Tuesday, 24 May 2016

To Airbnb or not to Airbnb...

Can Singapore make room and rules for Airbnb and other home-sharing offerings?
As URA continues to study issue, residents and hospitality players remain divided
By Janice Heng and Yeo Sam Jo, The Sunday Times, 22 May 2016

From stylish apartments to cheerful single rooms, tourists in search of alternative lodgings in Singapore are spoilt for choice.

The website of Airbnb, a leading player in the home-sharing market here, has options such as a Kallang shophouse for $249 a night, a Tiong Bahru flat for $114 or a room in East Coast with queen-sized bed and balcony for a mere $48.

According to Airbnb, there are about 6,000 properties listed on its website here.

Other home-sharing websites have set up here as well, such as PandaBed and Roomorama.

Yet, it is currently illegal for private and public home-owners to lease their properties for less than six months.

While a few home-sharing site listings are for long-term options, most are for short stays, which means they are breaking the law.

The authorities are still trying to decide if rules should be relaxed for private properties.

From January to April last year, the Urban Redevelopment Authority (URA) held a public consultation to assess if this short-term rental policy for private properties needed to be reviewed.

But last Wednesday, more than a year on, the URA said it needs more time to consider the issue.

In the meantime, enforcement action will still be taken, it added.

Under current rules, private home-owners who lease their units for less than six months can be fined up to $200,000 and jailed for up to a year.


For Housing Board flats, there is no plan to review the short-term stay rules, which aim "to pre-empt high turnover of occupants, which could affect the living environment for HDB residents", said the HDB.

Such disruption is also why some private property residents object to short-term rentals. "Some Airbnb users throw their cigarette butts and cause a lot of inconvenience," said housewife Ruth Tiang, 50.

Residents are also worried about safety in general.

When dental assistant Rodelita C. Leng's family members travel, they use Airbnb. Yet, the 38-year-old resident of Vacanza@East in Kembangan would not like the same to happen here.

"If my neighbours register their units under AirBnb, anyone can just go in and out. This is not safe and secure for my two young children," she said.

Those who list their condominium properties on home-sharing sites often offer the use of facilities such as gyms.

Businessman Kenny Tan, 40, said guests are sometimes not as careful as residents.

He said: "We pay a premium for the security and the facilities. The treatment of common facilities by transient tourists will inevitably be worse than the owners'."

In 2013, 2014 and 2015, the URA received 231, 375 and 377 complaints on short-term stays respectively. From January to April this year, there were 161 complaints.


However, residents at condominiums such as the Soleil @ Sinaran in Novena and Vogx in Dorset Road - both of which have units listed on Airbnb - said they had not noticed disturbances. Others are more open to the idea of home-sharing, especially if the authorities regulate it.

Said 25-year-old housewife Meggie Liu, who lives at Casa Merah condominium in Tanah Merah: "I will support URA legalising it as I feel that owners have the right to make their own choices about their property."

Rules can be included to ensure that landlords take steps to screen their guests, she added.

Mr Yeo Tong Wei, 21, who is waiting to start university, said that welcoming Airbnb will help Singapore be a more immersive cultural hub.

"I think it's a very organic way of learning about the city and its inhabitants, as compared with hotels," he said.


The hospitality industry is another stakeholder whose views have been sought by URA.

The Singapore Hotel Association (SHA), for one, supports the status quo. Private home-owners could become competition for both hotels and serviced apartments, said SHA executive director Margaret Heng.

"Equally critical to the tourism industry in Singapore is how do we ensure safety, security and hygiene standards in private outfits" which are unregulated, she added.

This need to uphold tourism standards was echoed by hotels.

Said Royal Plaza on Scotts general manager Patrick Fiat: "Home-shares are inconsistent in service delivery and cleanliness standards, which will have an impact on the image of Singapore as a travel destination in the long run."

Said Regent Singapore director of marketing Jeff Crowe: "All of us benefit directly or indirectly from Singapore's reputation as a safe destination... Hopefully, (any) upcoming legislation will ensure new entrants are held to the same high standards required of the established hospitality operators."

Still, both high-end hotels and backpacker hostels told The Sunday Times they were not overly worried about direct competition.

