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Proposed home-stay rules set the bar high for owners

Proposed home-stay rules set the bar high for owners.

After several years in the pipeline, a framework trying to balance Airbnb-style short-term stays and the associated disamenities is up for public consultation.

The main takeaway from the Urban Redevelopment Authority's (URA) suggestions yesterday was a 90-day rental cap, as long as owners holding 80 per cent of the share value give the nod to a change in land use.

At first glance, it appears to satiate both proponents and opponents of short-term stays, which, ranging from a few days to several weeks, are far below the current minimum requirement of three months.

Advocates say short-term stays provide an affordable alternative to hotels, while giving home owners a chance to earn a side income. Critics argue that transient visitors threaten the security and peace in a development they call home.

But even if the rules appear to strike a happy medium, the reality is that the fate of home owners looking to engage in short-term rentals is unlikely to change any time soon.

For starters, the new regulations set a high bar: The 80 per cent threshold is the same for most estates seeking a collective sale bid. Seeing how numerous collective sale tussles have played out, this is no easy feat.

Furthermore, in suburban areas where most developments are owner-occupied, owners are less likely to tolerate the frequent comings and goings of strangers.

Ironically, it is in suburban areas that home-sharing sites have argued they have an edge, by offering more authentic accommodation: Airbnb has previously shared that 85 per cent of its listings are outside traditional tourist districts like Orchard and Marina Bay.

Instead, the proposed rules are more likely to take off in central areas where owners have purchased investment properties and which are already mostly rented out. But this also means they will compete with hotels in the area - something hotel groups may object to.

Another obstacle is the high level of compliance imposed on such platforms. The URA wants such operators to list only residential premises that have been registered for short-term use, and reject rental bookings if the suggested annual 90-day cap is exceeded. It may also need to help collect taxes from hosts using their websites.

But just last week, it was reported that Paris city authorities were suing several sites for failing to remove ads of properties without a proper registration number. Airbnb pushed back, labelling the regulations in the French capital as "complex, confusing and more suited to professionals than individuals".

It is unclear if the proposed Singapore rules are any less onerous, but TSMP Law Corporation's head of corporate real estate Jennifer Chia noted that this would be additional business costs to commercial operators and "for which they would need to crunch their numbers to see if it would still make Singapore a viable business platform".

Even if all these hurdles are crossed, landlords and management councils may not find it worth the hassle.

At first glance, the 90-day cap appears generous, given that Airbnb has reported that the average number of days a property is rented out here is 39 days.

But with management councils given the leeway to shorten the cap, or impose higher maintenance fees on such hosts in their by-laws, many aspiring landlords may not find that the benefits outweigh the costs. Neither are management councils, which comprise volunteers, likely to take up the mantle of enforcing these rules.

If the proposed rules become law, it would - on the face of it - appear to make room for short-term rentals here while at the same time creating an environment where they will struggle to thrive.

Adapted from: The Staits Times, 17 Apr 2018