Your Money

Why the new Airbnb regulations are unlikely to work

The rules are intended to help ease the housing crisis. But can they be enforced?

Airbnb visitors in Dublin. Photograph: Cyril Byrne

Fiona Reddan's face
Fiona Reddan
Wed Jun 19 2019 - 05:27

In March a company called Irish Investment Consulting applied for planning permission for a development on Arran Quay in Smithfield. The investor was looking for change-of-use permission to convert the historic five-floor, above-basement property into a coffee shop at ground level, and to switch the the upper floors from residential use to short-term letting. The application was presumably in expectation of the imminent introduction of regulations for the sector on July 1st.

The response from Dublin City Council, just two months later, was both speedy and definitive. It rejected the application outright on the grounds that it would be contrary to planning goals, as it would result in the loss of long-term residential units from the market.

The council also expressed concern – mindful, perhaps, of the deluge of applications that might yet come in the early days of the new regulations – that allowing change of use from residential to short-term letting would set a “precedent”.

But what does this decision tell us about the Government’s imminent plans to regulate the short-term lettings sector?

READ MORE

After much toing and froing, Ireland will for the first time have a regulatory structure in place for short-term lettings from July 1st. It’s about time, some might argue, given the explosion in the short-term lets market, particularly in urban areas such as Dublin where hosts who are exempt from rent controls are earning more than €200,000 a year on some properties.

Under the new guidelines, hosts or landlords with properties located in rent pressure zones must either register with their local council or apply for change-of-use planning permission.

Registrations are limited to people either renting out a room in their home or letting their entire home for 90 days or less. However, if you want to let your home for more than 90 days, or if you’re a landlord and have been letting out a second property on a short-term basis, you must apply for change-of-use planning permission, either on a new or retention basis.

Will they work?

It’s not the first time the Government has sought to put some manners on the housing market. In 2016 new rent controls were introduced; but they have largely served to keep existing tenants in their homes while rents for new – and existing – properties soared, as many landlords simply flouted the rules or availed of their many exemptions.

The fear now is that these new planning rules for Airbnb properties look set to join the rest of Ireland’s heavy tome of earnest but unenforced regulations.

As the planning refusal cited above indicates, it’s now very clear to landlords that councils are very unlikely to grant their change-of-use permission.

Looking at planning applications for short-term lets with Dublin City Council over the past year, we found that, while the total number of applications were fewer than 20 (so landlords obviously are not even bothering applying), and decisions are still pending on some cases, the vast majority were refused on similar grounds to Arran Quay above.

Just two had been approved, and the council expressed reservations on one of those but decided to sanction it on the grounds that it would result in the “creation of a better-quality residential unit, which could be returned to the residential housing stock in the future”.

With such an approach, it should mean that landlords unable to regularise their properties for Airbnb lets will have to limit themselves to letting a room in someone’s home or letting out the entire property for no more than 90 days a year. They will have to switch either to long-term lets or get out of the market altogether.

But is this really likely to happen?

Perhaps not. First of all, landlords can evade the regulatory net by letting on a short-term basis but for longer than 14 days. If you are letting to summer students or corporate lets for longer than two weeks, the regulations won’t apply to you.

Not legally compelled

And even if that doesn’t work, you might be covered by another exemption; if you’ve been in the Airbnb business for seven years or more, the council may be “statute barred” from any enforcement proceedings against the property. Although the Department of Housing says landlords “are always encouraged to regularise their position”, they won’t be legally compelled to do so. So why would they bother?

And then there are those who will bet on simply not getting caught. After all, where the rent controls arguably fell down was in enforcement.

While the penalties for non-compliance may be steep(ish) – a maximum penalty of €5,000 or six months imprisonment, or both – the job of enforcement will rest with local authorities. And the question remains as to whether or not they will be adequately resourced to deal with the 3,000 or so properties in Dublin (according to figures from AirDNA) that may be in breach of the new regulations.

Dublin City Council told us that it will be enforcing the new regulations with the same resources it has now. While the response to a request for “appropriate resourcing” to the Department of Housing was positive, it says it is still “awaiting final formal sanction on the matter”.

So with just two weeks to go until the new regime is in place, it may be that we end up following the example of Kansas City. It introduced similar regulations in February 2018. But their impact has been muted: earlier this month, the local planning authority said it hadn’t even begun to start enforcement because it simply did not have the resources to do so.

Framing regulations is the easy part; enforcing them is something else entirely.

  • This article was amended on July 8th, 2019
LATEST STORIES