Why AirBnB and strata living may never peacefully coexist

A few weeks ago we published an article exploring why onsite managers might want to consider jumping on the AirBnB bandwagon. It featured a number of pro-AirBnB comments we’d received from our members, many of which centred around the positive effect it had had on their revenue.

But on the other side of the coin, we also received a substantial response from the opposing camp. The picture they painted was far from rosy – in fact the overall impression was that, as this article’s slightly sensational-sounding headline might suggest, AirBnB and strata living might never be able to peacefully coexist.

This isn’t to say that all short-term rentals are incompatible; many of our members themselves run mixed-use complexes quite happily. It’s AirBnB we’re focusing on, and as we’re about to explain, they are two very different kettles of fish.

We’re talking about the way AirBnB is relentlessly spreading through strata-titled residential buildings, and how this has impacted those who manage them.

Sharing a home vs. creating a hotel

At its core, this issue is about definitions and the way the AirBnB issue is thought about and talked about.

AirBnB sells itself as being a way for friendly locals to bring in weary travellers and give them a personal experience, but this goes out the window when you have multi-storey apartment complexes being “hosted out” on a commercial scale as what can only be described as hotel rooms. Or maybe serviced apartments, depending on how hands-on the owners are.

For onsite managers and resident owners in these types of developments, this is the same old question of common areas and how one owner’s actions might impact on everyone else’s. And at the top of that list is the issue of unknown people having free reign throughout a complex’s common areas.

Stranger danger

Short-term rentals and long-term residential living don’t mix well when you have high guest traffic in a place with a significant proportion of owner-occupiers.

One of our managers oversees an 88-unit complex in Toowong in Brisbane’s inner west, which she describes as “close knit and secure”. Two of the owners are AirBnB hosts, and their guests reportedly create a disproportionate amount of trouble.

“We have two owners who insist on doing AirBnB, and both the committee and myself are unhappy about it. When AirBnB-ers come in here, they have no vested interest in their behaviour on site, and seem to think they are ‘untouchable’.  The last lot we had in here made an awful noise at night for the poor resident next door and would park their car at an angle so it impeded access in the car park,” she said.

Another manager from New Farm wrote:

“Owners provide security keys to AirBnB guests and building managers have no knowledge of who is coming and going. They bring their family and friends to the unit which causes noise, security and parking issues.

“We even once got drenched by Airbnb guests and their invitees when we asked them to leave the pool (they had alcohol in the pool).”

“In our experience, generally by-laws are always broken, prams are left on common property, rubbish gets dumped anywhere due to lack of knowledge about the complex, and then there are the pool issues, parking issues – it all makes for an unhappy complex when the AirBnB guests arrive.”

Managers who are used to running holiday rentals or motels might be more accustomed to the nature of short-term tenants and the way they use (and misuse) common areas. But for those who manage residential complexes where dwellers understand their responsibilities under the by-laws, the additional work of policing for poorly behaved AirBnB guests is an unwelcome extra load, not to mention a strain on the other owners and tenants in the complex.

This is why definitions are important. There’s a huge difference between having an exchange student using a spare room in your suburban house versus having to deal with week after week of party groups smashing bottles in the communal pool.

And to add insult to injury, there’s almost nothing managers can do to change the rules, let alone enforce them.

No legal leg to stand on

No one disputes the fact that people should be allowed to use their own home in whatever way they see fit. After all, renting out an investment unit to a 12-month tenant is introducing strangers in just the same way as AirBnB, right?

Sort of, but the key difference is the volume of people movements, and their accountability for their behaviour.

It’s difficult to form a law-based response to this kind of problem. AirBnB and its effects are spread across numerous legal grey areas, from council zoning to residential tenancy and committee by-laws.

Unfortunately, by-laws are a non-starter. Queensland’s BCCM Act states that, “if a lot may be lawfully used for residential purposes, the by-laws can not restrict the type of residential use.”

NSW tells a similar story: “…no by-law can prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing relating to a lot… if a lot may be used for residential purposes, the by-laws can not restrict the type of residential use to which it is put.”

Nowhere in Australia has specific legislation to cover the intricacies of AirBnB (although they’ve tried!), so most arguments end up falling under the short-term letting laws of each state, which is a problem because most of these laws are outdated, to put it mildly.

