A New Decade: Airbnb Takeover?
Do you remember what Kingston looked like in 2010? Kingston’s skyline has changed over the years, with 2019 now closed and the new decade beginning, apartment complexes and high-rise developments are going up everywhere. Interestingly, the start of the new decade also marks the integration of an entire generation, “Millennials or Generation Y” (persons born around 1981 – 1995) into the workforce. Joining the workforce is an important stage in a young adult’s life when independence becomes paramount, and ‘getting my own place’ becomes a frequent topic over lattes and unsweetened mint tea. Unfortunately, as many young professionals see these new and attractively designed apartment complexes go up, they are subjected to only scrolling through images of apartments that they cannot afford to rent, much less purchase. But why is this so?
The high rental rate and high prices for these modern apartments, in Kingston at least, is not a novel topic and these prices have remained high for some time. The demand for these expensive units has kept the prices high and as more complexes go up, the greater supply has not caused the prices to drop. The question therefore is where is the demand coming from?
While there may not be any empirical evidence, rumor is that Jamaicans living abroad, pension funds, and wealthy investors make up a large part of the demand for these high-priced apartments and in order to get the best return on their investment, many are often converted into Airbnbs. It has been argued that as owners begin to prefer short term rentals to tourists, long term rentals become less attractive – the supply of long-term rentals then decreases which in turn contributes to the increase in the rates for local renters. Again, there is little to no empirical evidence in Jamaica, but one cannot help making the connection. The effect that a growing Airbnb market can have on Jamaica’s housing sector should not be taken lightly, despite there being several other influencing factors. Our Minister of Tourism, the Honourable Edmund Bartlett, is often quoted heaping praises on Jamaica’s Airbnb market, stating that “…All over Jamaica…the Airbnb fever has caught on…” and that “This is community tourism at its best...” These praises are well deserved as Airbnb represents a great opportunity for tourism in unconventional places and can have positive effect on Jamaica’s economy. However, a careful look should be taken on how the market may in the long-term affect access to affordable housing.
Other cities around the world (Amsterdam, San Francisco and New York) have begun to attempt to regulate the sector for a combination of reasons, including the effect the Airbnb market is believed to have on the cost of housing. Regulations such as: -
- requiring short term rentals to be not less than 30 days;
- limiting the number days your premises can be rented per year if the owner is absent;
- requirement of a special license or permit in New York;
- bans on renting in central neighbourhoods, and
- Requiring detailed information on the listings, identities and address of the hosts.
Some of these regulatory measures have been met with push back, most notably being a federal judge blocking a New York City law which was aimed at preventing persons from renting out apartments for a few days at a time to tourists and for collecting significant information on the identities of their hosts. Since the Airbnb market affects the availability of long-term rentals and can increase the cost of living, our lawmakers should have serious conversation about how this should be addressed. Additionally, whilst Americans have a troubled history with their Government collecting their information, Jamaica’s Government may not have enough. The potential for Airbnbs to be used in criminal enterprise in Jamaica should be reason some discussion about regulation in terms of collecting information on Airbnb listings.
It is too early to conclude whether the path to full regulation of the market should be taken, however, Jamaica should be proactive by starting comprehensive research into the factors that drive up the prices in Jamaica’s housing sector, particularly the possible effects of the growing Airbnb market. This research ought to be published, with both the Government and private sector stakeholders following through on reasonable recommendations for improvements.
As Developers invest and Kingston’s skyline rises, one cannot help but feel like Jamaica is taking a step in the right direction in terms of development. However, we must ensure that measures are in place which safeguard the best interest of this and future generations regarding access to affordable housing.
Antwan Cotterell is an Associate at Myers, Fletcher & Gordon and is a member of the firm’s Property Department. Antwan may be contacted via email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.