September 26, 2019

To Airbnb or not to Airbnb that is the question

You’ve just bought a new unit at the beach – congratulations, you broke into the market! Instead of renting to a long-term tenant, you opt to list the property on Airbnb where you can charge higher rates to holiday-goers. Things are going really well and the unit has strong occupancy rate.  That is, until you receive a notice from your local Council advising that they think you are operating short-term accommodation without a development approval and they want you to cease the use or face further action.

Home sharing platforms are proving a popular alternative to hotels and other more traditional holiday accommodation in a time where people are looking for unique travel experiences, that are also cost-effective. However, it raises questions;

  • Are these types of offerings legal?
  • Do they require a planning approval?
  • Do they require a building to be classified in a particular way?
  • Which level of government is responsible for regulating them (i.e. State or local government)?

The Queensland Government has legalised ride-sharing services (e.g. Uber, Ola and Didi).  Reforms have been introduced which require the ride-sharing drivers to have a booked hire service licence, similar to a taxi licence. 

In the world of ride-sharing services, the issues were brought to the fore much more quickly due to the involvement of giant taxi companies with the commercial impetus and resources to back the complaints.

In the home sharing platform world, the complaints seem to be much more localised and driven by the community who are not happy with their residential street being transformed. Further, we have not yet heard about existing hotel and resort operators making loud and targeted complaints in the way that taxi companies have over the past few years about ride-sharing services.

 

What is a home sharing platform?

Home sharing platforms allow people to rent out their property, or part of it, to travellers and other people looking for short-term accommodation. Airbnb is currently the largest of those platforms but there are a number of other similar companies such as Vacation Rentals by Owner (VRBO), OneFineStay and Oasis which are based on the same concept.

 

Why are they a problem?

The increasing popularity of this type of accommodation is a challenge in Queensland as the interest in supporting growth and the tourism economy needs to be balanced against community expectations.

Local residents are starting to voice their concerns more loudly about the impact the intense transient nature these types of holiday-rentals are having on neighbourhoods.  Complaints are being made to Councils, centering on:

  • the rise of people they do not know walking and driving around their street;
  • the increase in cars parked on their street and car doors slamming;
  • more parties, BBQs and other gatherings disrupting the status quo; and
  • general safety concerns.

These types of issues are usually regulated by local governments through the development application process.  A hotel, for example, would have conditions imposed on a planning approval which regulate:

  • maximum guests;
  • the number of car parks to avoid cars being parked on the street;
  • noise emissions, to avoid disturbing its neighbours; and
  • hours of operation.

So, do Airbnb and other homes share platforms require a planning approval and can these types of restrictions also be imposed on them?  The answer is not as clear-cut as the Taxi v ride-sharing debate.  It will depend on a number of factors: what local government area the home is located in; what the land is zoned; how the property is being used; and how the Council’s planning scheme deals with that type of use.

 

How are councils dealing with them?

These types of complaints are giving rise to a growing headache for Councils. Some Councils have issued fines, show cause notices or enforcement notices to the home owner where the required planning or building approvals have not been obtained. Some Councils have remained silent and left the market to its own devices.

Like with many uptakes of new technologies, it is often the case that the rules and regulations get left behind and governments struggle to catch up.

Ride sharing services faced similar regulatory issues which were solved at a State level. As with party houses, the better solution may be the Queensland Government taking over regulation of home sharing platforms which will make it easier for everyone to know the rules.

In the meantime, Councils are starting to adopt clear policies to regulate these types of uses in their local area. It will be interesting to see if Councils across Queensland work towards adopting a consistent approach to regulation for home sharing operators.

Will it be the case that Councils change their planning schemes to enable this type of share accommodation or will they step in and start cracking down? If regulation of these types of platforms increases, people will need to be wary of the trouble they can get into by not following Council requirements and risking enforcement action, like the scenario above.