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Short-Term Rentals: Why Ban Them?

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Mr Propwise

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In this article, property expert Mr. Propwise looks at the growing trend of short-term rentals. This (technically) underhanded practice has been going on five years. And where property owners see an opportunity for side-income, the government seems to see crazed hobos and serial killers in HDB wardrobes. Come on, what are they thinking? Crazed hobos would never lurk in a wardrobe. Not with the serial killer next to me.

A recent article in The Straits Times highlighted the growing trend of home owners and tenants renting out spare rooms to paying guests for short periods of times (such as a few days). Websites such as Airbnb, Wimdu, 9flats and Roomorama have sprouted out to facilitate these lettings by effectively creating a marketplace for renters and rentees.

Airbnb currently has over 230 listings for rooms for rent in Singapore, which can be stayed in for as low as $40 a day, or less than one fifth what a typical hotel room would cost. Some hosts even offer premium services such as breakfast and complimentary toiletries and EZ-link cards.

From the host’s perspective, it’s a great way to earn some extra dollars from a spare room, while from the guest’s perspective they can save a lot of money and get a different experience versus staying in a hotel.

 

The catch? It’s illegal

Sounds like a win-win idea… but it’s illegal. According to the Urban Redevelopment Authority (URA), private residential properties can only be rented out or sublet for periods of six months or more. A spokesman said they would investigate cases of breaches, and those caught will be issued enforcement notices. If they do not stop they can be fined up to $200,000 and/or jailed for up to a year. Neither the HDB nor JTC allow short-term subletting either, so those caught doing so can face penalties. HDB homeowners may even get their flats confiscated.

The URA’s rationale for banning this practice is that “transient occupiers” may disturb and inconvenience other residents. A Singapore Hotel Association (SHA) spokesperson voiced concerns about how unregulated guesthouses could compromise the safety and health of the guests, and that any complaints from tourists might create adverse publicity for Singapore.

 

Is the renting out of rooms really that bad?

Personally, I believe that short-term room renting should be allowed. As one of the hosts in The Straits Times article put it, doing so “democratizes the marketplace” and is a win-win for both the hosts and guests.

For the hosts, they can earn extra income from their asset while meeting new people from around the world. For the guests, they have a greater choice of accommodation at affordable prices, and can choose the experience they would like to have. In my travels, my favorite places to stay were often not the fancy hotels but small bed and breakfast places where you get to enjoy the local hospitality.

If this practice became widespread, the losers would be the hotels and hostels as they would face greater price competition and an increased supply of rooms, which is probably why they are against it. In my opinion, the risks stated by the URA and the SHA are probably overstated, given that this practice has been going on for over five years and we do not seem to have any major incidents arising from it.

Of course, if renting out rooms were allowed, the URA would still play a vital role in investigating any complaints lodged by neighbors and residents if a nuisance was being created, and could take action against offenders instead of banning it outright.

While negative incidents could indeed affect a tourist’s impression of Singapore, I believe on the whole that allowing the short-term renting of rooms would actually have the opposite effect – it would allow tourists to experience true Singaporean hospitality, and get an understanding of the local culture that they would never get by staying in a fancy hotel. It would also allow “asset rich and cash poor” homeowners to monetize their asset and increase their incomes, while exposing Singaporeans to people from all over the world, leading to increased cultural tolerance and understanding.

Hopefully the regulations can be reconsidered, and amended to benefit the homeowners and not just the hoteliers.

Do you think short-term rentals should be banned? Comment and let is know! Or drop by Mr. Propwise and leave your opinion! 

Image Credits:
The Rent Giant

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Mr Propwise

Mr Propwise is the founder of Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. A Chartered Financial Analyst, his articles on the Singapore property market has been published on Yahoo and other finance related websites.