The rules around short term rentals in Australia are disjointed, confusing and convoluted. Local councils grapple with it individually, especially in popular holiday towns such as Byron Bay, Noosa and Sorrento, while the federal government is trying to decide whether it needs legislation to tackle the issue with the rapid rise of the sharing economy.
US rental giant Airbnb is trying to get on the front foot before the issue boils over, pushing for national laws. The $US25 billion company has recruited several public policy executives to push its case.
The company would not confirm just how many it has working on the Australian lobby team. It also has a global public policy group.
Like the taxi industry disrupter Uber, the growth of sites like Airbnb has left authorities scrambling to figure out how the new means of finding rental accommodation fits into existing regulatory frameworks, and its impact on the hotel sector.
A spokesperson for Airbnb told Business Insider the company had been approached by a number of politicians to discuss how the sharing economy might be regulated.
Last year several Sydneysiders were threatened with fines of over $1 million for renting homes on sites like Airbnb as councils attempted to regulate the short-term accommodation industry.
“In some places, hosts have contacted their local council and were unable to receive clear and consistent guidance on whether or not hosting is a permissible activity, suggesting that councils themselves are confused,” the company said.
Airbnb’s Australian country manager Sam McDonagh has previously said the rules in NSW were confusing, while regulations in both Queensland and Victoria are much clearer.
“There is an important role for regulation in the sharing economy and Airbnb would welcome fair and progressive rules around home sharing in Australia,” the company said.
In Australia, 700,000 people have stayed in the 75,000 Airbnb properties over the past 12 months. Sydney ranks as the company’s 10th largest global market.
The company estimates on average an Australian host earns about $AU7,100 per year and rents out their listing approximately 51 nights a year.
“Airbnb hosts rely on this supplemental income to help pay bills and contribute to their savings, and the income has also played an important role in neighbourhood resilience,” the company said in a recent submission.
The company likens itself to existing home sharing sites, similar to Stayz in Australia, where private properties aren’t subject to hotel licensing schemes. It doesn’t wish to see holiday homes come under existing inspection regulations as they are both costly and difficult to implement.
Airbnb would prefer a flexible, short-term rental regulatory framework, citing Queensland as an example where councils were given increased powers to tackle behavioural issues when houses were turned into “party” pads.
UK homeowners can rent out properties for short-term stays up to 90 days out of the year. When the regulations were revised UK Housing Minister Brandon Lewis explained: “Previously, London homeowners looking to make a bit of extra money and rent out their homes faced nothing but bureaucracy and red tape… Anyone looking to rent out their London home for a short period can now do so without having to pay for a council permit.”
Disruptive business models are an increasing feature of the global economy and governments are racing to figure out how to regulate and tax them while placating the anger of incumbent players.
Treasurer Joe Hockey flagged the $1000 GST threshold for online transactions could be wiped, so international companies like Netflix would be forced to charge the tax. It’s another example of how legislators are sprinting to keep up with disruption.
“We need to make sure our tax system is set up for the next 40 years, not just playing catch up with new industries as they develop,” Hockey said.
Earlier this month Hillary Clinton made the on-demand sharing economy an issue for the US Presidential race when she vowed to “crack down” on employers who misclassify workers as independent contractors, calling it “wage theft”.
It’s an issue challenging Uber, now worth $US50 billion.
In Australia there are concerns participants in the sharing economy are skirting tax obligations. The Australian Tax Office recently released clarifying guidelines for participants with examples of how different types of services are to be taxed. UberX drivers have until August 1 to register for an ABN and begin charging GST.
ATO deputy commissioner James O’Halloran said earlier this year “in relation to Airbnb and those types of operations, residential rent is not subject to GST but, as usual, people need to declare the income that they derive from such activities”.
With the political debate on how to deal with the issue set to heat up, it’s a smart move by Airbnb to have lobbyists ready to massage the conversation with the public.
* The writer travelled to San Francisco as a guest of Airbnb.