AirBnB’s own spokesperson said it best:

“At present, the rules for home sharing in NSW aren’t fit for purpose. Right now, we have a confusing and complex patchwork of rules that were written well before the internet even existed.” You can say that again.

State governments have tried in vain to legislate on short-term letting in shared residential complexes, but so far none have succeeded. The latest NSW discussion paper, in an attempt to create a legislative middle-ground, is open for submissions for another few months, and there’s  a slightly smaller-scale information-gathering effort in QLD, however the existing rules are firmly on the side of owners – unless the manager has exclusive letting rights in the complex, or if a tenant is illegally subletting.

Although it’s far less common than investor-driven whole-dwelling AirBnBing, unsanctioned subletting is the most feasible area where managers and committees have a chance to limit AirBnB, as  a manager of a permanent-only, 50-50 owner-tenant townhouse complex in Currumbin on the Gold Coast told us. He said that when he discovered tenants were listing on AirBnB, he responded by including a special condition in their leases. It worked.

“We took the view that we had a duty to maintain control over who occupied our investor’s units. If our complex had holiday letting then our view would be different but as we are 100% permanents and given some of the horror stories about AirBnB occupants, we feel justified in keeping a tight rein,” he said.

Another possible avenue is to pursue the argument that lot owners are responsible for the behaviour of their ‘guests’ according to most complex by-laws. Our Toowong manager considered this as an option, remarking that, “I suppose in a worst-case scenario, if the lot owners were to receive a breach notice from the Body Corporate, it might be enough to dissuade them from continuing to rent out.”

Owners, committees and managers may not have the law on their side, but as another small consolation, the owner of one lot in our New Farm example did complain to the Brisbane City Council and managed to get in touch with local councillor Vicki Howard. The end result was that the owner was issued a notice to cease AirBnB – a win that could influence the outcomes of future disputes.

The business impact

Aside from the annoyance of having rowdy guests in your common area, as long as AirBnB continues to take bona fide rental vacancies and turn them into short-term lets, there’s going to be conflict.

When one of their global head honchos was asked his opinion on his firm’s ongoing erosion of legitimate rentals, he said, “Part of that is up to the government to balance. How much is it benefiting from a tourist economy versus making sure you’re not impacting long-term house markets?”

Not enough, apparently. A recent study by Sydney University reports that 6000 whole homes have been taken off the market, and a total of 17,000 are using AirBnB in Sydney alone. In hot-spots like Kirribilli and Bondi, there are twice as many AirBnB listings than normal rental listings.

One might assume that this would drive rental demand (and therefore leases) up, but the level of saturation is so extreme that people are simply opting to move further out than compete with (or live amongst) short-term tenants.

It’s not only renters suffering – owners who haven’t joined the sharing movement are shying away from properties where they know AirBnB operates.

One email respondent told us, “We’re a Class 2 (permanent) building and do not agree to the practice of letting on AirBnB, and nor do most of the onsite owners. We have tenants and prospective buyers asking if short term letting is allowed, and they won’t come here if AirBnB is present due to their experiences in other buildings.”

Can’t we all just coexist?

In an ideal world, state governments would get their community submissions done and start enacting legislation to work out a fair, equitable and workable compromise that allows both pro- and anti-AirBnB owners to get a little of what they want. But if recent history is anything to go by, this isn’t something to hold your breath for.

Imagine what the lobbying and campaigning process would look like. On one hand you have onsite managers, owners’ corporations and other concerned stakeholders who are, for the most part, dispersed and not strongly unified. They discuss their concerns on public forums (like this blog) and if anyone from AirBnB were to read their comments, they’d know exactly what their competition were thinking.

On the other hand, you have AirBnB, a multinational company with deep pockets, persistent PR and lobbying, and a singular vision. It is a no-compromise business that isn’t here to make friends – it’s here to make money. One only needs to look to New York or Barcelona to see what amount of government pressure it really takes to get them to capitulate.

So all in all, it’s a gloomy picture, but there is still some light at the end of the tunnel. Keep a keen eye on your onsite owners and tenants and don’t give an inch. Stay on top of the government’s legislative changes, and start thinking about ways to cope if things don’t go your way. Then again, who knows – maybe they’ll oversaturate the market with supply, owners will stop making fast dough, and they’ll bounce back to long-term rentals again.

One can only hope.