Short-term letting: The Flat Chat position

This is Flat Chat’s submission to the NSW government’s position paper on short-term holiday letting.
It is concerned only with strata schemes – people in houses can look after themselves.
JimmyT

Top Line Proposal (applicable only to strata apartments)

  1. Allow owners and tenants to rent one bedroom in their apartment (of two or more bedrooms) as short-term lets, provided the host is in residence and occupancy limits are not exceeded.
  2. Allow a “Family, friends and pets” exclusion permitting flat-sitting while the owners or tenants are on holiday for a maximum of four weeks per year (except where a longer term is established in a by-law) .
  3. Permit an initial simple majority vote by all owners to decide if they want to abide by their residential only zoning or allow short-term letting – and under what terms.
  4. Permit subsequent changes to that by-law only to be made by special resolution, as with all other by-laws.
  5. Establish strong penalties for owners and tenants who breach the established terms set down for short-term letting.

Observations

There are clear and serious implications for affordability and availability of accommodation in areas where Airbnb (and other holiday letting platforms) are most active, just as there are implications for tourism and the economy.

However, the issue of short-term lets should not be viewed purely through a financial prism. There are other less obvious, more profound considerations that need to be given at least as much weight, if not more.

A sense of ‘home’

In very basic terms, questions about the spread of STLs extend to what constitutes a home, what kind of society we want to have and how much we want to allow those matters to be compromised by the influence of global corporations seeking to harness popular movements for financial gain.

Then there is the change in attitudes to property investment which many agree has shifted too far towards the desire for profits and away from the need to house the residents of this city, leading to our grossly over-heated housing market.

And there are the rapid changes in our society. The more obvious is the spread and influence of the internet and the ability for ordinary people to use platforms like Airbnb and others of its ilk to put their properties up for rent to a global tourist market.

More significant in societal terms is the acceptance of apartment or strata living as a viable long-term option for families and first-time home owners.  We are told that half the population of Sydney will be living in strata by 2030.  Time is running out if we are to make that the new normal.

Also increasing is the acceptance, especially by younger residents, of the belief that their incomes may never catch up with rising property prices and they should therefore accept that they may be renting for the rest of their lives, or for as long as they choose to live in our major cities (a concept that is alien only to Australians, it seems). Half of apartment residents are tenants and that proportion is likely to increase.

However, the current system encourages landlords to evict tenants at the end of their leases as it’s the easiest way to raise rents. This is something that will have to be addressed soon and tenants really don’t need to be also competing with tourists for living space.

The counter-intuitive message from tenants that they support STLs is easily explained.  They want to be able to share in the sharing economy.  They want to supplement their income and offset their often-excessive rents by letting rooms to tourists and their whole homes to visitors when they are away on holiday.

But do they really want a system the takes properties out of the private rental market and pushes up rents for those that are left.  Do they want to be squeezed out of areas that also happen to have the best transport links and social facilities like cafes, shops and bars?

You would think not.

Put all that together and it’s clear that this is a complicated problem that requires a sophisticated solution.  A one-size-fits-all answer, especially one tailored to accommodate the distorting views of profit-driven global corporations, is a recipe for social disaster.

Right and wrongs

It’s an exciting and exotic notion – that someone from New York (or New Zealand) might rent your apartment –  and you can make a bit more money than you would from a permanent rental.

It’s a no-brainer, but that doesn’t make it right. Should dwellings that were approved for housing be allowed to be used exclusively or predominantly for the greater profits to be gained from tourism?

Unless we want to create an under-class of renters and owner-occupiers who are denied the opportunity to live in the best parts of our cities and coastal towns, while driving owner-residents into exclusive enclaves of privilege and self-protection, we need to make the right decisions now.

Our politicians need to look at the whole picture and not just the highly seductive advertising that portrays the profit-driven demands of a global internet platform as some kind of social service.

