Writing in the Irish Times yesterday, housing lecturer Dr. Lorcan Sirr noted a massive anomaly in the Irish housing market, and bemoaned it:
“There are more than 18,000 houses to rent on Airbnb vs 2,000 on Daft. Something is very wrong”
Sirr’s basic argument will resonate with many: “It is not acceptable to have tourists living in houses while 13,300 people live in hotel bedrooms”, he writes, pointing out that the homes exist in the country to accommodate our homeless people.
The problem with Sirr’s position, though, is that he appears to endorse the idea that this problem resolved by yet more restrictive legislation around housing, in order to force AirBnB owners to take their properties off the tourist market and return them to the Irish domestic rental market. In fact, I would argue that it is a problem created largely by Government policy, which has neatly managed to reverse the roles of hotels and homes in the economy.
Consider that traditionally, tourists who come to Ireland (or anywhere else) seek their accommodation in hotels or guest houses. Thanks to Government policy around the accommodation of migrants and refugees, a great many such hotels are no longer available. This one fact alone supercharges the attractiveness of offering your rental property out as an AirBnB to tourists. There should be no surprise then, as Sirr notes, that a great preponderance of such properties are in tourist hotspots like Kerry and Donegal, which have also been the site of large scale acquisitions of hotel space by the state in order to accommodate migrants. That’s the first point.
The second point relates to regulation of the private rental market. Here, I’ll let Dr. Sirr make the case for me:
Why is this? For many owners who want an income from a property, it is easier to do it through short-terms lets than through being a landlord. There is limited regulation in the short-term sector, little enforcement of what regulation there is, less wear and tear, and no Residential Tenancies Board or awkward tenants to deal with.
This, again, is a failure of Government policy. What Sirr does not note is that for landlords, AirBnB and other short-term lets have significant drawbacks: Letting your house out to a new guest every week or fortnight involves vastly more work than letting it out on a long-term basis to a family that intends to use it as a home. The long-term tenant does not expect the landlord to come and clean their house every week, wash all the bedding, stock the refrigerator, and put fresh flowers in every room – but the short-term tenant does. The higher revenues available from short-term letting should best be understood as compensation for the vastly greater workload involved in it.
All things being equal, you would not expect landlords to opt for short-term rental options in such large numbers. The fact that they are doing so is evidence that all things are not, in fact, equal.
As Sirr notes, the regulatory burden on long-term landlords has grown exponentially over the past decade or so, with rent restrictions, vastly longer notice periods, and rental regulatory bodies that in the experience of many landlords seem to exist solely to take the side of troublesome tenants and make any and all evictions almost impossible, even where a tenant has wrecked a property or declined to pay rent. In fact, it’s not so long since the state formally banned evictions for six months altogether.
In these circumstances, short-term letting, even with all the additional work, is simply a much safer option for the landlord who views their rental property as a valued source of needed income.
This being Ireland, the new solution is to regulate landlords even more, and to openly try to coerce them back into the long-term rental market by making life as an AirBnB host more difficult. The problem is going to be that landlords will still have other options.
For one thing, they can simply sell, as a great many have done in recent years. For another thing, they can bear the extra regulation imposed upon them and do what businesses have always done when faced with extra costs – pass those on to the customer. The chances are that efforts to regulate AirBnBs will simply make Ireland an even more expensive destination for tourists than it already is.
This is the other fact that isn’t being considered: The harsh economic reality is that the tourists accommodated in these homes will on average generate more revenue for the economy than homeless people will. Making it even harder for people to visit Kerry or Donegal will simply result in more unemployment in those two counties, and perhaps ironically, a rise in homelessness as a result.
If the Government wished to address the popularity of AirBnB in Ireland, the one thing it genuinely could do is to stop making it such an attractive option for tourists by re-opening many of the hotels that it has effectively shuttered in the name of international solidarity with migrants.
It is Government interference in the market, not the market itself, that has caused this problem.