Subscriber OnlyOn The Money Newsletter

Airbnb under fire: Housing crisis means the rules for hosts are getting tighter

On The Money: Short-term letting provides a great opportunity for holidaymakers and landlords but it is a mixed blessing for Government

Short-term holiday letting is an increasingly complex business for landlords. Photograph: iStock

Dominic Coyle's face
Dominic Coyle
Fri Jul 28 2023 - 11:40

The arrival of Airbnb was one of the great democratising moments in the tourism sector. As holidaymakers’ search for the authentic on their travels became a growing priority and hotels became ever more bland and anonymous, it offered a modest slice of adventure. You could spend your stay with an actual local family or rent a real home in local neighbourhoods in destinations of your choice.

It wasn’t that homestays and holidays off the beaten track had not existed before Brian Chesky, Nathan Blecharczyk and Joe Gebbia founded what was originally called AirBedandBreakfast.com but they were very much a niche market known only to the cognoscenti. Suddenly such options were made available to the mass tourism market, offering an endless variety of experience, generally at prices cheaper than you would pay for the hotel alternative.

The homesharing market has come a long way in the intervening 15 years. And Airbnb and the many other companies now offering similar travel options have gone from being industry disrupters to operations so big that governments and local authorities are now putting in place rules to limit their further expansion, or even roll back the clock somewhat. Their success has created a social and economic headache for many local authorities.

Put simply, for hosts / landlords, especially in city centres and tourist hotspots, the rental income they can achieve through short-term holiday letting is well in excess with what would be available to them on the increasingly tightly regulated long-term residential rental market. But, for planners, the priority is to ensure there is sufficient housing available in the private market to avert or stem a housing crisis.

READ MORE

Ireland is not the first country to look to clamp down on short-term letting – it only really started taking action four years ago – but it is getting increasingly aggressive in its efforts to do so.

So what does all that means if you have a room in your home you are looking to earn money from, or a full apartment or house that you can let out?

What regulations are in place in Ireland for short-term lets and putting your home on Airbnb?

Regulations put in place by the housing minister Eoghan Murphy in July 2019 exempted short-term lets in a person’s main home from the need for planning permission as long as the property had no more than four bedrooms to accommodate no more than four people in each. There was also a stipulation that the property could be rented out for no more than 90 days in a year.

There are also exemptions for people whose property is not in a rent pressure zone, where properties are used for corporate or executive lets, those only using the rent-a-room scheme or, importantly, where you are homesharing – i.e. you are letting out individual rooms to short-term holiday tenants while you are still living in the house.

If the property is in a Rent Pressure Zone and was not their main home – their principal private residence in Revenue speak – you need planning permission. Even if it is your main home, planning permission is required where the home is let out for more than 90 days.

Many people presume that rent pressure zones relate only to the main urban centres but, since the concept was first introduced in 2016, the number of zones has continued to increase and will include many areas people never saw as likely to be covered. They can be entire local authority areas or more limited to specific local electoral areas within councils. As recently as March of this year, Westport local electoral area became the 54th rent pressure zone around the State.

How has those restrictions worked out? Not great, if a report from my colleague Olivia Kelly earlier this year says anything.

She wrote that just 36 property owners had sought permission for short-term letting of houses and apartments since the 2019 regulations came into force. The city council was investigating around 1,600 Dublin properties on suspicion that they were operating as illegal short-term lets.

Presumably, part of the issue is a clear view that permission is not very likely to be forthcoming. Of the 36 applications to date, only eight were approved.

For now, you can dodge the planning rules on short-term lets in a rent pressure zone by letting the property out for a minimum of 15 successive days at a time, but that’s a very different market than Airbnb.

Others try to stay under the radar by avoiding listing their properties on any of the dedicated websites and availing instead of alternatives like Facebook Marketplace.

It’s not all plain sailing for people whose properties are exempt under the regulations. While they may not need planning permission, homesharers and those letting out their family homes for less than 90 days in the year, do still need to register with their local authority. This comes via a Form 15 which you can get from your local authority. It has to be filed each year – ideally within four weeks of the start of the year but certainly at least two weeks before you accommodate your first holiday tenants.

You will also need to file a Form 17 – again available from your local council – at the end of the year or, more practically, by January 28th of the following year.

And if you were planning of availing of the exemption on lets of 90 days or less cumulatively across the year and find yourself tipping over the threshold, you will need to file a Form 16 with the council within two weeks of exceeding the limit.

Can I let out a room this summer?

That all sounds like a lot of work but the truth is that there is more red tape on the way.

The Planning and Development, Maritime and Valuation (Amendment) Act 2022 allows the host/landlord to be fined if they do not have the appropriate planning permission unless they are exempt from such permission. The penalties under planning law for those ignoring enforcement can be onerous enough – up to €5,000 or six months in prison on conviction, with provision for daily fines of up to €1,500 thereafter if the offending continues.

Subsequent legislation – the Short-Term Tourist Letting Bill – will make it an offence for anyone offering accommodation for periods of up to 21 days not to register with Fáilte Ireland – whether they need planning permission or otherwise. Hosts/landlords can be fined €300 a time over failure to register and the platforms – Airbnb, Expedia and others – will be subject to a stiffer €5,000 for every listing they carry without a valid Fáilte Ireland registration ID.

That will place the onus on Airbnb and its peers not to permit properties to advertise on their sites if they have not got the correct permissions in place.

The legislation was due to be in place in March but it has been delayed in a European Union oversight process and will not now become law before December at the earliest.

The failure of the Minister for Housing to enact the earlier planning legislation provision is quite possibly connected with that. It is hard to see why it would not otherwise already be in place, given the pressure on ministers to do everything they can to address the housing crisis.

One way or another, it is clear that short-term letting – certainly of entire homes – is going to be increasingly restricted going forward. Government policy is clearly focused on bringing thousands of property in the short-term letting market back into use for longer-term rent.

Hosts/Landlords determined to persevere with the Airbnb model can look forward to ever tighter rules and ever more paperwork. And that’s before you even start thinking about taxation.

You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.