Pandemic lockdowns crushed Airbnb, Stayz and other short-term rental operators but the market has bounced back sharply, creating tensions in popular tourist destinations between councils, community groups and well-heeled property owners. Callum Foote reports on the case of ritzy Byron Bay.
A powerful lobby group for short-term rental providers, whose politically connected members oversee hundreds of properties, has nixed local council legislation and led to a community backlash and claims of profiteering at the expense of a housing supply and cost of living crisis.
Short-term rentals offered by platforms such as Airbnb and Stayz spread quickly throughout Australia. They delivered easy choice and competition for accomodation for tourists but councils are now grappling with a backlash from residents who say they are in part responsible for a housing supply crisis and rising living costs in the regions.
Byron Shire Council was recently refused the right to limit the number of days a residence can be leased out as a short-term rental on platforms such as Airbnb to 90 days.
Minister for Homes Anthony Roberts gave a commitment Council could limit short-term rentals to 90 days per year in the run-up to the last NSW election then reneged on that promise and intervened to stop Council from implementing its own policy.
The council argued that the unlimited leasing of short-term rentals has shrunk the housing stock in the plumb tourist destination putting pressure on housing affordability and the community at large.
One of the major players behind the campaign against the council cap was the Australian Short-Term Rental Association (ASTRA) is the largest lobby group for owners and managers of short-term rentals, the kind you see listed on platforms such as AirBnb and Stayz.
Powerful ASTRA lobby prevails
ASTRA ran a campaign ‘Byron deserves better’ against the council’s decision. Byron Deserves Better raised $40,000 in August last year and engaged in extensive lobbying efforts writing to the minister 23 times according to the Department of Planning Industry and Environment.
ASTRA chairman Rob Jeffress told his members that the 90-day cap “would destroy an important local service, making it untenable for property owners to offer their homes, and removing a valuable contributor to the local visitor economy”.
The board of the lobby group are heavily involved in the market. Jeffress the chair is said to account for 700 listings across the 13 property entities he lists himself as either being a director or a partner in.
Other members of the coalition against Byron Bay’s council decision are Colin Hussey and Sarah Workman from short term rental company ‘A Perfect Stay’ which manages over 300 homes in the Byron Bay region. Workman is a former Byron Shire Council economic development officer.
Joining the campaign too was Zsuzsannah Handelsmann, ASTRA Treasurer and the business manager of Private Property Pty Ltd, one of Rob Jeffress’ companies, along with Yoav Tourel, the ASTRA Vice Chairman.
ASTRA and Rob Jeffress declined to respond to queries regarding their campaign against the Byron Shire Council.
Online travel agency TripADeal co-founder Norm Black also opposed the cap. In 2020, TripADeal sold a 55 per cent stake to private equity firm BGH Capital. In May this year, Qantas also bought a stake in the company, with options to acquire the whole business in four years.
Backlash by Neighbours Not Strangers
Trish Burt, convenor of Neighbours Not Strangers, a grass roots nation-wide community advocacy group, says that until recently Australian state governments took a harder stance on short term rentals.
In NSW, our Land and Environment Court has consistently, until the inception of Minister Rob Stokes’ 2021 Short-Term Rental State Environmental Planning Policy, judged the mixing of residential housing with short-term rentals ‘fundamentally incompatible’ and a failure by Council to enforce residential zoning as an ‘effective abrogation of its fundamental duties and responsibilities’.
According to Burt, governments are being lobbied by online booking platforms and commercial STR organisations such as ASTRA while “many MPs and other legislators are quietly profiteering directly from the commercial short-term rental of their investment portfolios.”
Neighbours Not Strangers calls for increased regulation on residential zoning. However, ASTRA denies that short-term rentals influence housing affordability arguing that there aren’t enough rentals on the market to make a difference.
Tourist locations hit hardest
This may be the case for many regions but perhaps not for choice tourist locations such as Byron Bay. However according to Dr Thomas Sigler, Associate Professor and Deputy Head at the University of Queensland School of Earth and Environmental Sciences, the impact of short-term rentals on overall housing supply is minimal,
“I would say that focusing on short term rentals is a policy red herring” Dr Sigler said, “It distracts from the real issues which are about supply and household formation in housing supply. The first major data point number that I point to is that the number of short term rentals in Australia has dropped by around 30% from pre-pandemic highs in December 2019.”
Short-term rentals peaked at 400,000 in December 2019 and by mid-2022 had dropped to approximately 260,000 according to research group AirDNA. “This represents from around 4% of the National housing stock to near 2% being taken up by short term rentals” says Dr Sigler.
City rentals a different proposition
The drop has varied between areas, with the biggest drops being seen in major cities. “The places where short term rentals have remained steady have been peri-urban areas such as the Blue Mountains, the Sunshine Coast and the Central Coast – high amenity areas where people want to work from home,” says Sigler.