Short-term letting has been described as a cancer in apartment living and while that view may seem a little extreme, those of us who lived through the long debates over smoking will recall how the tobacco lobby, while pouring money into advertising, sport and, indeed, political party coffers, was allowed to take a fundamental health issue and reposition it as a matter of personal freedom.

It’s easy to see the obvious parallels with the STL lobby’s support for the “right” of home owners (and renters) to do what they want with their homes and the “right” of individuals to smoke in public. Sometimes our elected representatives have to protect us from ourselves

It’s your home, not your castle

The right to do as you wish with your home has always been qualified.  You can’t build an extension on to your home without council approval and you can’t behave badly within the confines of your house if it affects your neighbours.

The right of apartment owners to decide how and when to sell their apartment, and to whom, has been seriously compromised by the collective sales provisions incorporated in the Strata Schemes Management Act of 2015.

That law allows a significant majority of owners to decide when other owners’ apartments can be sold and under what terms. That establishes in law that a strata community can make decisions where the greater good of all owners supersedes right of individuals.

Whether you agree with that or not, it seriously undermines the provisions of section 139 (2) which blocks by-laws that interfere with “dealing” with a lot.  The concept of inviolable property rights for lot owners is all-but dead.

These are just three of the more obvious examples of limitations on the “my home is my castle” attitude. Without needing to dig too deeply, we can see that the rights of home owners are already qualified and restricted, as they must be in a civilised society.

And in any case, isn’t this all about a global company that wants to “disrupt” the staus quo. OK, fine – but that cuts both ways and they can’t cherry pick the laws that should be ignored while claiming  others are sacrosanct, just because it suits their business model.

Apartments are different

I must admit I am less concerned about the effects of STLs on free-standing homes.  My area of interest and some expertise is apartments specifically and strata in general.

And one of the things I know very well is that just because there are by-laws and rules governing residents’ behaviour, and penalties for breaking them, that is no deterrent for those who don’t care.  It can take months to get a satisfactoru result from the NSW Civil Administration Tribunal (NCAT), regardless of how clear the evidence of by-law breaches is.

In strata, that means months of continued disturbance, now exacerbated by resentment and often abuse from the owners or tenants who have been the subject of the complaints.

Being able to deal with a problem only after the slow and unpredictable wheels of Fair Trading and NCAT have ground out a verdict, as we do in strata, is very different from having taken reasonable steps to prevent the problem in the first place.

And all of this goes to the sense of “home” which should lie at the heart of any legislation now and in the future.  Even the shelved Coure report into STL legislation conceded that holiday lets had a more immediate and profound effect on apartment residents than on house dwellers.

The fact is, every unit block is different and for the growing numbers of long-term residents of apartments, there is a period of learning how to co-exist with your neighbours.  Holiday makers have neither the time nor the inclination to learn how to be good neighbours.

They have no idea how loud their TV can be before it disturbs the neighbours. Slamming doors, noisy chatter in lift lobbies, where to put their garbage, why they can’t take glassware to the swimming pool, why they can’t use visitor parking, loud music late at night – these are all insignificant issues for people in holiday mode but which soon become major irritants and sources of stress and disturbance for permanent residents.

But it’s the loss of a sense of home when you open your front door to find yourself face to face with a complete stranger every other weekend that’s most disturbing. If you can’t feel safe and secure in your own home, where can you?

Nothing will more effiently or quickly destroy the fragile communities only now starting to take hold in our inner-city apartment blocks than turning them into de facto hotels so that a minority of opportunists can make a lot of money.

Legislate for choice

Government can’t be expected to come up with a policy that is absolutely right for every different strata community.  That’s why it’s vital to pass laws that allow strata schemes to enforce their existing “residential only” status through by-laws that reflect their community needs.

Let councils zone residential buildings as they do and, if necessary, bring in zones that specifically exclude or allow holiday letting.  But otherwise, let a majority of owners in a building decide whether or not they want short-term letting and, if so, on what terms.

It only takes one apartment in a large unit block to take short-term lets and change the nature of the whole building.  The selfish interests of a minority of owners and tenants should not be allowed to destroy communities – especially when the majority of owners purchased in the belief that they were buying a home, not a hotel room.

