Institute for Social Change News

This article by Institute for the Study of Social Change affiliated researcher Dr Kathleen Flanagan first ran in Parity Magazine. Read the full Parity Magazine July 2017 issue (1,703KB).

Dr Kathleen Flanagan, deputy director, Housing and Community Research Unit (HACRU)

Homelessness, Tasmania … and Airbnb. By Kathleen Falanagan, deputy-director of the Housing and Community Research Unit, University of Tasmania.

You may well ask what Airbnb, an online platform allowing property owners to advertise part or all of their homes directly to tourists seeking short-term visitor accommodation as part of the ‘sharing economy’, has to do with homelessness in Tasmania. After all, the typical Airbnb aesthetic,(1) one of on-trend comfort and luxury, contrasts sharply with the day-to-day housing experiences of many clients of specialist homelessness services. But there is growing evidence, admittedly anecdotal and circumstantial, that Airbnb is affecting the local housing market in ways that could very significantly disadvantage those least able to afford it.

Tasmania is undergoing a tourism boom. The undisputable success of MONA and its associated spin-offs have underpinned substantial growth in visitor numbers and given Tasmania global exposure in the cultural tourism market. This has occurred alongside a well-documented and significant shortage of tourist accommodation, especially in Hobart.(2) These and other factors have produced a situation in which Airbnb and competitor businesses like Stayz have been able to thrive.

In May 2017, there were 777 active Airbnb rentals in Hobart alone, managed by 564 hosts; 106 of these hosts were listing multiple properties. In comparison to Adelaide, for example, where 16 properties per 10,000 residents are listed on Airbnb, in Launceston, there are 33 properties per 10,000 residents and in Hobart, it’s over 35 properties.(3) Of course, these numbers date from a different regulatory regime — as of 1 July 2017, the Tasmanian Government has elected to deregulate the informal visitor accommodation sector, a policy that has been promoted as freeing would-be Airbnb hosts from ‘red tape’. The rhetorical emphasis has been on owner occupiers choosing to rent out their spare room — as the Minister for Planning and Local Government, Peter Gutwein put it: ‘It’s only fair that a home owner can rent out a room in their house without having to ask the Government for permission. It’s just common sense, if you can have a relative over to stay, why not someone else?’(4)

 But over three quarters — 78% — of the Airbnb properties on offer in Hobart in May 2017 were offered as entire homes. And 44% were advertised as available for more than ten months in the year. Only 18.5% of listings fall into the ‘short-term’ category of one to three months’ availability.(5) This is suggestive of a situation that involves more than just spare rooms being rented out.

Concerns about the impact of Airbnb on the long-term rental market have produced various regulatory responses around the world, with restrictions placed on the operation of Airbnb-style lettings in a number of cities across Europe and in the United States.(6) These restrictions are founded on more than just local anxieties about the tourists moving in: academic research suggests that under certain market conditions, namely, a low vacancy rate, this form of renting out property can significantly and negatively affect the affordable housing supply and increase rents.(7) Hobart’s current vacancy rate is around 0.6%.(8)

Determining the extent of Airbnb’s contribution to this situation is difficult. It is hard to extract meaningful data from Airbnb’s website; researchers have needed to rely on data analytics firms like Airdna or watchdogs like Inside Airbnb to draw conclusions about the effect of Airbnb on the market. There are certainly examples of individual tenants who have been displaced due to Airbnb and some housing service providers say there is reason to think that at least part of the contraction in affordable housing supply is due to properties being converted to visitor accommodation. But there is no clear source of empirical data that settles the question one way or the other. And this matters.

The structural disadvantages faced by low and very low income earners in the private rental market are well-documented,(9) as is the growing emphasis being placed on the private rental market as the preferred destination for households which might previously have relied on social housing, including those facing significant income constraints, leaving homelessness or resettling after crisis.(10) Essentially we have a situation where there is reliable evidence that, all else being equal, landlords prefer not to lease to people who rely on income support payments, have insecure employment, unstable tenancy histories, or complex personal histories, but where government policy-makers have decided that nonetheless, these types of households should live in the private rental market unless it is completely unavoidable.

The Tasmanian Government is rolling out a program of incentives and brokerage funding designed to encourage private landlords to prioritise households in need to affordable housing rather than making a decision about prospective tenants that is purely market driven.(11) But all of this is stymied by the reality that, incentive or no incentive, the returns available for short-stay visitor accommodation facilitated by websites like Airbnb generally exceed those available from conventional private rental.