Leo Patterson Ross, CEO of the NSW Tenants Union largely agrees “short term rentals have been incredibly damaging impact in regional towns because there is an already fairly small pool of homes, and often there is a large proportion of properties that move onto the holiday rental market.
“This certainly predates Airbnb. The multinationals have certainly exacerbated the issue, but there are parts of NSW where it has been routine for years for people to have a residential tenancy for six months and then they are exited so the residency can continue as a holiday rental.”
A hybrid model
This model has become widespread. HomeHost, an ‘Airbnb management company’, started by Gabriel Sarajinsky, offers a ‘Hybrid Rental Model’. Where state government limits are imposed, HomeHost offers short-term rentals during peak holiday seasons and long-term rentals during tourist low seasons. In other words, tenants are evicted after a three or six-month residential lease and the home flipped back onto multiple short-term rental platforms.
Sarajinsky himself currently has 37 homes listed as short-term rentals.
However, this impact is far less pronounced in major cities. “There is certainly still an impact in the cities, but it’s much less strong, and I think the reason for that is in Sydney particularly the rents in areas where the Airbnbs or holiday rentals are most popular were already some of the most expensive in the country.
“So, the shift between holiday lettings and regular leases – one there’s more capacity for a city to wear that without it having as much of an impact. Most of the people in the city already couldn’t afford to live in Bondi or the CBD,” according to Patterson.
The short-term rentals that survived Covid were primarily from professional leasing operators such as those that Jeffress operates and ASTRA represents.
Professionalisation of the market
According to Dr Sigler, “I think of an amateur listing as someone who has one or two properties which are rented on an occasional basis. A professional lister is either a company or individual who does it for a living and has a very strategic financial motive”.
Increasingly there are entire apartment buildings in central Melbourne and Central Brisbane that are run by professional letting agencies that operate across multiple platforms.
In Sydney’s Millers Point stands the heritage listed Stevens Terrace. Zoned “general residential”, the former NSW Department of Housing building now comprises 11 separate dwellings. All 11 homes are listed on Airbnb by Zoja Miljevic, ‘Hospitality Manager’ HomeHost. All apartments list the same ‘Licence number’, issued by NSW Planning.
Research conducted by the Tenants Union in 2017 found that short-term rental providers who lease their house out for more than 60 days were more likely to be professional.
“The vast majority of properties that are listed for less than 30 days are more likely to be the personal users. Over 60 days a year you’re much more likely to be a commercial user.”
In the middle you have high end luxury listings, like former deputy premier John Barilaro’s property in regional NSW. Because that property is so expensive it’s quite premium it doesn’t need to be leased out all that often to be a viable investment.”
Much like the proposition of Byron Shire Council, the NSW Tenants Unions wishes to limit the number of days a property can be leased out as a short-term rental before additional approvals are required.
Media savvy operators
Operators within the short-stay rental market have been adept at framing their perspective through the media.
ABC News reported on the decay of rural town of Dalgety in NSW in August last year. A 20-minute drive from Jindabyne, Dalgety is losing essential services. The local public school, post office and its only café all closed last year.
According to the ABC report, land value in Jindabyne went up by 100% last year – the highest increase in the state with real estate agent Joan Bird quoted as saying “It was unexpected. And regional areas are struggling with that a little bit in terms of infrastructure, housing…”
According to Domain, in the 12 month period to 30 August 2022, Bird’s agency Alpine Country Properties had sold one residential dwelling for $1,580,000 and leased three residential dwellings. Meanwhile, Bird’s Snow Escape Holiday Accommodation site currently has 20 homes listed for short-term rentals.
Bird joined the board of ASTRA in 2018.
Whither regulation?
According to Dr Sigler, any additional regulation “needs to meet halfway.”
“A lot of the platform providers want regulation. I’ve talked to the policy team at Airbnb and they’re not anti-regulation at all. They’re anti-having a different regulation for every council. Australia has two or three thousand council areas.
“If we had a different regulation in each one, that is two or three thousand sets of different rules to comply with. The obvious outcome would be non-compliance.
“I’m also quite optimistic about short-term rentals” Dr Sigler says, “Because I think they represent broader societal transformation to more platform-based and digital ways of consuming. If you think about how cumbersome it is to rent with a property agent and the RTA guaranteeing the bond. All the different paperwork you have to sign, the contracts, there’s a lot of middlemen.”
The platformisation has eliminated a lot of that and the rating system ensured that quality. It’s not perfect, it’s not regulated yet. I’m very much pro-regulation. I think there should be clear rules but I think that those rules should be enforced at the state level not at the local level.
Callum Foote was a reporter for Michael West Media for four years.