Airbnb-style rental: Proposed framework should ensure fairness for opposing homeowners, experts say

SINGAPORE — While property experts and some homeowners generally welcomed a proposed new category for apartments to be leased out Airbnb-style, there are concerns about how fair it will be to opposing owner-occupiers who will have to put up with the disamenities.

This is especially so in developments where a significant proportion of units are owned by investors out to maximise their rental yields, and would thus be eager to have their condominium come under the proposed short-term accommodation (STA) category.

The draft regulatory framework by the Urban Redevelopment Authority (URA) — which was released for public consultation on Monday (April 16) — will need to be further refined, in order to prevent potential disputes and tensions between residents that are frequently witnessed during en bloc tussles, homeowners and experts said.

Under URA’s proposals, owners of private residential properties could be allowed to lease out their apartments for short-term stays under the new category, provided there is approval by at least 80 per cent — calculated in terms of share value — of the owners. The endorsement by the management corporations (MCSTs) will be valid for two years, and needs to be renewed with an updated vote count each time.

Currently, private residential properties in Singapore are subject to a minimum stay duration of three consecutive months.

Madam Pauline Lim, 52, a homeowner at Water Place Condo for six years, said she is “reluctant to welcome Airbnb tenants” to her condominium.

While she felt that the 80 per cent rule is “fair” because it reflects the will of the majority, she suggested additional layers of protection such as allowing homeowners to collectively rescind the MCST’s endorsement instead of having to wait two years should the experience of leasing out the units turn awry.

The majority who said yes could also be made to pay more for the facilities and maintenance fees, suggested Madam Lim, who noted that the proposed framework will allow some owners to lease out their units to the many tourists visiting Singapore each year.

Mr John Lin, 34, who has been living at Ritz Regency for two years, cited safety issues, excessive noise, a lack of privacy and improper care for the condominium’s facilities as the many reasons why he does not welcome short-term stayers.

“I think the short-term accommodation status should apply only to new condominiums. We (existing owners) did not sign up for this… it is unfair to put it to a vote, even if it is an 80:20 ruling.”

MORE ‘WARS’ AMONG NEIGHBOURS?

Currently, for en bloc sales to go through, consent from at least 90 per cent of the owners is required at developments under 10 years old. Older buildings need to obtain at least 80 per cent consent.

Property experts noted that the ugly scenes played out at condominiums across the island whenever an en bloc fever is sweeping through could be seen more regularly under the proposed regulatory framework for short-term stays.

Mr Eugene Lim, key executive officer of ERA Realty, said the new framework “grants flexibility” to homeowners and there is an additional layer of safeguard in the form of URA’s approval, which has to be sought after MCSTs get the required level of consent.

“It might however, lead to disputes among homeowners (as seen in some en bloc cases) if the homeowners are unable to come to a consensus,” Mr Lim reiterated.

Some forms of regulations and controls are important to balance the interests of the majority and the opposing homeowners, said Associate Professor Sing Tien Foo from the National University of Singapore’s real estate department.

Noting that it “may not be easy” for a condominium to achieve 80 per cent consent, he added that those who are reluctant could be incentivised with reduction in their maintenance fees for example.

Concurring, Ms Christine Li, head of research at Cushman & Wakefield Singapore, said those who wish to rent out their units to short-term stayers could offer to pay significantly higher maintenance fees to compensate for the disamenities suffered by their neighbours.

Should the framework be imposed, Ms Li expects only a small pool of properties to eventually obtain STA status, given that it is unlikely that many owners bought their units with the intention of leasing them out for short-term stays.

Mr Ku Swee Yong, chief executive of International Property Advisor, also flagged concerns about faster deterioration of properties that are used by “transient” users. He suggested that residential shophouses, apartment blocks or condominiums with fewer than 50 units be excluded from the new category. Smaller projects with fewer apartments will face higher “disturbances” compared to larger developments, he said.

Overall, most of the experts believed that the proposed framework will add vibrancy to the private property rental market, and allow private homeowners to generate additional income.

Already, some owners are looking forward to it.

Ms Olivia Lee, 29, who owns an apartment in The Skywoods at Dairy Farm Heights, said: “I think that my condominium’s environment would be lovely for environmental enthusiasts as I live close to the Bukit Timah Nature Reserve."

She added that she was not concerned with noisy short-term stayers for instance as her condominium is “less likely to attract party-animal types” due to its location.