In 1944, when setting out the rationale for Australian Government involvement in the provision of public housing, the Commonwealth Housing Commission pointed out that there was a group in the community who would never find adequate and secure accommodation in the private rental market because they simply did not earn enough money to provide an adequate return to the landlord. Private landlords could not be blamed for wanting to make a profit, not a loss, argued the Commission, and rather than expecting otherwise, the solution was that the Government itself should provide subsidised housing to people whose incomes could not stretch to cover private rents.(12) We see a similar situation today: the market does not provide for people on very low incomes because it cannot do so at a profit. And it is not unreasonable for landlords, in the absence of any regulatory requirements for them to do otherwise, to choose the most profitable option, which in this case might well be to use their property for a sporadic Airbnb listing rather than a long-term affordable rental. Nor is it unreasonable for landlords who do choose to continue to offer their properties as long-term housing to select those tenants who they think will offer the greatest return and (in their view at least) represent the least risk. The consequences, in the absence of a well-resourced social housing system, will not be distributed evenly but will reinforce existing patterns of poverty and inequality across Tasmania. We already know that one of the more significant causes of homelessness in Tasmania is simply the lack of affordable and adequate accommodation.(13)

One of the defining characteristics of Tasmania’s recent tourist boom is that it is a gentrified experience — built on fine wine and food, luxury wilderness experiences and a certain ‘edgy’ aesthetic. Tasmania’s economic fortunes are increasingly tied to tourism, and sustaining this industry is important, but it is still reasonable to ask whether the benefits are really going to ‘trickle down’ to ordinary people living here, or whether the effects will be those more typically associated with gentrification: displacement, exclusion and marginalisation.

The Tasmanian Government has chosen to put its faith in the trickle-down effect: ‘embracing the sharing economy’ will ‘grow the tourism and hospitality sectors, which will in turn create jobs’.(14) But it also needs to take active steps to monitor the long-term effect on housing availability and affordability for the most vulnerable of its constituents. One simple way to start would be to add a single, compulsory question to the Government’s new Building Self-Assessment Form,(15) which must be completed by people intending to make their investment properties available for visitor accommodation: what was this property previously used for? This will allow the government to track whether or not existing long-term rental accommodation is being converted into short-stay visitor accommodation, and give us an evidence base upon which to evaluate and develop policy in this area in the future.

Endnotes

1. Chayka K 2016, ‘Same old, same old. How the hipster aesthetic is taking over the world’, the Guardian, 7 August. <https://www.theguardian.com/commentisfree/2016/aug/06/hipster-aesthetic-taking-over-world>, accessed 12 July 2017.
2. Tourism Tasmania 2010, Research Snapshot: Accommodation Supply and Demand in Greater Hobart 2010-2017, Tourism Tasmania, Hobart.
3. McConville P 2017, ‘Sharing Hobart: Managing the rise of Airbnb’, background paper prepared for a forum of the same name organised by the Institute for the Study of Social Change, University of Tasmania and held on 22 June 2017 in Hobart, <http://blogs.utas.edu.au/isc/files/2017/06/Airbnb-Background-Paper1.pdf>, accessed 13 July 2017.
4. Hodgman W and Gutwein P 2017, Embracing the Sharing Economy, Media Release, 3 February, Department of Premier and Cabinet, Hobart.
5. McConville P 2017, op cit.
6. For a recent review, see ‘Airbnb — how and where it affects our homes and neighbourhoods’, Global Tenant, March 2017, pp. 3-5.
7. Gurran N and Phibbs P 2017, ‘When Tourists Move In: How Should Urban Planners Respond to Airbnb?’, Journal of the American Planning Association, vol.83, no.1, pp.80-92.
8. SQM Research 2017, Residential Vacancy Rates: City: Hobart, <www.sqmresearch.com.au/graph_vacancy.php?region=tas%3A%3AHobart&type=c&t=1>, via Tenants’ Union of Tasmania, <tutas.org.au/publications/rental-vacancy-rates-in-tasmania/>, accessed 10 July 2017.
9. See for example Victorian Equal Opportunity and Human Rights Commission 2012, Locked out: Discrimination in Victoria’s Private Rental Market, Victorian Equal Opportunity and Human Rights Commission, Carlton, Vic.; CHOICE, National Shelter & National Association of Tenant Organisations 2017, Unsettled: Life in Australia’s Private Rental Market, accessed via Tenants’ Union of Tasmania, <http://tutas.org.au/wp-content/uploads/2017/02/The-Australian-Rental-Market-Report-2017.pdf>, accessed 12 July 2017.
10. See for example New South Wales Government, Future Directions for Social Housing in NSW, New South Wales Government, Sydney.
11. Housing Tasmania 2015, Tasmania’s Affordable Housing Strategy 2015-2025, Department of Health and Human Services, Hobart.
12. Commonwealth Housing Commission 1944, Final report, Department of Post-War Reconstruction, Canberra.
13. Australian Institute of Health and Welfare 2016, Specialist Homelessness Services 2015-2016, <http://www.aihw.gov.au/homelessness/specialist-homelessness-services-2015-16/>, accessed 12 July 2017.
14. Hodgman W and Gutwein P 2017, op cit.
15. Planning Policy Unit 2017, Visitor Accommodation — Use of Existing Homes, Shacks and Investment Properties, Fact Sheet, June, Department of Justice, Hobart.