Short-term Lettings Bill 2018 – Speech on behalf of Government in Seanad Éireann

Private Members’ Bill

Seanad Éireann

Short-term Lettings Bill 2018

Wednesday 20th June 2018

Check Against Delivery

Introduction

Firstly, I wish to thank Senator Humphries for bringing forward this Bill and providing us with another opportunity to discuss short-term lettings which is a priority for this Government.

 

Policy

Can I set out from the start that, “Home sharing” that is to say, people providing overnight and short-term accommodation in their own homes – is a good thing. It can be an important source of income, helping “home sharers” to meet the cost of mortgages, rents and other household expenses and hence support tenure security.  It also supports tourism and associated economic activity and even social and cultural exchange.

This does not reduce the number of residential units available in the economy.

Importantly, planning regulations have traditionally recognised that home sharing and overnight guest accommodation is permissible in certain circumstances in houses, but not apartments, without the need to obtain planning permission.

However, the Government is concerned about the growing availability and use of online short-term letting platforms, and the potential commercial opportunities they provide, may lead landlords, who normally provide residential rental accommodation, to move into short term letting to tourist and business traveller customers because of the higher returns available from this activity.

Similarly people may well purchase or rent properties specifically for short term letting as an investment option, taking them out of residential market.

Short term letting under either of these scenarios, will lead to a direct loss of units in the rental sector and by extension, the broader housing system.  This means less longer-term and secure accommodation being available to the increasing numbers of families and people who need to access it.

Of course there is the potential for positive impacts as well, such as increased economic activity and tourism revenue.  With the housing system  under severe pressure the positive impacts are outweighed by the negative ones.

The social and economic impacts faced by families experiencing difficulties in accessing accommodation are significant and will not be compensated by the broader economic benefits a shift of residential units into short term letting could bring.

Equally, increased tourism revenues or footfall in urban restaurants, shops and local businesses will do nothing to compensate the frontline worker who has to move from the city to the periphery of the commuter belt with all the associated burden that brings with increased travel time and costs and dislocation in terms of schools and social networks.

At the same time we do not want to deny people the opportunity that short term letting – in the traditional B&B manner or via online platforms provide – that allow people to let out rooms in their homes as a means of earning some extra income.  This type of activity could actually help the frontline worker pay their rent or mortgage – and keep them in their home.  It is important to emphasise that we do not want to close that down.

That said, I understand and appreciate the motivation and bona fides behind this Private Members Bill.

To specifically address your proposals, I will take the opportunity to set out the Government’s position on each proposal.

Section 2 proposes to introduce a definition of short term lettings.

At present, there is no legal definition of short-term letting.  The Property Services (Regulation) Act 2011 uses a figure of 8 consecutive weeks but this does not take into consideration the cumulative effect across an entire season or year.

To accept the definition in the Bill would pre-empt the findings of the working group established under the Strategy for the Rental Sector not to mention any possible issues that may arise during discussions with the Office of Parliamentary Counsel.

Section 3 states that, under the planning code, where a dwelling is used for short-term lettings for more than an aggregate of 6 weeks per year then its use shall be classed as commercial rather than residential.

Under the planning code, all development, including a material change of use, requires planning permission unless exempted under the Act or the associated Regulations.  For example, there is an exemption which facilitates the use of a house for overnight guest accommodation in certain circumstances, which is traditionally relied on in the context of the provision of B&B-type accommodation.

The Bill proposes that, for the purposes of the planning code, short-term letting for periods exceeding 6 weeks in a year is a commercial use not a residential one.  It is understood the intention of this provision is to require property owners to obtain planning permission for a material change of use.

However, this is already generally the case under current planning requirements, and was addressed in a circular to planning authorities in October 2017, which sets out the existing planning requirements in relation to the short-term letting of houses and apartments.

Section 4 proposes removing the exemption under Section 3(1)(l) of the Property Services (Regulation) Act 2011 that disapplies the Act to short-term lettings.