"It's a different market that we cater to, where our guests are looking for luxury, as well as unique and special experiences," said a spokesman for Hotel Fort Canning, which offers packages such as a buggy tour in Fort Canning Park.

Shophouse The Social Hostel co-founder Mustaffa Kamal has even turned Airbnb to his advantage, listing some of his rooms there. "There's no point in fighting, so I leverage on it."


Ang Mo Kio GRC MP Darryl David compared the rise of home-sharing sites with other "disruptive innovations" such as private-hire services UberX and GrabCar, which have given commuters more transport choices.

Last month, the Land Transport Authority announced it will introduce regulations for these services. These include requiring drivers to apply for a licence.

Mr David, who is in the Government Parliamentary Committee (GPC) for National Development, said home-sharing could also have potential benefits for both tourism and home-owners, but it needs more study.

"Because these are disruptive technologies, we are forced to sit down and see how to incorporate them into our system," he said. "To ban them or to ignore them is not necessarily the best solution.

"You don't want to have this go underground."

GPC for National Development deputy chairman Chong Kee Hiong said that if short-term rentals are allowed down the road, then they should be subject to rules "that ensure equity among all stakeholders". The rules should also address safety and privacy concerns.

What about the fact that home-sharing sites still operate despite the current legal issues?

"My view is that it is not correct to say that since these sites are likely to continue, we should legalise it. This is putting the cart before the horse," replied Mr Chong, who is an MP for Bishan-Toa Payoh GRC.

If the rules against short-term rentals remain, then the authorities should further step up enforcement so owners are aware of the consequences, he added.

Additional reporting by Clement Yong, Jessie Lim, Aleysa John, Delphine Kao, Timothy Goh

Asia a fast-growing region for home-sharing firm Airbnb
By Yeo Sam Jo, The Sunday Times, 22 May 2016

Airbnb is perhaps the name most synonymous with home rental websites.

With about two million listings across more than 190 countries, the San Francisco-based firm is arguably the largest of its kind.

In 2012, Airbnb opened its Singapore office, which also serves as its Asia-Pacific headquarters.

It recently moved into a three-storey office in Cecil Street.

There are about 6,000 properties in Singapore listed on the website, an Airbnb spokesman said, adding that Asia is one of its "fastest-growing regions".

He said that home-sharing can support local businesses away from the usual tourist spots, and help hosts afford rising living costs and prepare for retirement.

Pointing to seniors who might have spare rooms in their homes, the spokesman said: "It provides them an extra source of income and an opportunity to welcome travellers from all over the world without leaving their home.

"They find great joy in being local ambassadors and continuing an active lifestyle."

Addressing the issue of security, Airbnb said safety tools such as detailed profiles and authentic reviews allow guests and hosts to "get to know each other before a reservation". "An example is our Verified ID system, which connects a person's offline identification (like a passport) with the online profile they've created on Airbnb."

Asked about Singapore's rules against rentals shorter than six months, Airbnb noted that more cities around the world are embracing home-sharing.

The spokesman pointed to South Korea and Dubai, which recently signed tourism-related agreements with Airbnb.

"We encourage Singapore to join this trend, and adopt fair and progressive rules to allow regular people to share their homes."

Extra cash spurs some to open homes to strangers
By Yeo Sam Jo, The Sunday Times, 22 May 2016

The chance to make new friends, a passive income and a weak rental market are among the reasons why people here offer their homes and rooms for short-term rentals even though the practice is illegal.

One such host on home-sharing website Airbnb told The Sunday Times that he started letting out his condominium unit at the end of last year as he found it increasingly difficult to find a long-term tenant.

The 56-year-old businessman, who asked to remain anonymous, said: "The rental market now is horrible. I started doing this to defray my mortgage and maintenance costs on the apartment."

To date he has hosted about 20 groups of visitors at his city-fringe condominium for about $150 per night. A four-star hotel in the same area could cost twice as much.

"Visitors to Singapore may not have the budget for luxury hotels and may not like hostels," said the businessman, whose guests include tourists and business travellers from countries like Britain, China and Malaysia.

