Threshold on short-term lets
The Week in Housing 15/03/24
I’m really happy to bring you a fantastic deep dive into the issue of short-term lets and related regulation, written by the team at Threshold: Ann-Marie O'Reilly (National Advocacy Manager); Zak Murtagh (Legal Officer); Cat Clark (Campaigns Officer); Gareth Redmond (Research and Policy Officer); Éabha Nugent (Policy Intern); Beth Eccles (Legal Intern); Blaithin Sharkey (Paralegal). Huge thanks to the authors for contributing this piece. Also, I have a piece in today’s Irish Examiner looking at how we understand housing affordability, especially in relation to cost rental.
Threshold first highlighted the impact of increasing short-term lets on the long-term rental sector in 2018. Threshold’s position is to ensure the effective operation of the proposed Short-Term Tourist Letting Register and to limit the negative impact of some short-term tourist lettings on the availability of long-term housing units. We remain enthusiastic about the introduction of a short-term letting register and associated requirements as set out in the General Scheme of the Registration of Short-Term Tourist Letting Bill 2022.
Through this proposed legislation, the Government aspires to regulate short-term letting by introducing registration requirements for proprietors of short-term tourist lets. Threshold’s hope is that this Bill, when enacted, will properly regulate the short-term letting market, resulting in the reintroduction of a considerable number of homes to long-term residential use.
Here we explain the problems that certain short-term lettings are causing within an already stressed housing supply context, and explain the nuanced journey of the Bill that we hope to see enacted by summer 2024.
The Problem: Why we need a register
Threshold has been campaigning for the regulation of short-term lettings (‘STLs’) since 2018, as it became apparent that their increasing numbers were causing disruption to the Irish housing market by removing homes from long-term residential use.
Threshold campaigned for, and welcomed, the introduction of the 2019 regulations. This regulated short-term letting accommodation through the planning code in areas of high housing demand. This legislation allowed the Minster to make regulations permitting home sharing, while restricting the letting of second properties on a short-term basis in high demand areas.
Despite this, multiple instances of hosts not applying for planning permission to run short-term lettings have been discovered by journalist Ellen Coyne. Several local authorities have identified that the number of applications for planning permission required by those running short-term lettings in RPZs has been low compared to the number of properties available on short-term lettings platforms.
What this appears to indicate is that potentially thousands of hosts with properties in areas with some of the highest housing demand in Ireland are leasing out homes, as short-term stays for holidaymakers – and potentially generating a far higher income.
Consequences for the PRS
The narrative of companies that promote short-term letting is that hosts are “renting a room in their primary home,” but this is not completely accurate. Research by the US-based Economic Policy Institute (‘EPI’) shows that bookings are increasingly concentrated on a small number of professional landlords.
Other studies have suggested that increasing touristification and gentrification has created a whole new class of homebuyer, the short-term rental speculator. While individual hosts and guests may benefit economically, the use of short-term rentals produces significant consequences for surrounding communities. A high proliferation of short-term letting platforms can cause fewer affordable housing options, higher average asking rents, and erosion of neighborhood social capital. One tangible example that many people may be able to relate to is that of people who work in the tourist sector being unable to secure homes in or around where they are working.
To further enforce the 2019 regulations, and hopefully return housing stock to long-term use, the new regulations proposed by the current Government would prevent online platforms from advertising properties that do not have the requisite planning permission. Hosts who wish to let a home, that is not their principal residence, on a short-term holiday basis (up to and including 21 days) will be required to register with Fáilte Ireland, as is the case for all tourist accommodation, which will issue them with a registration number, this number will be required to post an advertisement of the short-term let.
Adherence to these new rules will be overseen by Fáilte Ireland. To ensure compliance with these rules, a property owner who advertises their property without a valid registration number may be fined between €300 and €5,000. Online platforms which list a property without a valid registration number may be fined up to €5,000.
While this legislation is not a silver bullet for the inadequate supply of homes in the private rental sector, it will help return homes to long-term use, which is critical right now. Fáilte Ireland, Ireland’s tourist board, estimates that up to 12,000 properties could be brought back into the long-term residential use on foot of Ireland’s proposed regulations. With more than 13,000 adults and children homeless, returning these homes to long-term residential use will have a significant impact for those without suitable or secure housing.
