Short-term letting taking over? What local governments can do

Are you part of a council with short-term letting problems?

Short-term letting is a major concern for many local governments, especially those in tourist hotspots. We covered the reasons why in our last post.

BnbGuard is working with a number of councils across Australia to help them regulate short-term rentals in their area. But it’s a very tricky problem for them to solve.

Lots of different approaches have been tried overseas, from very tight regulation (eg New York City, Singapore) to nearly unregulated (South Australia). There is an ideological bent to a lot of the discussions too. Fans of regulation risk being painted as retrograde opponents of all technological progress, while proponents risk being tarred as unrestrained capitalists with no regard for the local community. It’s important to ditch the rhetoric and look at practical solutions.

Local governments want tourists from overseas and nearby cities. They bring in much needed income that help these towns survive and thrive. But without regulation, there will be lots of negative effects for their community.

So what should local governments do?

It’s a complex issue and there’s no single silver bullet councils can use. It needs to be treated more as an economic problem than a legal one – don’t think about laws, think about incentives and supply & demand.

Based on what’s happened overseas though, there is an emerging set of tools that local governments can employ. While local conditions vary, here’s are nine tips for councils considering regulation:

1. Use a licensing system – Pass laws to force everyone hosting short-term rentals to register their property with the council for a small fee. Make it clear that license numbers must show on all short-term rental ads.
2. Block investment properties from getting a license – This will keep a lid on house prices in the area and stop outsiders from snapping up properties for full-time holiday rental.
3. Use penalties – Have strict fines for anyone who puts up a short-term rental listing without a license. These need to outweigh the income a property can bring in, so should be charged based on days of booking without a license. Which is why you need to…
4. Have an enforcement mechanism to monitor for listings and identify their owners –  Without it, many people will just ignore the rules because it’s so hard to catch them. That’s been the pattern overseas.
5. Hold owners liable – If guests disturb the peace, owners should cop a fine. Have clear rules for what this is (eg no loud noise after midnight) and push hosts to state these on their listings. This will put a lid on party houses.
6. Track all the sites – While Airbnb gets most of the attention, increasingly traffic is moving to other sites like Booking.com, Homeaway, Tripadvisor, as well as niche sites like Innclusive and Misterbnb. If you force Airbnb to comply, the illegal activity will move to other sites. That’s what we’ve seen overseas, in London and New Orleans in particular. You need a solution that spans all these sites, or it’ll be a temporary one at best.
7. Use availability, not booking – A lot of governments pass rules allowing residents to have, say, 30 days of booked accommodation per year before a license is required. These rules have not been effective to date. For starters, it’s easy to remove a listing and put up a new one. Also, unless the site actually tells you the number of days booked, it’s pretty easy to just say “it wasn’t available” instead of “it was booked” for a period. You may get Airbnb to give you booking data as London and Paris have, but you’re unlikely to get the other sites. It’s better to focus on availability – eg I can have my house available for 30 days a year, and no more. That can be tracked independently across multiple sites.
8. Treat it as a process – A harsh crackdown won’t work, based on what we’ve seen overseas. Councils should pass smart, targeted regulations that control short-term letting without interrupting the tourist growth they can enjoy from it. Regulations will need to be changed and updated to suit both local conditions and the evolution of short-term letting in the future.
9. Don’t wait – We’re only at the beginning of this phenomenon. But if councils wait too long to regulate, they risk permanent changes to their towns that they won’t be able to undo. If the town hollows out from losing long-term residents, the local economy will increasingly depend on it, and controlling it will be that much harder.

Are you part of a council with short-term letting problems? Just like we’ve helped Noosa Council, BnbGuard can help with monitoring, enforcement or just advice. Contact us info@bnbguard.com.au today for a chat.