Institute for the Study of Social Change Director Professor Richard Eccleston with the latest Insight Report on regulating short-stay accommodation in Tasmania.

Talking Point: We can have have Airbnb as well as easing rental squeeze

This opinion piece by Institute for the Study of Social Change Director Professor Richard Eccleston, first appeared in the Mercury newspaper on Tuesday 7 May 2019.

AS with any new technology, the rapid growth in accommodation ‘sharing’ platforms such as Airbnb is creating winners and losers. Tasmanians know this better than most. They are living it.

The number of visitors to the state who opt for Airbnb-style accommodation rather than traditional hotels and motels continues to rise, increasing 8 per cent last year. This has been a boon for property owners and investors, travellers and the local economy.

The surging tourism sector is creating jobs and fostering a confidence, particularly in the South, that it would have been difficult to imagine a decade ago.

But this success has a downside. The state faces housing challenges, most obviously an acute shortage of affordable rental accommodation, which has not improved over the past year. It is particularly bad in Hobart, where steadily rising house prices and rents are making life difficult for renters on lower incomes. Strong population growth is a factor in this, but the rise of short-stay accommodation is also playing a central role.

Our conservative estimate is that 667 residential dwellings across greater Hobart have been switched over to Airbnb or other short-stay accommodation use since 2016. Nearly 400 of those are in the City of Hobart.

Meanwhile, rental vacancy rates are at just 0.4 per cent and, as the Reserve Bank showed last month, when rental vacancy rates are below 1 per cent rents increase, rapidly putting more households under housing and financial stress.

The evidence is clear. The rapid growth of the short-stay accommodation sector in Tasmania has benefits and costs. The question facing the state is how to develop a regulatory framework that embraces the opportunities Airbnb offers while dealing with the problems it has helped create.

Our research suggests a solution is within reach. A targeted regulatory scheme would have little impact on the growth of the short-stay accommodation sector, or tourism generally, but could improve housing outcomes for Tasmanians.

By drawing on lessons in other parts of the world, we can balance the need for an affordable rental sector and a sustainable accommodation industry in private homes. Our report, out today, has identified reforms that have worked elsewhere and could work here.

We should begin by introducing a permit system for all Airbnb and short-stay accommodation operators. The Tasmanian Government has begun heading down this path, but the permit scheme only applies to hosts who rent a property that is not their primary residence. We should go further so all hosts register annually to capture data on the entire sector and improve compliance.

While all operators should be required to hold a permit, hosts sharing their own home or renting it for short periods should be granted a permit at little or no charge, given genuine sharing has minimal impact on the housing market.

Higher annual permit fees, or a cap on the number of nights a property can be rented per year, should be applied to investment properties.

Ideally these fees or caps should vary in response to local conditions. For example, we believe there is a clear case for higher fees or caps in the City of Hobart, given acute rental shortages, but not in regional Tasmania.

Experience elsewhere suggests higher permit fees would deter some hosts in areas experiencing rental shortages and would create a revenue stream to pay for regulation of the sector.

We also argue that our planning system needs to be able to respond to housing market conditions. The planning scheme deals with residential character and amenity considerations but has little to say about the impact of short-stay accommodation on rental supply and affordability.

The planning scheme allows provisions to be applied to specific communities — Battery Point, for example — but these need to be approved by the Tasmanian Planning Commission, which takes time. We need a nimble, evidence-based framework that can respond quickly to changing market conditions at local and citywide scales.

Evidence from elsewhere also highlights the need to gather and share better data on the short-stay sector and the broader housing market to achieve good housing outcomes.

All levels of government, industry and other stakeholders should collaborate to establish a Housing Supply Forecasting Council that would have access to the platforms’ data, identify housing needs and make policy recommendations.

The State Government and parliament should be commended for having begun the work of regulating this sector but more work is needed to improve housing outcomes for all Tasmanians.

Professor Richard Eccleston and Dr Julia Verdouw are authors of the University of Tasmania Institute for the Study of Social Change’s report Regulating Short-Stay Accommodation in Tasmania: Issues to consider and options for reform. The report is available here.

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