"They like staying in a condo because it's almost like a hotel suite. They can even cook and do their laundry."

The host soon discovered other perks. "When I have time, I take my guests out and become their unofficial tour guide," he said. "I point out where the hawker centres are, what are the good dishes to eat - stuff which only a local would know."

An Airbnb "superhost" - an experienced host who has received good reviews - said he occasionally gets Singaporean guests over the weekend.

"They want to buy a place here and get a feel of the neighbourhood," said the 33-year-old, who lets out two rooms in his Buona Vista condominium apartment.

But most of his guests are foreign professionals and research students who are here for a few months.

"I like getting to know people from all over the world," said the tech start-up founder, who has hosted more than 40 guests from countries including Finland and Germany since June last year.

"When I travel, they even help me water my plants. We add each other on Facebook and some of them have become business contacts."

Another host, a 30-year-old nail artist and freelance travel planner, also said some of her guests have become good friends.

"I visited them in their countries and they welcomed me to their place without any charge," said the host, who leases out a spare room in her Balestier condominium.

But things are not always peachy.

"Some treat me like a hotel boy and want me to do everything for them," said the start-up founder.

The businessman host has had guests steal two towels from his apartment. Some others do not clean up after cooking in the kitchen, or leave the air-conditioner on when they go out.

"It's very time consuming. We have to be there to open the door for guests, clean up the house and get calls in the middle of the night from those who lock themselves out of the room," he said.

"I don't intend to do this for too long."

Berlin cracks down on home-sharing
Bid to stop websites like Airbnb from worsening housing shortage and driving up rents
By Neo Hui Min, In Berlin, The Straits Times, 21 May 2016

Mr Joel Westerheide used to rent out a room in his Berlin apartment on Airbnb, but he hosted his last guest over the weekend after a ban on such private holiday lets went into force in the German capital this month.

"I cancelled the rest of the bookings," said Mr Westerheide, who used to rent out the living room in his one-bedroom apartment to pay off his student loan, and later for extra income.

The new housing law that took effect on May 1 prohibits property owners and tenants from putting up more than half the floor space in their apartments for short holiday lets. Those who flout the law risk a fine of up to €100,000 (S$155,000).

Berlin authorities took the drastic step in a bid to stop home-sharing websites such as Airbnb, Wimdu and 9flats from exacerbating a housing shortage and driving up rents.

The crackdown came after similar action in New York.

The average monthly price of rental apartments in Berlin is nearing almost half - 45 per cent - of the country's median monthly household income, according to a survey by property specialist Immonet. That is far higher than the 30 per cent affordability rule that property owners apply when considering a tenant's solvency.

With rents in Berlin soaring by 50 per cent between 2011 and this year, from €6.17 to €9.29 per square metre for a 60 sq m apartment, officials are anxious to limit the surge.

"Apartments are for living in," said Mr Andreas Geisel, who is Berlin's senator for city development and environment, in a statement. "We should not have to explain, least of all to those looking for apartments in Berlin, why the illegal usage of apartments for commercial purposes should continue to be tolerated."

With property prices relatively low in Berlin compared to other key European capital cities, some speculators have bought apartments to put on the lucrative short-term rental market rather than lease them out to the city's residents.

Berlin authorities estimate that around 12,000 apartments are being illegally used as holiday lets.

But home-sharing websites are fighting back. Wimdu has filed a lawsuit at the constitutional court challenging the new rule in Berlin. It claims the law violates constitutional protection for freedom of occupation and property ownership rights.

Its competitor 9flats, which backs the lawsuit, has moved its operations to Singapore where it keeps its database of Berlin apartment hosts, shielding them from German authorities.

"To pass a law against what people want is fundamentally wrong," Mr Roman Bach, chief executive of 9flats, told The Straits Times.

Sites like 9flats feel that they are being made scapegoats for the failure by city authorities to build sufficient housing.

"There will be a shortage of 220,000 apartments by 2020, and putting 4,000 holiday apartments back into the market is just a drop in the ocean," said Wimdu chief executive Arne Kahlke in a statement.

Mr Bach said Berlin authorities have not tackled the root of the problem. "Numbers clearly show that the negligence of housing policy in combination with increased demand for properties in Berlin are driving up the cost of living," he said. "Rents will not go down if holiday letting is forbidden."