Taking away the rights of hundreds of owners to live in the residential buildings they bought into (or rented) to pander to a minority of selfish investors, would undermine everything that the recent changes in strata laws sought to achieve and would take us back to the dark ages of strata living.

The facts and the fictions

Airbnb would have us believe that their holiday letting service has little or no effect on rentals or the availability of rental properties.  Yet, they boast the Australia is the “most penetrated market” in the world.

Well, in other less penetrated markets, such as London, it has been proven beyond doubt that Airbnb and other online letting services affect housing rents and availability.  As a result, Airbnb has conceded that they will de-list any London properties that exceed a set limit on the number of days they are available per year.

This is something they previously said would never happen. But it’s amazing what suddenly becomes possible when politicians are prepared to say, “OK, we need housing more than we need extra tourists, so we will shut you down.”

From Barcelona to New York and Amsterdam to Paris, the easy access to a global market of potential tourists is creating housing shortages for local people and forcing them out to the fringes of the cities. The advertising catchphrase “live like a local” has a hollow ring when the locals have been forced by soaring rents to live elsewhere.

Airbnb claims that every study in Sydney that shows they have a detrimental effect on rents and availability is based on flawed data. This includes three peer-reviewed university studies, the most recent of which showed they had effectively taken 6000 properties out of the Sydney market.

At the same time, Airbnb refuses to reveal its actual figures on the income it generates from whole-home lets, partly on the dubious grounds of “privacy”.

Meanwhile, a curious Tenants Union study based on the same data that Airbnb disparages, but claiming STLs had little effect on rentals, was hailed by them as fair and accurate. It’s called having your cake and eating it.

Airbnb also claims that the majority of people in Sydney like Airbnb.  That is probably true – but the vast majority of people in Sydney are unlikely to suffer any impact from Airbnb because most tourists don’t want to visit where the majority of people live.

It is this constant misinformation and massaging of statistics that should raise concerns in our MPs’ minds.  How much can we trust or believe? And why does Airbnb have to do such a hard sell for a product it says doesn’t harm anyone?

What Airbnb really  wants

Airbnb consistently claims that all it wants is for “ordinary people” to be able to let a room in their homes to holidaymakers.  If only that were so. Very few people, even in strata, have any argument with that concept. But give Airbnb exactly what their advertising says they want and everyone will be happy – except Airbnb and their self-interested hosts.

It’s obvious that what Airbnb really wants is for owners and tenants to be able to let their whole homes – especially apartments –  in areas popular with tourists.

Airbnb says whole apartment rentals are a tiny part of their business.  If so, why are they determined that this should not be restricted in any way, especially when, according to a recent City of Sydney survey, the majority of owners are against it?

Asked why they wouldn’t be satisfied with genuine home sharing, rather than the letting of whole apartments as commercial operations, Airbnb spokespersons say: “We support the right of apartment owners to do as they wish with their homes.”

How noble!  How archaic! People who live in strata accept that there are restriction that allow everyone to get along. It’s not about personal freedom – it’s about living in a civilised manner and your freedoms stem from that.

The buck stops here

The only people who truly understand the effect of holiday lets on apartment blocks are the people who live in them.  Every block is different and some communities will cope with STLs while others will be destroyed.

So, let’s separate the clear, proven, peer-reviewed facts from the expensively and professionally promulgated fictions.

Let’s allow residents to invite tourists into their homes but, in the case of apartments, only while the residents are there.

Otherwise, let apartment owners choose whether or not whole-home STLs should be allowed in their buildings – after all, it is they who’ll have to live with the consequences.

I urge the government to amend strata regulations to allow apartment owners to decide by a simple majority whether or not to allow short-term letting (subject to local zoning, their own rules and any further restrictions imposed by their local councils).

Subsequently, changes would only be permitted by special resolution, as with all other by-laws.

 

Jimmy Thomson
Flat Chat
September 18, 2017