who wins and who loses when platforms like airbnb disrupt housing and how do you regulate it

However, the impacts of Airbnb on rental supply have been offset by:

  • substantial growth in dwelling numbers in key areas of Melbourne

  • large numbers of dwellings that are otherwise outside of long-term housing supply, including many unoccupied dwellings.

What motivates Airbnb hosts?

This research offers a new Australian perspective on Airbnb host motivations and decision-making, drawing on some of the most extensive empirical work to date.

The main motivation for hosting on Airbnb is to earn extra money from housing assets, in a way that is perceived to minimise risk. In some cases this income is tied to an immediate need for a buffer against housing insecurity. But this is not the case for many hosts.

Financial motivations were bolstered by the fact that hosting brings additional intrinsic benefits. These include the opportunity to connect with diverse people, and a sense of pride associated with being a good host. For many hosts, the flexibility to use the property occasionally, while also using it to earn money, was a significant advantage of short-term letting over long-term rental.

Some hosts have converted long-term rental properties into permanent Airbnb listings. However, some of these will likely return over time due to a perception of declining profitability, a greater workload associated with short-term letting, and the professionalisation of Airbnb. On the other hand, some hosts are motivated to expand their Airbnb portfolios with new acquisitions.

For other hosts, flexibility is key. Without Airbnb they would prefer to keep dwellings vacant rather than rent out long term. This points to other motivations for owning investment property than achieving maximum rental income.

Approaches to regulation

We reviewed regulation in Melbourne, Sydney and nine cities overseas in which short-term letting is a significant issue. Our review found three broad approaches to regulation:

  • a permissive approach – short-term letting is mostly allowed without prior permission or notification

  • a notificatory approach – short-term letting is mostly allowed, provided the host first notifies an authority (that is, there is no specific decision by the authority).

  • a restrictive approach – short-term letting is mostly banned, or allowed only where an authority gives specific permission.

Melbourne and Sydney have both recently adopted a permissive approach, with some limitations. However, we believe the notificatory approach is best adapted to managing new aspects of short-term letting in the Airbnb era.

Policy implications

The research findings suggest four ways to strengthen policy responses to short-term letting:

  • a registration system for listings, to help with enforcement

  • additional localised strategies to limit short-term letting and ensure adequate affordable rental supply in areas of intense activity

  • the integration of measures to limit commercial-style short-term letting within a broad-ranging housing policy, which reflects the changing nature of housing markets and the complex drivers behind these shifts

  • an ongoing research agenda into short-term letting across our cities and regional areas and its impact on housing and urban planning outcomes, supported by access to detailed, up-to-date data.

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