Airbnb defended its business model by releasing a slew of data showing that a typical host earns just €1,800 by sharing his space for 34 nights a year.

"And we hear from countless Berliners who couldn't afford their homes or the city if they could not share their homes," it said.

Others resent the authorities' meddling with the privacy of their homes. "I think I should be allowed to do what I wish with the apartment that I am living in," said Mr Westerheide.

For now, many apartments are still available as holiday lets, as hosts - and district authorities - take a wait-and-see approach before the verdict from the Wimdu case is given.

Others advertise just one room, as is permitted under the 50 per cent rule, and then offer more if asked.

Open policy on open doors in some countries
With short-term rentals growing in popularity with services such as Airbnb, Correspondent Walter Sim looks at the situation in other parts of the world.
The Straits Times, 21 May 2016


Japan has backtracked on guidelines to regulate home sharing, or minpaku, that a Bloomberg report said were issued in February. For example, hosts were allowed to rent to guests only for seven days or more, in a move aimed at protecting the hotel industry.

Business daily Nikkei reported last week that a new law has been drafted and is due to be tabled in the Diet by next year. The new law is said to be a full deregulation of short-term rentals, and will update rules that are almost 70 years old.


Current regulations prevent tourist and visitor accommodation in residential zones, but the Sydney city government has been pushing for softer rules, ABC News reported in February.

The proposal comes after a few homeowners were fined over A$1 million (S$995,000) in 2014, and will "balance the desire of property owners to sign on with providers like Airbnb with a wish to maintain the safety and amenity of neighbourhoods", the report said.


A law passed last year allows Londoners to rent their homes for up to 90 days a year without having to apply for special permission.

British Secretary for Communities and Local Government Eric Pickles said then: "The Internet is changing the way we work and live, and the law needs to catch up."


There are no laws against short- term rentals in China, which has its own equivalent of Airbnb - Tujia, an online apartment-sharing platform.


India's tourism ministry said last month it will review laws on home-sharing. There are now more than 18,000 homes listed on Airbnb in 100 cities - a 115 per cent growth over one year.


There are no laws banning short- term rentals, although falling occupancy rates have prompted a Johor hotel association to seek government intervention. The Johor Baru City Council in turn said no licence was required for owners to rent out their homes.

URA needs more time to study short-term stays issue
'No clear consensus' in public consultation on such stays in private residential properties, it says
By Yeo Sam Jo, The Straits Times, 19 May 2016

After holding a public consultation on short-term rentals last year, the Urban Redevelopment Authority (URA) said yesterday that it needs more time to review the issue.

Results of the consultation, held from January to April last year, were "split, with no clear consensus", the URA revealed.

"This issue on short-term stays is complex, multi-faceted, has wide- ranging implications and it warrants a careful and balanced review," it said, adding that it "needs more time to study the issue".

Last year, the authority conducted the consultation to assess whether there is a need to review the policy on short-term rentals in private residential properties.

It is illegal to lease a home for less than six months in Singapore. Private home offenders can be fined up to $200,000 and jailed for up to a year. Despite this, listings for short-term rentals have sprung up on home-sharing websites like Airbnb, PandaBed and Roomorama.

The consultation came in two forms. The first was an online survey open to the public, which ran from January to February and had about 2,000 respondents.

Discussions were also held with close to 100 stakeholders, including home-sharing portals, hotel and serviced apartment representatives, neighbourhood committees of private housing estates and condominium management corporations.

The URA said that while participants acknowledged the need to accommodate the demand for short- term home sharing, there was also "strong endorsement" of existing controls on subletting.

These controls are intended to "preserve the privacy and sanctity valued by the vast majority of home owners", it added.

Noting that hotel and serviced apartment operators are subject to business taxes and requirements to ensure the safety and well-being of their occupants, the URA said: "There was important feedback that any change in rules should ensure a level playing field."

It stressed that while the review is ongoing, the six-month rule still stands and enforcement will be taken against misuse.

In 2013, 2014 and 2015, the URA received 231, 375 and 377 complaints on short-term stays respectively. From January to April this year, there were 161 complaints.

