From stylish apartments to quaint single rooms, tourists looking for alternative lodgings in Singapore are literally spoilt for choice.
Airbnb, a leading player in the home-sharing market, has short-term housing options such as a Kallang shophouse for $249 a night, a Tiong Bahru flat for $114 or a room in East Coast with queen-sized bed and balcony for a just $48.
According to Airbnb, there are about 6,000 properties listed on its website in Singapore.
Other home-sharing websites have set up shop here as well, such as Roomorama and PandaBed. Yet, it is currently illegal for both private and public home-owners to lease their properties for less than six months.
URA Consultation Exercise
The Urban Redevelopment Authority (URA) announced last Wednesday (May 18, 2016) that it required more time to review the issue of short-term rentals.
URA conducted a public consultation exercise from January to April last year and said that views were “split, with no clear consensus”.
“This issue on short-term stays is complex, multi-faceted, has wide- ranging implications and it warrants a careful and balanced review,” it said, adding that URA “needs more time to study the issue”.
There have concerns about safety and liability issues, and neighbours’ complaints on short-term tenants have been on the rise for the past three years.
Possible Impact on Home Prices
With home-sharing websites like Airbnb likely to stay, it is inevitable that regulations have to incorporate these disruptive technologies into our ecosystem.
How URA decides to regulate the short-term rental market will have an impact on home prices.
Allowing short-term rentals in residential units would effectively open up the lucrative short-term rental market to private property owners, probably to the detriment of the hotel and serviced apartment business.
Just consider this – a landlord may prefer to rent out two bedrooms in his apartment for $100 each a night, for $6,000 a month in rental income, rather than rent out the entire apartment to a long-term tenant for $3,000.
Property prices may soar, if landlords are prepared to pay higher prices for apartments they intend to let out for higher yields in the case of short-term rentals. Rental yields in the housing market will also spike, with increased competition for a space to stay.
A report by ING said that housing prices in Amsterdam can increase by up to €100,000 (S$155,000) due to tourist rentals.
On the other hand, the authorities here are unlikely to permit short-term rentals in HDB flats.
Hence, there will likely be an even more pronounced difference in prices between HDB and private apartments. Private property would be seen as even more attractive for buyers, as compared with HDB flats.