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Time to act on short-term room rentals

When an American friend’s son visited Singapore for two nights recently, it was perfectly legal for him to stay with us, though we had never met him before. On the other hand, if we had advertised the same arrangement on Airbnb and he had paid for the room, we would have violated the law and could have been fined up to S$200,000 and jailed for up to 12 months.

The law needs to catch up with the Internet and it is time for the authorities to study the practice of short-term rentals enabled 
by sites 
such as Airbnb. Photo: Bloomberg

The law needs to catch up with the Internet and it is time for the authorities to study the practice of short-term rentals enabled
by sites
such as Airbnb. Photo: Bloomberg

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When an American friend’s son visited Singapore for two nights recently, it was perfectly legal for him to stay with us, though we had never met him before. On the other hand, if we had advertised the same arrangement on Airbnb and he had paid for the room, we would have violated the law and could have been fined up to S$200,000 and jailed for up to 12 months.

But this tenuous legal situation has not stopped those who do want to offer a room for a night from advertising their flats on Airbnb, Roomorama or other online platforms. A check on Airbnb one day last month showed that more than 1,000 rooms were available for short-term rental here, and Roomorama had listed more than 200 rooms.

Senior Minister of State (National Development) Lee Yi Shyan told Parliament recently that since last year, the authorities had received more than 500 complaints about alleged rental of private residential properties for less than six months. The complainants had cited privacy and security concerns due to the presence of transient guests, said Mr Lee.

The regulatory issues resulting from the online room-rental platforms are clearly not new. Airbnb has enabled people to rent out rooms since it was founded in 2008 and Roomorama, co-founded by Singaporean Teo Jia En, has been doing the same since 2009. These companies and an increasing number of competitors have linked millions of travellers around the world with local residents, including Singaporeans.

But renting out a room is not allowed in a number of other cities as well. In Airbnb’s hometown of San Francisco, for example, at least two regulations make private rentals of less than 30 days illegal and at least two lawsuits have been filed by local residents concerned about housing availability.

New York City has similar restrictions, though Airbnb said it was working with the Attorney-General there to decide whether to allow short-term rentals.

TAKING ACTION FASTER

Yet, around the globe, laws are starting to change. In February, Amsterdam became one of the first cities to approve a law that allows residents to rent out their homes for short periods. In March, France approved national housing legislation that allows residents to rent out their home without asking for permission from the local authorities. And Seoul, which has powered ahead and designated itself a “sharing city”, has embraced the concept.

The United Kingdom government is also supportive of short-term rentals by residents. In June, it proposed reforms that would eliminate rules preventing home owners from offering short-term rentals. UK Secretary of State for Communities and Local Government, Mr Eric Pickles, told The Guardian: “The Internet is changing the way we work and live, and the law needs to catch up.”

Taking action soon is indeed important. A study by researchers at Boston University showed that if Airbnb keeps growing at its current rate, with listings doubling every year, its market share could grow to 10 per cent in some cities.

In Singapore, Mr Lee told Parliament that while renting out properties for less than six months is clearly an infringement of the law, in the long term, the Government will need to study the implications of this growing trend. He noted that though the idea of sharing resources “is itself positive”, it comes at the expense of existing regulations that protect both consumers and service providers.

While it may be prudent to study the issue in the long term, many consumers feel that there are benefits and people continue to rent out rooms on a short-term basis to foreign visitors. Some may do so for extra income, while others may be motivated more by a desire to host and meet foreigners. It is not clear if those who do are aware of the law.

Perhaps it is time, then, for the authorities to study the policy more quickly. The first step could be to expedite the review that Mr Lee had mentioned. Since Airbnb and other services have been available for more than five years, there is a reasonable track record to assess and policymakers can also look into experiences in other cities. Another step is to use well-run surveys to find out how residents here feel about issues related to short-term rentals.

In the meantime, allowing a pilot in a few hundred or several thousand homes by home owners that register to offer short-term rentals could be helpful in assessing how best to accommodate the practice in Singapore.

Allowing residents to rent out rooms in the short term can enable people here to promote the country as a great tourist destination and broaden their perspectives through interaction with travellers from around the world. The need to bring in foreign labour may drop as well, since residents provide the services their guests need. As for security concerns, the fact is that Singaporeans have been renting out rooms to foreign visitors for some time with few, if any, major reported incidents.

As Mr Pickles said, the law needs to catch up with the Internet. Rather than studying the issue in the longer term, taking effective action quickly could be beneficial to home owners and travellers alike.

ABOUT THE AUTHOR:

Richard Hartung is a financial services consultant who has lived in Singapore since 1992.

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