A spokesman for Airbnb said: "We are disappointed that after more than a year since URA concluded its public consultation, there has not been a revision to URA's guidelines. We encourage Singapore to adopt fair and progressive rules to allow regular people to share their homes."

PandaBed chief executive James Chua, 36, hopes that any change in regulation will consider the interests of all parties involved. "There are tourists who find home-sharing a bona fide better alternative to hotel rooms," he said. "The regulations need to take into account what the Internet brings to the market."

Singapore Hotel Association executive director Margaret Heng said the consultation results indicate that there is concern relating to short-term rentals, especially in the areas of safety and security.

"The hotel industry shares the same concern as these two factors are critical for the continued growth of the tourism industry in Singapore," said Ms Heng.

A 43-year-old business owner, who wanted to be known only as Ms Chew, said the condominium unit next to hers has been used for short-term stays for a few years.

"This did not bother us until my daughter's bicycle was stolen from outside our house in January.

"I am not against short-term rentals but landlords should put in place adequate checks and balances, like making sure visitors are registered. I have three young kids in the house and am worried for their safety."

Freelance property broker Alex Poh, 62, said short-term rentals could be regulated "like Grab and Uber", referring to the ride booking apps. He said: "It'll boost tourism and be good for our economy."

To Airbnb or not to Airbnb...
As URA grapples with issue of short-term home rentals, here are some points to consider
By Chua Mui Hoong, Opinion Editor, The Sunday Times, 22 May 2016

Sometimes, the best regulatory response to emerging disruptive technologies is to stall.

Not rushing to regulate lets the market find its own level, and gives time for the disrupter, the incumbent, the consumer and other stakeholders time to adjust.

So I wasn't unduly surprised when the Urban Redevelopment Authority (URA) announced last Wednesday that it needed more time to review the issue of short-term rentals of homes.

It had conducted a public consultation exercise from January to April last year and said that views were "split, with no clear consensus".

"This issue on short-term stays is complex, multi-faceted, has wide- ranging implications and it warrants a careful and balanced review," it said, adding that it "needs more time to study the issue".

The lull gives the URA more time to study the issues and come up with a regulatory framework. It needs to balance the interests of those who want to let out rooms to tourists for income on home-sharing platforms, like Airbnb, with the interests of hoteliers and accommodation providers which are subject to licensing requirements; and the interests of neighbours who are entitled to peaceful living spaces.

It helps that other cities have grappled with the Airbnb challenge. Their experiences point to some sensible approaches the URA can adopt on common issues.


One criticism of Airbnb is that its renters do not pay occupancy or other government tax that hotel guests have to pay. Others say the income that hosts receive should also be taxed.

In Amsterdam, one of the first cities to legalise Airbnb rentals, the city council created a new class of "Private Rental" accommodation permitting home owners to rent their homes up to two months of the year to up to four people at a time.

Hosts have to pay income and tourist taxes. Complaints from neighbours over noise or nuisance will be investigated by law enforcement agencies.

Airbnb itself has been proactive in working with the tax authorities to collect room taxes : In its home city of Portland, Oregon, it added an 11.5 per cent hotel tax to all reservations. It is also collecting such taxes in San Francisco and Washington DC and remitting them to the cities in one lump sum.

A similar approach can be adopted in Singapore: Get Airbnb to impose an occupancy tax payable to the state and get the hosts to file their income taxes.


Unlike Uber or other car-sharing platforms, where passengers share space in a driver's car for just a few minutes of a commute, home-sharing platforms bring strangers together in a home for much more intensive interactions, which may fuel tension. Strangers may live for weeks in a host's property. Neighbours may object to living next to a unit with a constant flow of short-term guests.

Addressing neighbours' concerns is thus a big part of Airbnb regulation.

There is also concern about short-term rentals driving out long-term tenants. A landlord may prefer to rent out two bedrooms in his apartment for $100 each a night, for a potential $6,000 a month rent, rather than let out the entire apartment to a long-term tenant for $3,000. If more landlords then evict long-term tenants in favour of short-term ones in an area where housing is in short supply, housing affordability becomes an issue. Workers cannot afford to rent and live nearby.

