Feedback on Short-term Home Rentals and Prior Approval by Property Owners

Er Dr Lee Bee Wah asked the Minister for National Development in light of concerns from some condominium owners on the further relaxation on short-term leases (a) whether the Ministry will consider getting 100% approval from current property owners in each condominium before short-term leases like Airbnb can be allowed; (b) whether the potential impact of short-term leases on the hospitality industry has been considered; and (c) how is the Ministry dealing with illegal leasing of property currently listed on websites like Airbnb.

Mr Melvin Yong Yik Chye asked the Minister for National Development (a) how many Airbnb cases have been reported in HDB units and private residential units respectively in the past three years; and (b) what is the typical timeframe for investigation to complete after a case has been reported.

Sir, the Urban Redevelopment Authority (URA) conducted a public consultation exercise on short-term accommodation (STA) from 16 April to 31 May 2018.

Many respondents supported the need for regulations on STA, given that STA can cause negative externalities to other residents. Key concerns raised include safety, security and privacy, as well as abuse of common property. Many also supported regulating STA platform operators, for example, through a licensing framework.

One of the proposals was to require the Management Corporation of a strata-titled residential development to obtain the support of at least 80% of the share value in the development before STA can be permitted in any residential unit. The intent is to give homeowners a say in whether or not to allow STA in their development.

There was mixed response to this proposal. Some respondents felt that an 80% threshold would be unfair to the minority who do not support STA, but have to accept the presence of STA guests in their developments. On the other hand, there were some who felt that an 80% threshold was too high and that it would be difficult to obtain sufficient votes in support of STA among homeowners. URA is carefully studying all the feedback that we have received and we will do so before deciding on how to take this issue forward, including how to structure the final regulatory approach and whether there is a need for any legislative amendments.

Er Dr Lee Bee Wah asked about the impact of legalising STA on the hospitality industry. Indeed, this is something we had considered very carefully. The proposed regulatory framework for STA includes controls which are similar to those imposed on the hospitality industry. For example, under our proposed safeguards, STA hosts must collect and record the personal details of their guests and comply with fire safety regulations like the provision of fire extinguishers in their units. We have also proposed licensing platform operators, so that they can also help to ensure that STA activities do not cause problems for other residents. The intent is to provide a more level playing field between the STA sector and the hospitality industry.

As I have mentioned, these are proposals that we had put out; we have done one round of consultation, received feedback, there are mixed views. So, URA is studying the matter very carefully to see what is the best way forward. Even as we do so, even as we consider the deliberations very carefully, I would emphasise that the minimum stay duration of three consecutive months for private residential properties still applies. URA will take enforcement action against those who breach this rule.

Mr Alex Yam and Mr Melvin Yong asked about the number of such cases. From 2015 to 2017, URA received 1,808 reports of unauthorised STA in private residential units. In the same period, HDB received 390 reports of STA in HDB flats.

The time taken by URA and HDB to investigate a report of unauthorised STA depends on the circumstances of each case. Conducting ground inspections and interviews to obtain evidence of an offence can take up to several months in some instances. However, if the party making the report is able to provide details and documentary evidence of the suspected offence, investigations can be completed more expeditiously.

Speaker, Sir, I have four supplementary questions. The impact on the hospitality sector that I am looking at is, with the liberalisation of short-term leases, does the Minister think that it is unfair to those who had invested in the hospitality sector? They would have invested in the setting up, for example, of hotels and so on.

The second question is, why is it 80%? Condominium owners, a lot of them who buy and want to stay in these units themselves, they will be adversely affected. I would think that for existing condominiums, it should be 100%.

The third question, a lot of the residents think that if we allow short-term leases, it would drive up the rental costs and, hence, it would have a chain-effect and drive up the cost of living. So, what is MND's take on this?

And, last, if we allow short-term leases, it would make investment in a property look more attractive and the returns more attractive and, hence, it would drive up property prices. On one hand, you have just implemented a round of cooling measures that is very unpopular; and on the other hand, you wish to liberalise short-term lease.

Mr Speaker, I will take the questions in turn. On the first point on the hospitality sector, our approach to this has to be one that is based on fair competition. It is not possible to say, "Let's block any new entrants into the hospitality sector", simply on the basis that the existing incumbents have put in investments. This is an open market; new entrants can come in but the regulations must be fair and the industry must be regulated on a level playing field. That is the intent of what we have proposed.

On the thresholds, as I have said, there were mixed views from the consultations, so, we are going to review what is the right way forward and what is the best way to ensure that all property owners do have a say in deciding on the appropriate use of their development.

On the impact on rental and the property market, the Member's views are well-taken. We have seen this and we have studied this phenomenon in other property markets as well where, indeed, short-term accommodations have put upward pressure on rentals and on property prices. We are mindful that this may have an impact and that is why, as I have said earlier, we are not rushing to make changes. We are studying the matter very carefully. If and when we choose to do so, we will make sure that there are, indeed, appropriate safeguards.

Mr Speaker, just two clarifications to seek from the Minister. The hon Member Er Dr Lee Bee Wah and I had raised the question on short-term lease websites that are currently operating. Are there any plans to police them, or to regulate them before the new regulations come into place? The second, as the Minister has mentioned earlier, the number of cases under URA and HDB, they come close to about 2,200 cases. Of these reports, how many have actually proceeded to prosecution?

Mr Speaker, on the websites and the ads that you see on the websites by STA operators, these, in and of themselves, do not necessarily contravene the rules because it is a posting of a place that is available for rental. They do not indicate timeframe. The postings themselves may not necessarily contravene the rules and, even if we were to block the websites, I am sure there will be different ways in which these advertisements can be put up. So, I think the key is not so much the postings or the websites, but the actual STA activities that are undertaken. And if URA knows of any such activities, they will take follow-up and enforcement action.

I mentioned a number of cases. For all of them, enforcement notices will be issued. A good majority of them will then stop and immediately comply with the enforcement notice. But should there be cases that continue or there are egregious cases, then, indeed, URA will work with AGC on prosecution. There has already been one and we will see if there are others, if they were to come in the subsequent months.

I thank the Minister for the answer. In fact, I think out of the 1,000-over cases, a significant number will be from my constituency. I just did a quick check on one of the websites: I tried to put in a five-day request and it turns out that there are 196 listings just within a small area in Novena and Orchard.

I think a common complaint from my residents is that URA is taking too long to investigate the complaints and to take enforcement actions to stop the illegal short-term home rentals. Residents cannot quite understand why it is taking so long because they have pictures of people coming in buses and in Grab cars every two, three days. In fact, during my house visits, they can even tell me which are the units. When I go and knock on the doors, yes, indeed, sometimes, different residents come to talk to me. So, to them, I think the evidence is quite clear and perhaps the investigations and enforcement action can be more expeditious. I hope the Minister can clarify on this.

Mr Speaker, I thank the Member for his feedback. I will ask URA to make sure that they have sufficient resources to carry out the enforcement and make sure that this is done expeditiously.