Airbnb listing not so easy when it’s ‘residential’ property

A good friend who is a real estate negotiator in Penang, always points out that many condominiums there are not suitable for the Airbnb concept.

This is not limited to Penang alone. Getting listed on Airbnb may not be as straightforward as you think, especially if you’ve purchased a high-rise condominium with the intention of venturing into Airbnb, only to learn later that any such arrangement is not allowed.

An article on PropertyHunter.com.my relates one real-life incident.

On Oct 16, 2017, Kota Kinabalu City Hall (DBKK) confirmed it was illegal for Sabah residents to lease their properties through Airbnb.

Former Assistant Sabah Tourism, Culture and Environment Minister Pang Yuk Ming said, “Airbnb is a business, but if an apartment is built as a residential property, it cannot be used for commercial purposes.”

This move is also linked to protecting the interests of hotels, especially international hotel chains. According to the Minister, international hotels play a significant role in the development of tourism in the state.

As stipulated in the House Rules of Jesselton Residences under Clause 2.1 Use of Housing Units and Common Areas: Homeowners are not allowed to use their units as a hostel, office, SOHO, workers’ quarters, Airbnb, motel, hotel, homestay or any means of the housing to a group of people.

The high-rise in the case was The Loft Residences.

On August 3, Shelley Yap Advocates and Solicitors issued a notice to cease and discontinue all commercial activities related to short-term lodging/rental to the owners of the Loft Residences. Owners were to cease such operations within 90 days from the date of the notice.

Failure to comply with the notice shall result in a fine of RM2,500 per day and keycard(s) to the units shall be deactivated by Syarikat Kapasi Sdn Bhd, the Developer of the Loft Residences.

The Loft Residences also did not fulfil the fire safety requirements set by the Fire Department for short-term lodging by way of license, the article also stated.

It is likely that this regulation differs from state to state. Thus, if you to refer to the Airbnb website for units within the Klang Valley or even in Johor Bahru, you will see lots of units built for residential purposes being advertised for short-term stays.

Though many have no objections to such short-term rentals as this has been going on for a rather long time, federal and state governments should have one harmonised set of rules and regulations because uncertainties are never good for the market.

If the government wants to encourage “second incomes”, listing an apartment on Airbnb can be viewed as that second income.

However, if the government decides to disallow it, perhaps a stricter measure is needed. This was Airbnb’s argument recently and it would be a good move for the country’s economy.

Meanwhile hoteliers are hoping that Airbnb is regulated so that the playing field is more level.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.