Inside Airbnb's latest nationwide data indicates that there are 8,840 entire homes, which have been frequently and recently booked, listed in Ireland. Of these 3,277 were advertised by hosts with more than one property. To put these figures in context, Daft reported that were only 1,800 properties advertised to rent long-term, on its rental platform, daft.ie, in their Q3 2023 Rental Price Report, a nearly five-fold difference between the properties available for short-term letting and long-term letting in Ireland.
Regulating short-term lets
In April of last year, it was reported that the European Commission informed the Irish Government that the proposed Registration of Short-Term Tourist Letting Bill would make it “more difficult” for online short-term letting platforms to do their business in Ireland, and that the Government had failed to provide enough evidence for pursuing what the European Commission described as “restrictive” proposals or sufficiently explained how they would help ease the housing crisis. The list of concerns expressed by the European Commission were:
· Failure by Irish authorities to prove how their “restrictive” measures would make best use of existing housing.
· The proposed laws apply in rural areas, as well as towns and cities where short-term lets are “more likely” to influence rents.
· Failure by Irish authorities to provide any alternatives.
· A lack of evidence to show how the clampdown would be proportionate.
The Government had hoped the legislation would be enacted by the end of March 2023, but the European Commission extended the “standstill period” until December of last year.
Around the same time that the Irish Government introduced legislation to regulate Short-Term Letting, the European Commission introduced its own proposal to regulate short term lets
The proposed EU regulations aim to streamline data collection and sharing obligations for hosts and online platforms. It will replace current different and sometimes complex rules across Member States with one clear framework for data collection and sharing.
In practical terms, the regulation should facilitate the registration of hosts and their short-term rental properties and reduce inconsistencies in how online platforms share data. Platforms will be compelled to check whether hosts register their properties with the relevant authority and share data about rented nights and guests with such authorities.
The Committee on the Internal Market and Consumer Protection (IMCO) was tasked with drafting a report on the Commission's proposal. This was completed by Dutch MEP Kim Van Sparrentak (Green/EFA). Her report is constructive and is well worth the read. One of her key proposals is to expand the provision of information provided by hosts as part of the registration procedures to allow the precise identification of a property.
Ms Van Sparrentak also recommended that greater powers should be given to the relevant authority to suspend a host in case of false information or registration being provided. This would be achieved by providing the relevant authorities with the right to request online platforms to provide further information and remove access to unlawful listings.
It was also her view that platforms must design their online interface in a way that requires hosts to provide a registration number, where such procedures exist, and declare the relevant information. This would mean that certain information is a pre-requisite to registration which would make enforcement easier.
The recommendations set out in the IMCO Committee’s report to the European Commission contained the majority of Ms Van Sparrentak’s proposed recommendations.
The regulation was set to go before the European Parliament for its first reading and in late February the Parliament adopted the regulation. Once the Council adopts the text, it will be published in the EU Official Journal, after which the regulation will become law in 2 years' time.
In the meantime, The European Commission has indicated that the Irish legislation can progress, subject. That said, there are potential twists and turns regarding the EU’s legislation that cannot be fully discounted. The Commission has sought further time to review the short-term tourism letting legislation. Minister Martin has stated that the Commission responded positively to the Irish response. She believes that this will enable the Government to plan for the publication of the Bill in the coming months. Threshold are keen to see this occur without further delay.
Minister O’Brien has indicated that he wishes for the online register for short-term lettings to be up and running by this summer, so for the moment it is a game of wait and see. However, Threshold looks forward to opportunities to contribute to the pre-legislative scrutiny process and to keep the momentum going to facilitate effective regulation of short-term letting to the benefit of all those in need of a secure home.
Events & news
A new report on the conversion of vacant ‘above shop’ units for residential will be launched at the end of March. Alex Pigot, who recently wrote this piece on Cost Purchase housing, will be speaking on the same topic, along with a number of other speakers, at this event next Tuesday. The Call for Paper for the European Network of Housing Researchers (Delft, late August) has been announced, details here.
What I’m reading
I haven’t read this yet but it looks like it’ll be very interesting - a Central Bank research paper on the impact of institutional investors on the PRS. This is a great new article on an housing affordability and poverty in Europe, definitely not to be missed. This new journal article is another great example of the emerging literature on what I call the ‘new tenant politics’.