Airbnb likely to get nod to operate in room-starved Japan

TOKYO • Airbnb Inc is finally getting the green light to do business in Japan after years of operating in grey areas of the law.

Prime Minister Shinzo Abe's Cabinet has approved rules that limit home-sharing by private citizens to 180 days a year, according to the final draft of the legislation. The Bill, which also leaves room for the local authorities to impose their own restrictions, is now submitted for approval by Japan's Parliament.

Airbnb, which just closed a US$1 billion (S$1.42 billion) funding round that valued the company at US$31 billion, has found a more receptive audience in Japan, compared with the clashes it had with municipal governments in New York, Barcelona and its hometown of San Francisco.

A tourism boom has cut into the supply of available hotel rooms and helped make Japan Airbnb's fastest-growing market. Overseas visitors will probably continue to set records as Japan prepares to host the Rugby World Cup in 2019 and the Olympic Games the following year.

"What's important is that there will now be clear rules governing home-sharing," said Ms Mika Yamamoto, public policy manager for Airbnb in Japan. "The impact on people will vary depending on their position."

The new legislation, which still needs to pass Japan's Diet, distinguishes between those who share their own dwellings and absentee landlords, anticipating that the latter are more likely to be the source of friction in neighbourhoods.

While Airbnb does not break down its 48,000 listings in Japan by type, a search on its site shows hundreds of houses available for rent, as opposed to rooms in occupied homes. About 90 per cent of hosts who are not present on the premises said the 180-day restriction would make their businesses unfeasible, according to a survey by the Japan Association of New Economy last year.

Airbnb, like its ride-sharing counterpart Uber Technologies, has faced resistance from local authorities around the world. Japan's home-sharing limits are relatively lenient, compared with 90 days in London and 60 days in Amsterdam.

Still, for some hosts in Tokyo, the new rules may force them to choose between giving up a second source of income and committing to becoming a full-time rental property operator. Until now, high occupancy rates in popular neighbourhoods such as Shibuya and Asakusa make it possible to make a profit on rented apartments, prompting people to take a second or third lease. The legislation would require a landlord's permission and an operating licence.

Japan's more lenient laws could be closely watched by the likes of Singapore, which last month made it illegal for home owners to rent out their apartments or rooms for less than six months, unless they have permission from the Urban Redevelopment Authority (URA). Officials will have the right to force their way into homes to check whether residents are renting them out illegally.

But Singapore has left itself some wiggle room by saying the URA is studying the option of creating a new category of private homes that will be allowed for short-term rentals.

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A version of this article appeared in the print edition of The Sunday Times on March 12, 2017, with the headline 'Airbnb likely to get nod to operate in room-starved Japan'. Print Edition | Subscribe