Airbnb revolution faces old world rivals’ backlash

It is just eight years since graphic designers Joe Gebbia and Brian Chesky sought to pay the high rent on their San Francisco loft apartment by renting out air beds on their floor to visitors. Since then Airbnb's growth has been exponential and the company is now valued at €30 billion – not a bad return for its founders who still privately own it.

The scale of Airbnb’s growth was highlighted by an extraordinary interview on Liveline last week in which one host, Séamus Murphy, said he lets out 40 rooms through Airbnb despite owning none of the properties. He claimed all the landlords know what he is doing, but one contacted the programme to say she never gave her permission.

It’s a reality of Airbnb’s rapid growth that, along the way, it has accumulated powerful enemies. CNBC lists Airbnb as the second biggest disrupter of traditional business in the world after Uber, the taxi-sharing app.

The authorities in Ireland, like those in many countries, are only now beginning to grapple with the phenomenon. There are 6,000 Airbnb apartments for rent in Dublin alone, out of 15,000 nationwide. This is a huge chunk of the rental market which is already straining under unprecedented demand.

Anti-social behaviour

The short-term letting of apartments has begun to cause difficulties for existing tenants in apartment blocks. Because of anti-social behaviour and the constant stream of visitors and cleaners coming in and out, the 2,000 residents at the Spencer Dock apartments on Dublin’s north quays have been told short-term lets are contrary to their residential and tenancy agreements.

The impact of lost revenue for traditional hotels and bed-and-breakfast providers is also a significant factor, although it is a bigger issue in other cities which charge hotel tax.

The real catalyst for intervention in Ireland has been the impact on rent and property prices in popular tourist areas. Residents in Temple Bar had enough when they recently took a case against an apartment owner who put a €425,000 valuation on a two-bedroom property in Crown Alley. The valuation was 54 per cent higher than the average (€275,000) for similar apartments and reflected the increased yield from Airbnb in comparison with renting.

An Bord Pleanála upheld a Dublin City Council planning decision that the property had undergone a material change of use due to its Airbnb activity and was not exempt from planning regulations. An Bord Pleanála has stressed that the ruling is specific to the site in question, but it is likely to set a precedent for other objectors.

It remains to be seen if this will act as a brake on landlords tempted to let or sell their properties with Airbnb in mind rather than through the rental sector.

One auctioneer, who did not want to be named, said Airbnb was a “no-brainer” for landlords in areas like Temple Bar. “Why settle for €1,000 a month rent, when you can get €2,000 to €3,000 on Airbnb?” he said.

Earning €70,000 a year

The Institute of Professional Auctioneers and Valuers (IPAV) chief executive Pat Davitt said he had heard of one apartment with a yield of €70,000 a year on Airbnb. "Some of the landlords are taking their properties out of the system and they are renting them on Airbnb all the time. They have to rent them a lot less to get more money."

There is now a sense of urgency about regulating the Airbnb market. Dublin City Council has made a submission to the Department of the Environment stating that letting an apartment on a continual basis for Airbnb ought to be classified as a change of use and a breach of the planning regulations. The Minister for Housing Simon Coveney has promised clarity.

The Residential Tenancies Board (RTB) said it is “self-evident” that Airbnb is having an adverse impact on the stock of properties to rent. It says it is working with the Department of the Environment on a strategy for the rental sector to be published by the end of the year.

Solicitor Brendan Slattery, who specialises in planning law, said authorities everywhere have been reactive rather than proactive about dealing with Airbnb. He cited a study in The Irish Times recently in which the four local authorities in Dublin gave four different answers as to how the planning laws should affect Airbnb.

Slattery believes that amending planning is a crude way of dealing with the issue. Instead, he recommends that Dublin adopt the London model in which property owners are allowed to use their properties for Airbnb for 90 days a year.

For its part Airbnb says it is willing to work with policymakers. Spokesman Peter Huntington likened the changes in regulation to deal with Airbnb as akin to the rules of the road when the car replaced the horse and cart.

"We know hosts want to follow the rules and we want to help," he said. "Already we have worked with policymakers in Europe and around the world on clear housing-sharing rules – including London, Paris, Amsterdam, Hamburg, Milan and Lisbon – and we look forward to doing the same in Ireland."