Rise of Airbnb poses new test for councils

POPULAR: Port Stephens resident Michelle Carter has two apartments in the holiday town of Nelson Bay listed on Airbnb. Picture: Marina Neil
POPULAR: Port Stephens resident Michelle Carter has two apartments in the holiday town of Nelson Bay listed on Airbnb. Picture: Marina Neil

THE success of online accommodation sites like Airbnb has Hunter councils grappling with a smorgasbord of regulatory headaches, from legal issues, a potential loss of rate revenue, and the rise of so-called “party houses”.

In submissions to a state government inquiry looking at the impact of the rise of short-term letting services like Airbnb, Hunter councils say that Airbnb’s popularity – the company says it grew by 167 per cent in NSW in 2015 – could eat into the money it sees from tourism.

In its submission, Great Lakes Council said short-term letting was a valuable source of income for the council, estimating that it added about $80 million annually to its economy. 

It said that “emerging disruption channels such as Airbnb” had “without doubt had a tangible effect on both the number of short-term holiday rentals and the growth of individual owner-managers in the Great Lakes”.

While Great Lakes says over-regulating the industry would be counter-intuitive, some councils, like Port Stephens, point out that “in terms of the rate base [it means] the owner is receiving an economic return [but] the local government area does not capture direct benefit from a business rate levy”.

“Balancing the cost impost on owner versus economic benefit from additional people in the area is a factor to consider,” the submission read.

Councils outside of the Hunter have gone even further, with Byron Shire Council arguing there is an “urgent need” for an income source from short-stay accommodation sites, and suggested an amendment to the Local Government Act to enable it to levy business rates on properties used for short-term rental accommodation.

Lake Macquarie Council said the short-stay industry “contributes to tourism revenue and job creation with flow-on effects for food services, transport and retail industries”, but that there were “a few” examples of noise and amenity issues “mainly due to them functioning as party houses.”

The issue of how to regulate the industry is still an unanswered question in NSW, but the City of Sydney has recommended creating a new category of short-term letting somewhere between a residential and business rate.

Michelle Carter, from One Mile, runs a tourism business in Port Stephens as well as letting out apartments in Nelson Bay on Airbnb.

She said creating a separate category would be a disincentive to use the services, and would harm their positive impact on tourism.

“If we weren’t using the apartment for Airbnb, we’d have permanent renters,” she said.

“We would still pay residential rates, but they’d use more services.”