SINCE I moved to Kedah 20 years ago, I will stay at the same hotel near the Putra World Trade Centre every time I travel to Kuala Lumpur, unless I fail to get a reservation.
When that happens, I will try my luck at a nearby hotel. It had never crossed my mind to book a room or an apartment through Airbnb.
I realised this recently when a former colleague suggested I gave it a try. His suggestion prompted me to look at listings in the Airbnb portal and I was amazed to see the wide range of properties offered there.
The Airbnb story is that familiar story of “innovative sharing” of your residential space with others while, at the same time, earning a side income.
Malaysian car owners have, for some time, signed up as Uber and Grabcar drivers to earn extra income. If we can be a part-time driver for Uber or Grabcar, why can’t we be part-time landlords (host) for Airbnb’s guests?
Airbnb Inc made headlines recently when a news report from Tokyo revealed that Japan had approved the United States-based US$31 billion (RM132.9 billion) company to operate in Japan by prescribing rules for home sharing.
Under the new law passed on June 9, homeowners are allowed to rent out their rooms to paying guests up to a maximum stay of 180 nights in a year. The law requires homeowners to register their properties with the local authorities and to comply with terms and conditions prescribed by them.
Airbnb faced difficulties in some areas of jurisdiction not because of the landlord-tenant law, but due to local authorities’ zoning legislation.
If you own a residential unit in an apartment block, you are generally free to get any tenant you like on tenancy terms you see fit. The rental amount will be according to prevailing market rates for such a residential dwelling.
However, when you become an Airbnb “host”, the rental rates are invariably higher (more likely at par with hotel rates). The authorities, who will not have a problem if these apartments are rented out to long-term tenants as residential properties, will not be happy to learn that these residential homes have been tenanted out more like hotel rooms to short-term guests.
Tatiana Cames, a “host” who early this year advertised her apartments in Brooklyn to business travellers was fined US$5,000. She was told penalties would escalate if she continued renting. According to a local authority official, this is “just the beginning” of the crackdown on such lettings. (“Something in the Airbnb: hosts anxious as New York begins crackdown”, The Guardian, Feb 12, 2017).
New Yorker Sierra Kraft (who has been an Airbnb host for four years) is prohibited from renting out her place for less than 30 days. She was told that it was illegal to advertise her home on Airbnb or other home-sharing platforms.
The authorities were not happy with Airbnb because its home-sharing business “threatens the hotel industry and takes affordable housing out of a market desperate for more”.
Airbnb’s innovative home-sharing business began in August 2008, and in less than a decade, it is doing business in 200 countries, catering to some 140 million “guest bookings” around the world.
However, since 2010, it has been illegal under New York city laws to rent out a home to guests when the host (home-owner) is not present while the guests are staying.
Elizabeth Warren wants the Federal Trade Commission to conduct an investigation into this “short-term rental industry”.
According to her, while cities were struggling to address shortages of affordable housing, this short-term rental industry had resulted in removing residential units from housing markets, thereby contributing to even higher rents.
If this problem is not solved soon, “our cities will become cheap places to stay for tourists, and unaffordable for the rest of us”, she said.
Since Alexander Zaitchik moved to New Orleans in early 2013, he had seen entire blocks in a neighbourhood converted to short-term rentals, mostly operated by absentee landlords. Vacancies in the area are few and rents have gone up. Long-term neighbours have been replaced by vacationing strangers.
In 2014, the New York Attorney General’s office had released a report showing that commercial landlords operate a third of Airbnb rentals in the city, most of which were in violation of zoning and tax law. Another report (by the Los Angeles Alliance for a New Economy) revealed that almost 90 per cent of Airbnb’s revenue in the city was derived from absentee landlords and leasing companies.
Early this year, the Dublin City Council ruled that an apartment owner in the city area must apply for planning permission for a material change of use of the apartment if he (as an absentee-landlord) wants to rent the property out for short-term rentals via Airbnb.
In Berlin, the city council banned the letting of apartments through Airbnb without a permit. In Barcelona, short-term holiday rentals are illegal.
In Vancouver, Canada, its zoning by-law states that “No person shall use or permit to be used any dwelling unit for a period of less than one month unless such unit forms part of a hotel or is used for bed and breakfast accommodation”.
According to Allen Garr of the Vancouver Courier, this means that not only must property owners have a licence, they should also be paying hotel tax and be subject to health and safety inspections.
Representatives of our local hospitality industry recently asked how illegal hotels and Airbnb operators could be brought into the tourism tax system as they are presently not registered with the Tourism and Culture Ministry. They pointed out the uneven playing field because while they have to comply with a long list of legislation, pay fees for their business licences and pay commercial rates for their utilities, operators of illegal hotels and Airbnb are not paying anything.
As of April this year, there are only 3,126 accommodation providers registered with the ministry, compared with 6,452 unregistered providers on Agoda.com and 11,698 providers under Airbnb.
Airbnb is a good thing, but it should be regulated, now rather than later. Legitimate home-sharing should be permitted, but the law should prevent illegal hotel operators from driving families out of their once-quiet neighbourhood.
Salleh Buang formerly served the Attorney-General’s Chambers before he left for practice, the corporate sector and, then, the academia. He can be reached via [email protected]