To Airbnb or to let long-term?

The Department of Tourism has laid the groundwork to regulate Airbnb and the kicker is that it could affect the entire rental industry!

New Tourism Bill

Currently, private individuals can freely list their property on unregulated apps such as Airbnb and the profits from these listings go directly into the pocket of the person listing that property. The Tourism Department seems to be suffering as a result as some of their funding comes from the issuing of registration certificates to hotels and guest houses at an annual cost.

The Tourism Amendment Bill has been released for public comment and with it, the groundwork laid for the Department of Tourism to potentially change the short-term rental industry and if regulated correctly, the rental industry as a whole.

Airbnb will need to be registered with the government

It is anticipated that the Department of Tourism will require that in order to operate an Airbnb, you need to be registered and obtain an annual certificate from the Department of Tourism that includes a registration fee. This process has been set into motion by a request for the public to comment on the amendment to the Tourism Act.

Short-term home rental

The Tourism Amendment Bill is proposing to include a definition of short-term home rental:

“short-term home rental means the renting or leasing on a temporary basis, for reward, of a dwelling or a part thereof, to a visitor”

It further proposes to amend the Act to include:

“7. (1) The Minister may, by notice in the Gazette and after following the consultation process contemplated in subsection (2), determine -  

(a) norms and standards for -

        (v) thresholds with regard to short-term home rental;”

In practice, this means that preparation has been made to give the Minister of the Department of Tourism the power to propose a change in regulations to the short term rental industry which defines exactly what constitutes a short-term rental and to impose restrictions such as annual registration.

Vague definition could have a knock on effect!

The knock on effect of this could be that the Airbnb market will have less properties available; the demand for rentals will rise as a result, and the cost of rentals rise due to new demand.

A concern with the definition of short-term rental is the vagueness of it. The Minister will in all likelihood set out a time period of what constitutes ‘short-term home rental’ but right now, a one year lease could technically fall under the definition.

If the Minister introduces regulations and fails to set a time threshold, it could inadvertently have a major impact on the rental industry and with that a dramatic shift in whether Airbnb or long term letting is preferable when the Tourism Amendment Bill comes into force. This is definitely a space to watch closely!

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