The 2011 Act provided for, inter alia, the establishment of the Property Services Regulatory Authority – which regulates property service providers, i.e. estate agents, letting agents and property management agents.

The Act provides that the Act does not apply to –

“(l) a property service consisting solely of a short-term letting to a person where such letting—

(i) does not exceed or is unlikely to exceed 8 consecutive weeks, and

(ii) is for bona fide tourism or other leisure purposes,”

This exemption provision was intended to allow owners of holiday houses, cottages, etc. to let them directly to tourists without requiring them to use estate or letting agents with all the costs and inconvenience that involves.

The 2011 Act was designed to regulate the genuine property services sector, not the tourism sector and was quite deliberate that genuine tourism lets were incorporated in the list of exemptions provided for.

Amending the Property Services (Regulation) Act, as proposed in this Private Members’ Bill, would significantly change the manner in which the 2011 Act operates, and would potentially place a very significant additional burden on the Property Services Regulatory Authority (which would require significant resourcing) and may very well lead to unforeseen consequences.

The Government also has genuine concerns for small operators in the short-term tourist letting sector, many of whom will almost certainly fail to satisfy qualification and other licensing requirements, if this exemption is removed. This would then mean that such small operators (e.g. owners of tourist cottages, etc.) could not legally directly let their properties on a short-term basis and would instead, have to engage a licensed property service provider to conduct such lettings, with the consequent incurring of expenses and administrative complications.

Section 5 of the Bill proposes to place the obligation on short-term letting service providers to provide specified information to planning authorities.  It also proposes to require planning authorities to request, collect and collate such data and share this information with the Revenue Commissioners on request.

The purpose of the planning system aims to facilitate and support proper planning and sustainable development in a balanced manner, ensuring that the right development takes place in the right locations at the right time.  However, it is not the function of the planning code, nor is it the appropriate vehicle, to provide a wider regulatory framework for the short-term tourism-related letting sector or related tax requirements.

 

Government Efforts

The Strategy for the Rental Sector, recognised the potential issue of significant numbers of properties being withdrawn from the long term rental market for use as short term tourism-related lettings.

The negative impact this would have for the supply and availability of residential rental accommodation and that the growing use of online platforms, such as AirBnB, could, if not adequately regulated, facilitate and encourage this trend.

That is why we established a Working Group, made up of representatives from my Department, the Departments of Finance and of Business, Enterprise & Innovation, An Bord Pleanála, Fáilte Ireland, the Residential Tenancies Board, and Dublin City Council, to develop proposals for the appropriate regulation for management of short term tourism related lettings taking into account the Government’s overall housing and rental policy objectives.

The working group has submitted its report to the Department and Minister Murphy is currently considering same.

 

Proposed Regulation

The primary goals of the regulatory proposals are to:

  • Reduce the market impacts of short-term rentals on the long-term residential rental market;
  • Facilitate the use by resident householders of unused capacity in their homes for short term letting and the associated economic benefits for them and the local economy;
  • Ensure the quality of accommodation services provided, consumer protection and safety; and,
  • Limit and mitigate the costs associated with high volumes of short-term lettings borne by residential communities.

 

What is currently envisaged is a licensing system for both intermediaries – such as websites and management companies – and persons renting out both single rooms and entire properties as a short term lets.

The precise details regarding inspection, monitoring, enforcement limit setting, fees as well as consideration of local factors have still to be finalised.

However, it is clear that different approaches will be needed for those wishing to let properties on an ongoing commercial basis and those wishing to let a room in their home or to let their home while away for a short period, perhaps on holiday.

The regulatory approach also intends to recognise the huge difference across different areas of the country.  In some places increases in short term letting poses a risk to the rental stock, while in others it could provide an important opportunity for landlords to make profitable use of properties that they have difficulty letting.

 

Conclusion

To conclude, I would like to thank Senator Humphries for introducing this Bill and the sentiment which it contains, which is and will continue to be extremely helpful as we move forward with the design and establishment of an appropriate regulatory framework to both protect our housing and rental supply and also take advantage of the benefits that this new and growing economy provides.

 

ENDS

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