Property prices may also soar, if commercially minded landlords are prepared to pay higher prices for apartments they intend to let out for high yields for short-term rentals.

A report by ING last month said that housing prices can increase by up to €100,000 (S$155,000) due to tourist rentals, as residents can get loans for higher amounts due to such incomes. It has become a political issue: Green party GroenLinks last Thursday said it would push for an Airbnb ban in Amsterdam, citing rising housing prices.

Some cities have dealt with this by requiring hosts to live in a property, and restricting the number of days a property may be let. This allows home owners to rent out rooms occasionally for extra income, but makes it commercially not viable for landlords to buy properties to start a short-term rental business.

London permits home owners to rent out their home or rooms for up to three months a year. Santa Monica, in California, requires a host to register for a business licence, live in the property during a renter's stay, and collect a 14 per cent occupancy tax to be paid to the city.

Similar rules can be implemented in Singapore requring hosts to live in the property, and limiting the number of days a place can be let to short-term tenants to, say, 60 a year.

The authorities here are unlikely to permit short-term rentals in Housing Board flats, which are primarily meant for owner occupation, given the issues with social cohesion, neighbourliness and security.

As for private properties, current URA rules do not permit rentals of under six months for residential units. But even if URA rules change to permit short-term rentals under some conditions (if landlords live on the properties, and for up to a certain number of days a year), those living in condominium estates have to consider their condo's Management Corporation (MC) rules.

Some MCs may pass bylaws to totally ban short-term rentals in their condo estate, for example.

Those prepared to allow such rentals may introduce additional rules, such as requiring hosts to register their units for short-term rental, and to pay a higher maintenance fee, since their guests can also use the common recreational facilities, and the constant flow of visitors may tax security services.

Letting MCs determine whether to permit short-term rentals in their estates may result in a segmented market, with some "Airbnb-friendly" condo estates emerging. These may attract investor-buyers rather than occupier-buyers.

This is where the URA will also need to set a cap on the total proportion of units permitted for short-term rental in an estate. This is essential to prevent commercialisation of residential blocks.


Hoteliers are unhappy that Airbnb rentals are not subject to the kind of safety regulations that they are subject to. This results in commercially run hotels incurring higher costs, so they can't compete on price with private room rentals by home-owner hosts.

The uneven regulatory landscape also affects tenants.

In a widely read article last November, journalist Zak Stone wrote about his father dying in an Airbnb rental home in Texas. His father was trying out a rope swing tied to a tree when the trunk of the tree collapsed and fell onto his head. He died days later in hospital.

In his feature, Mr Stone also highlighted the case of a Canadian woman who died in a Taiwan Airbnb rental home in 2013: "A leaking water heater placed on a fully enclosed balcony next to the room she was staying had filled the apartment with carbon monoxide. Her five friends staying in the adjoining room were hospitalised and survived. The apartment was being run as an illegal hostel by two men who lacked proper permitting, and didn't bother to install a carbon monoxide detector or conform to 'structural or fire safety standards'."

Mr Stone raised questions about Airbnb's minimalist approach towards safety of the homes rented out, questioning why it could afford to send professional photographers to help take pictures of hosts' homes, but not arrange for basic safety inspections.

There is also the issue of liability: Will the home owners' home insurance policy cover the damage in a guest accident? Many policies rule out liability for commercial activities.

Safety and liability issues are a potential minefield. Here, the Singapore approach can be to help facilitate an insurance scheme that covers such claims, while pressing Airbnb to come up with a safety checklist or even safety inspections for hosts.

Like Uber, Airbnb has unlocked tremendous potential in the sharing economy, matching people with rooms to spare at home, with travellers looking for a place to stay.

As an Airbnb guest myself, I have enjoyed the unique experience of living in locals' homes, and making friends as I travel.

But the truth is that such sharing platforms, while benefiting the direct host and guests, create externalities that neighbours, hoteliers and the neighbourhood have to endure.

This is why sensible regulation is needed. I hope the URA will come up with a framework of regulation before too long, and that Singapore joins the ranks of cities that permit short-term rentals, with safeguards.

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