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Airbnb: Free Money and Castles in the Air

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Airbnb and the battle for your block: Part 2

Last week Jimmy Thomson looked at the growth of Airbnb and the opportunity and potential threats it presents to apartment residents.  This week he looks at the appeal of “free money” and why some owners, tenants and legislators are hell-bent on allowing holiday rentals to have greater access to apartment blocks with little or no regard for the potential disruption to high-rise communities.

“We support the right of people to do what they want with their own homes.” That’s the line from an Airbnb spokesman and in the world of apartments, it cuts to the core of what our lifestyle is all about.

Property owners get very defensive about their rights, imagined or otherwise, and very aggressive when they are challenged.  That has led to a slow learning process for Australians getting to grips with apartment living – a much more profound form of sharing than even Uber or Airbnb.

In a unit block you’re sharing the roof over your head, the floor under your feet and walls between your homes.  Your lifts, lobbies, garbage bins and, if you’re lucky, your swimming pool – they’re all shared with dozens if not hundreds of other people.

This concept does not seem to have gelled with some of our politicians who, 50-odd years after the first strata scheme was built in Sydney, still cling to the idea of your home being your castle, even if it’s 20 storeys in the air.

Add the lure of free money for ordinary people into the mix, and that pretty much explains our politicians’ apparent rush to regulate (or de-regulate, depending on your point of view) the holiday letting industry.

It’s very easy to see how they could be seduced by the whole ‘everybody wins’ myth.

As Murray Cox, activist-in-chief at independent monitoring website InsideAirbnb.com explains, property in Australia is seen largely as a means of making money, even when people are buying somewhere to live.

It’s certainly not exclusively about creating homes for people to live in.  So when people find a way of making more money from their homes, we shouldn’t be surprised when any ideas of community go out the door.

John Cleese, Ringo Starr and the late Peter Sellers in 60s comedy movie The Magic Christian

There’s an earworm playing in my head as I write this:  Come And Get It, Badfinger’s  theme from the 1960s movie “The Magic Christian”.

The underlying concept of the Peter Sellers, Ringo Starr comedy is that people will do anything for free money. The film ends with people in smart suits wading through a giant vat of raw sewage and blood to gather scattered banknotes (pictured on home page). Subtle, it is not.

If you want it, here it is, come and get it.

The appeal of short-stay letting to MPs is as simple as that. They’d be putting free money in their constituents’ pockets.

They believer there is no discernible downside in terms of votes, there are potential benefits like increased tourism and revenue (if the tax department ever catches up with the hosts) and they would get to look hip, cool and down with the kids.

The only people who would be negatively affected are a minority of people who live in apartment blocks – losers, by definition, in some people’s books.   They live near transport links, cafes and theatres, have the best views and resort-style facilities, but they don’t want to share. How selfish!

And as for displaced renters, lodgers and roommates?  Even though there are 25,000 properties listed in Sydney alone, and another 15,000 in Melbourne, and hosts can earn an average of $650 a month more than with residential lets, there’s no definitive proof that short-stay letting adversely affects the residential rental market. At least, that’s according to Airbnb.

Meanwhile there are all these “ordinary people” who simply want to make a few extra dollars a week to help with their mortgage, pay off their student loans or have a holiday themselves.

It’s a nice idea but it may be mostly a myth. Sure, there are people who make a decent amount letting out a room but they are not the majority.

Any independent evidence available suggests that relatively few people benefit significantly from short-stay letting but, especially in apartment blocks, a lot of people suffer, directly through disruption and indirectly through increased rents.

A recent report from Sydney University’s School of Architecture, Design and Planning claims that in areas where Airbnb is most active, rents are going up and the availability of residential lets is decreasing.

Head of department Professor Peter Phibbs says holiday lets are also pushing up property prices as investors outbid first-time home owners for units that they plan to put straight on to Airbnb.

InsideAirbnb.com claims more than 60 per cent of listings are for whole homes and 30 percent of hosts list more than one property.  Its Australian-born, New York-based activist-in-chief Murray Cox goes beyond the “whole-home” scenario to ask what happens to the most vulnerable tenants – the lodgers and roommates of days gone by?  They are being pushed out to the fringes to be replaced by tourists.

Airbnb strenuously disputes all these allegations and, when it comes to roommates, they may well have a point.  Plenty of people who don’t want the hassle and emotional engagement involved in having a person sharing their home semi-permanently, may be attracted to the idea of an occasional visitor from another state or country.

If it doesn’t work out, they will be gone in a few days and the hosts won’t have to be an unwilling audience for their sad soliloquies about their work, love lives or parents. Familiarity does breed contempt and distance certainly lends enchantment.

But that’s a whole other story. Entire residential apartments, especially those with “resort” facilities in great locations with fabulous views, are prime attractions for travellers.  And the harder the unit block’s owners have worked and the more they have spent to keep their little slice of heaven ticking over and looking splendid, the juicier a plum they are in the short-stay market.

The irony of this is not lost on “Our Community, Our Choice”, the new Owners Corporation Network-based pressure group of Sydney apartment block chairs, who, like their counterparts in Victoria, want the government to bring in legislation to allow strata schemes to decide whether or not they want short-stay letting in their buildings.

Or, perhaps, the NSW owners want them to leave things exactly as they are because there are few problems in buildings zoned residential only where holiday lets aren’t wanted and the owners corps are actively discouraging them.  If it ain’t broke …

But would allowing apartment owners to pass by-laws controlling holiday lets give them far too much power over their neighbours? Should the influence of owners’ corporations – all the owners voting as a group – extend past the front door of individual units?

Well, don’t tell anyone, but it already does. Your castle in the air is just pie in the sky and your neighbours can already affect what you do in your home in ways much more profound that permission to run holiday lets.

For instance, under freshly minted NSW strata laws, the owners corporation can legally limit the number of people living in a unit to two adults per bedroom. They can also stop you smoking on your balcony, having a pet, renovating at weekends or in the evening or playing loud music at any time of day.

Even more fundamentally, 75 percent of owners can force the other 25 percent to sell their homes. It’s true. If nine owners in a block of 12 want to sell the whole building to developers, the other three should start flat-hunting ASAP.

So it seems strange that under the mooted short-stay letting laws, 99 percent of owners won’t be able to prevent one opportunist from renting their flat to a different set of strangers every night.

The reality is that, in NSW at least, the walls of your strata castle have already been breached.  And there is a cost to this “free money”.

The question for MPs in both NSW and Victoria remains whether it will be borne entirely by apartment residents – owners and tenants – or whether there will be a political price to pay too.

Next week:  Politicians and the myth of the vomiting bridesmaid.

Previously:    Part 1 – Holiday lets … opportunity or threat?

 

Jimmy Thomson writes the Flat Chat column in the Sydney Morning Herald and edits this Flat Chat website.

 

 

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