What next for short-term home rentals?

New Bill makes clear penalties, new option for home-sharing under consideration

The amendment to the Planning Act makes it illegal to rent out private homes on a short-term basis. In some estates, consensus on short-term leasing is not clear-cut. In areas like the Chestnut neighbourhood (above), there are residents on both sides
The amendment to the Planning Act makes it illegal to rent out private homes on a short-term basis. In some estates, consensus on short-term leasing is not clear-cut. In areas like the Chestnut neighbourhood (above), there are residents on both sides of the fence. ST PHOTO: JONATHAN CHOO

There is the stick - it is illegal to rent out private homes on a short-term basis, Parliament heard on Monday.

And then there is the carrot - the authorities are also considering a new class of private homes that allows short-term rentals and is looking into shortening the minimum rental period from six months. No specifics were mentioned.

In an interview with The Sunday Times, Airbnb's Asia-Pacific director of public policy, Mr Mike Orgill, said clarity is needed with the amendment to the Planning Act that passed last week.

"While the Government has come up with a new Bill that codifies existing guidelines, they also say that there may be some way or form for hosts to engage in home- sharing. But it lacks essential details and it is this lack of clarity that needs addressing. While the penalties have been made clear, a way forward for our host community has not," said Mr Orgill.

There are around 8,000 Singapore listings on Airbnb, the poster child of the sharing economy and one of 2016's biggest disruptors. Airbnb itself is not opposed to regulation, said Mr Orgill, and has come up with tools to assist policymakers in crafting laws regarding home-sharing.

  • Relief for some building managers

  • A new law passed last week, which clarifies that short-term home rentals are illegal, has brought relief to some building managers who have been finding their own ways to combat the problem.

    At The Sail in Marina Boulevard, it took drastic measures from the building's management corporation strata title (MCST) to tackle the issue.

    Given its downtown location, the 1,111-unit private condo had been plagued by "professional operators" running a hotel-like business for the past four years.

    In August last year, council members voted to pass a by-law to clamp down on short-term home rentals, amid growing concern among residents over the security and reputation of the condominium.

    The condominium's response involved bouncers who operated around the clock in two shifts.

    MCST chairman Augustine Cheah said: "They could demand to see the tenancy agreement of anyone they suspected to be involved in short-term leasing.

    "If they could not prove they were legal residents, they would be given the boot. Most of the time, they are renting from the original owner, who does not know about the subletting.

    "At its peak, I would say that 10 per cent of units in The Sail were involved in short-term letting."

    While harsh, the measure worked, as the MCST no longer receives reports about strangers entering the premises, he said.

    But in some estates, consensus on short-term leasing is not as clear-cut. At the condominiums and landed homes of the Chestnut and Cashew estates in Bukit Panjang, there are residents on both sides of the fence.

    The chairman of the Chestnut neighbourhood committee, who declined to be named, said: "Those with extra space in their homes would like the ability to lease out and share their homes with vacationers, as they benefit from these economic activities.

    "But there are those who expect their homes to be liveable and do not accept short-term renting.

    "This is especially true in the denser condominiums, where there are more chances of friction."

    Ng Jun Sen

When The Sunday Times asked if the growth of the sharing economy may be dented now that the law has been clearly spelt out, experts were split in their answers.

Singapore University of Technology and Design's (SUTD) Professor Costas Courcoubetis, said the move could have a chilling effect on the sharing economy here.

"The Government should avoid over-regulating as it continues to encourage innovation in the sharing economy," added Prof Courcoubetis, who leads SUTD's Initiative for Sharing Economy Research. He called for a self-regulated system with both the Government and businesses in the sharing economy making available data about public complaints, for instance.

The home-sharing model has faced challenges in cities such as New York, London and Paris, with strict regulations and heavy enforcement against short-term rentals.

New York, for instance, has been tangling with Airbnb over its business model, and imposed steep fines on anyone who lists their property on its website.

President of the Sharing Economy Association Singapore, Mr Jim Tan, said the sharing economy is important as enabling apps can provide smart ways to match demand with supply in cities where resources are limited.

Nanyang Business School's Associate Professor Boh Wai Fong said the law is inevitable, given the Government's previous stand that short-term leasing under six months would contravene the Urban Redevelopment Authority's guidelines.

Clear regulation also kicked in last week in the case of transport apps like Uber and Grab - private car-hire drivers now need to be licensed.

Prof Boh said while the transport economy is also regulated, car-sharing is generally in line with the Government's objective for a car-lite Singapore.

But not so with home-sharing apps.

"It is just that housing and property is a highly regulated and sensitive sector for Singapore and for the policymakers. Hence, the recent policy relating to leasing to tourists does not, in my view, reflect the official government stance towards innovation in the sharing economy," she added.

Entrepreneurs should seek to anticipate the likely responses of the stakeholders, said National University of Singapore Business School's Associate Professor Sarah Cheah.

"While most governments support innovation and entrepreneurship with the view to promote job creation and economic development, they still have to maintain social order and stability as a society undergoes transitions with technological disruptions and socio-cultural change," said Prof Cheah.

In response to The Sunday Times' queries, a Ministry of National Development spokesman said: "There is certainly a place for short-term rental platforms in Singapore. What we intend to do is carefully review and consider new policies to better respond to them.

"Such an approach best ensures that any problems caused by such 'disruptors' are effectively addressed, even as we attain the social and economic benefits from fostering innovation in the sharing economy."

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A version of this article appeared in the print edition of The Sunday Times on February 12, 2017, with the headline What next for short-term home rentals?. Subscribe