Hello again. Hopefully you are either enjoying a well earned holiday break or looking forward to one.
For many people, holiday travel is now as likely to mean staying in an apartment or house booked on one or other of the online platforms pitching such accommodation as opting for a hotel room.
Airbnb, the big kahuna in the market with a reported 50 per cent share, understandably makes big play of the advantages – a “more authentic experience”, “mixing with locals”, “feeling more at home”. And it’s true to a degree. Home stays certainly offer more flexibility than a hotel.
But the apartment your friendly host is letting to you is one less home available for a local family looking for longer-term accommodation in your holiday location. A report by the New York City comptroller back in 2018 found that landlords could expect to make the same money on the short-term letting market in 11 days as they would get for the month from a long-term tenant. And that, increasingly, is becoming an issue.
On the Money: the personal finance newsletter from The Irish Times
Christmas dinner for under €35? We went shopping to see what the grocery shop really costs
One in four PAYE workers are overpaying tax. Can you claim money you’re owed?
Typical price paid for home by first-time buyer up €88,000 on five years ago
It’s not entirely surprising. When they arrived on the scene, the short-term letting platforms such as Airbnb were disrupters of a global hotels sector that had done little over many years to address consumer experience or cost. Partly for that reason, growth in private short-term letting has been exponential.
And, of course, it offered homeowners a chance to boost their income in a fairly flexible manner around their normal routines.
But as with all these things, the original intention can get lost in the evolution of a business. While Airbnb started very much as a homeshare concept, with people offering rooms or beds in their homes to passing holidaymakers who were mostly on tight budgets, the arrival of more mainstream travellers and entire families on these sites inevitably saw demand more entire apartments and holiday homes increase.
The nature of the landlords changed as well. In a recent release, Airbnb placed the focus on hosts firmly as being “everyday families who typically share their primary home for just three nights a month”. The platform said its Irish hosts earned “more than €5,600 a year” on average.
“More than half of hosts in Ireland say they host to afford the rising cost of living, and over a third say the additional income helps them make ends meet as energy prices and mortgage repayments increase,” they said.
That may well be true but it is undeniable that short-term letting on Airbnb and other platforms has increasingly attracted professional and even corporate landlords. Anyone using the service of these platforms in recent years will have come across hosts that are anything put humble homeowners.
Overtourism protests
For local residents – in Dublin, around Ireland’s tourist hotspots and across Europe and North America – the inevitable outcome has been fewer homes available to them for longer-term rental or purchase, and higher rents, as growing numbers of visitors force out the very people providing the “local colour” the short-term letting platforms cherish.
That has led to a dramatic rise in the number of protests against overtourism. Accommodation is not only flashpoint. Cruise ships disgorging, on average, 3,000 people at a time on to already busy city streets and the sheer number of sometimes less than sensitive visitors to certain tourism hotspots are also proving magnets for protest.
Politicians are becoming increasingly sensitive to the issue – especially the message sent out by thousands of short-term holiday lets being available in cities that struggle to offer housing options to residents. Dublin, after all, is not the only city with a housing crisis.
Most recently, Barcelona mayor Jaume Collboni has pledged to phase out all short-term tourist letting licences by late 2028 and return 10,000 apartments to the residential market.
That is the most extreme in a series of restrictions that have been put in place in cities as diverse as Paris, Berlin, Florence, Amsterdam, New York, San Francisco, Montreal, Honolulu, Singapore, Scotland and, of course, Ireland.
Strict rules in Ireland
Ireland already has fairly strict rules in place for anyone looking to offer a short-term let – stays of fewer than 14 days – in one of the State’s 61 rent pressure zones. These cover not just the big urban areas that you might suspect but also locations such as Mullingar and Westport.
Anyone renting out either their family home for short-term lets of more than 90 days in total in a year or in a second home regardless of the annual total of days requires planning permission.
For two years it has been promising even tougher measures. These will certainly include a requirement for everyone who is offering short-term accommodation to register the details with Fáilte Ireland and include their registration number in all online listings.
Failure to do so will lead to fines of €300 – and potential fines in court of up to €5,000 – for the property owners and the platforms.
Such registration is increasingly the norm internationally and almost all players in the industry, including Airbnb, which has lobbied heavily against tighter restrictions on its business, says they favour the process which increases transparency in the sector.
As a byproduct, of course, it ensures compliance with things like tax law in an area where, in some international markets, this has been rather lax. It should also improve health and safety standards although these are generally already fairly well observed as a business necessity.
The Irish legislation also promises tighter control on planning for short-term lets. No details of this have yet emerged, which seems odd and certainly unhelpful as it only fuels uncertainty for those trying to run short-term letting as a business.
The aim of the Government moves is the bring an estimated 12,000 of the 30,000 properties currently advertising on online platforms back into use on the long-term rental market.
But, as with so many of the locations feeling the heat over short-term letting, tourism remains a key sector in the Irish economy – and potentially even more critical in more rural and remote areas in the west of the State. Policymakers have a very delicate balance to strike in trying to ease a housing crisis without damaging a sector that is among the biggest employers in the State and a critical contributor to many local economies.
Airbnb points to rising hotels prices in New York where short-term guests are now allowed only where they share the accommodation with the property owner, and in Scotland where what it calls “heavy-handed new short-term let rules” resulting in a low number of licences being granted have seen hotel prices rise by 9 per cent in Edinburgh this year alone, according to one industry assessment.
Short-term letting has been a boon for the holidaymaker and for many property owners globally but the pressure on housing and concern about overtourism means the pendulum is undoubtedly swinging the other way. That will mean increasingly tighter controls on who can stay where, and what it will cost to do so.
No one ever wants to spend more or earn less than they can but what hosts and travellers really want is some clarity on what the rules will be so that they can at least plan ahead.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
