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Grappling with housing disruption: how should planners respond to Airbnb?

Posted by on May 1st, 2018 · Affordability, Cities, Data, Economy, Government, Housing, Planning, Sydney

By Laura Crommelin. This article originally appeared in New Planner – the journal of the New South Wales planning profession – published by the Planning Institute of Australia. 

The explosive growth of digital short-term letting platform Airbnb poses plenty of challenges for planners, with the impact being felt across both urban and regional areas. But what exactly is the nature of the disruption caused by Airbnb, and how should NSW’s regulators respond?

Airbnb.com makes it easy to advertise a property for short-term rental—be it an entire home, or part of one (a private or shared room). It has fast become big business worldwide, and Sydney is among Airbnb’s top 10 markets globally. To date, however, the NSW Government has not followed global cities like Berlin and London in restricting Airbnb use. This may soon change, as the government reviews thousands of submissions on short-term letting, made in response to a recent Options Paper. The Options Paper itself followed a 2015 Parliamentary Inquiry, which heard input from industry, government and community stakeholders.

Numerous press reports have documented the diverse challenges Airbnb (and similar short-term letting platforms like Stayz) pose for regulators, from uncertainty under existing planning laws, to complaints about party houses and concerns about housing affordability impacts. At the same time, Airbnb provides a financial boost to tens of thousands of NSW residents, as well as the state’s economy more broadly—estimated at $115m in 2015. Airbnb also aligns with the NSW government’s collaborative economy strategy, which ‘forms a key component of the NSW innovation agenda. Regulatory responses must take all these considerations into account, as well as more pragmatic enforcement challenges (as efforts to regulate unauthorised music sharing sites have shown, restricting online activity is no easy task).

So how best to proceed? Our work studying Airbnb—including an ongoing research project for the Australian Housing and Urban Research Institute—points to two key tasks for regulators: first, establishing exactly the sort of disruptions caused by Airbnb (and other short-term letting sites), and second, gaining a clear understanding of the benefits these digital disruptions bring. In both cases, addressing these challenges requires information that is not easily accessible. This data access issue highlights a far broader challenge posed by the digital revolution, and one we must address if the benefits of the smart cities
transformation are to be shared equally.

Detailing the disruptions caused by Airbnb

A key challenge facing planning officials is the diverse range of problems Airbnb poses, including:

  • amenity issues for nearby residents when properties are used as ‘Airbnb
    hotels’ and ‘party houses’;
  • increased insurance and management costs for body corporates where Airbnb
    is used in strata-titled properties;
  • Airbnb rentals being used for illegal purposes, including unregistered brothels
    and informal boarding houses; and
  • impacts on the availability and affordability of housing in areas with significant Airbnb use, where many properties have become permanent short-term rentals.

Mapping of Airbnb use in Sydney has shown clustering of properties in three main areas: the CBD and surrounds; the eastern beaches; and the Manly peninsula. This means certain areas of Sydney bear the brunt of the Airbnb phenomenon. Furthermore, these are areas with large quantities of high density housing, meaning strata management issues and increased risk of neighbour disruptions.

Regulatory efforts need to recognise and address these localised impacts, rather than simply assessing Airbnb at the city-wide or state-wide scale. To help with this, our forthcoming research will provide detailed mapping of the housing opportunities in the areas most affected by Airbnb in Sydney and Melbourne, including affordability metrics and socio-economic indicators.

Unpacking the benefits of Airbnb

Another challenge with assessing Airbnb’s impact is that few of the benefits claimed by the site have been independently tested, making it hard to assess their reliability. Detailed data on how and why Airbnb is being used is harder to come by. For example, Airbnb regularly claims that its purpose is to facilitate ‘home sharing’, by allowing visitors to use excess housing capacity (a spare room, or a whole property while the owner is traveling). But it is clear that many users are running commercial operations, so their properties are ‘shared’ only with other visitors, not permanent residents. It is the latter category which raises housing affordability concerns, as these properties might otherwise be used as long-term rentals. Using data provided by the website AirDNA.com, we have calculated how many Airbnb listings in Sydney are likely shared  properties (either a partial property, or an entire property available for no more than 90 days a year), and how many are really full-time commercial enterprises (entire properties available for more than 90 days a year, or one of multiple properties owned by a single host). The results are:

Listings (% of total)
Traditional Holiday Let   5,084 (24%)
House Sharing                 15,960 (76%)
Total                                  21,044 (100%)

This analysis shows the majority of Airbnb use to be home sharing, but there is also significant commercial use of Airbnb. In our view, regulations should primarily focus on managing the latter.

Where to from here?

Our research goes some way towards unpacking the nature of Airbnb’s disruption, as does related work by researchers at the University of Sydney. In both cases, however, these analyses rely on incomplete datasets, as Airbnb has not made their data freely available for research or public use. Without it, as well as more extensive and independent engagement with Airbnb users, we’re left with a worryingly incomplete picture of Airbnb’s impact. This places researchers, regulators and the public at a disadvantage in trying to respond equitably and effectively to digital disruptions like Airbnb.

In the smart city, data is power, and anyone lacking access will find themselves at a disadvantage. As major corporations like Airbnb, Google and Uber play an increasingly significant role in shaping how our cities function, we need to ensure the government and the public are wellplaced to assess the impact of these digital disruptions and respond accordingly. Any smart city strategy that fails to ensure data access is arguably not smart at all, but likely to see growing inequality and reduced efficiency. In this regard, the Airbnb experience might be seen as a test case.

While tackling the housing disruptions raised here is an important part of the NSW government’s regulatory response, tackling the data access issue may well prove to be even more significant in the long run.

 

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