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The Story of How Airbnb Ruined Byron Bay

...And turned rental property landlords into millionaires.

by Nat Kassel
11 April 2019, 9:26am

All images by Pixabay

This article originally appeared on VICE AU.

Ilona Harker has lived in seven different rental properties around Byron, Australia, in the last four years, but it hasn’t been easy. “I was just sort of staying here, there and anywhere,” she says, explaining how she recently got kicked out of a house she was sub-letting in Bangalow, and ended up sleeping in her car. “I was earning quite good money so I wasn’t in any way financially poor – It’s just there were no houses.”

She got the boot when the landlady claimed to be selling the property. But Ilona says the owner kept the house and just started letting it through Airbnb. “I had to get a mover again and put all my stuff in storage and the house didn’t get sold,” says Ilona. “She actually rents it out through Airbnb. I’ve had friends stay in there. So she lied and didn’t care that no one could afford to live there.”

Ilona’s story is not an uncommon one in the Byron Shire, where according to the Australian Coastal Councils Association, 17.6 of properties are rented to tourists via short-term holiday letting agreements, including Airbnb.

The Airbnb listings around Byron Bay have enticing titles like, “Hidden Tropical Sanctuary” or, “River Sea Studio Apartment” or simply, “The Surf Shack”. Byron has been a holiday town for decades but the debate about Airbnb is a divisive one in the area.

Renters like Ilona tend to say that the platform has driven long-term rental properties into scarcity and made housing unaffordable for locals. Some property owners say they couldn’t afford to pay their mortgages without the income they make from renting out a granny flat or spare room. Others argue that tourism dollars have long been a crucial part of the town’s economy and Airbnb is just a platform that helps bring more cash into the town. But no one denies that it’s having a noticeable effect on the area.

Byron Shire cops more than 2 million visitors a year, putting tourists to locals at a ratio of 70:1. And according to a study conducted by Southern Cross University, 77 percent of locals agree that Airbnb reduces the availability of affordable housing for residents. The study also found that locals perceive nine negative impacts of Airbnb, including increased congestion, waste management, infrastructure costs and noise levels. There were just two positive impacts: increased employment and local tax revenue.

Scrolling through the Byron community houseshare pages on Facebook, there’s an abundance of young people, couples and single parents looking for a place to rent. One of these pages, Reasonable Rentals Northern Rivers NSW, was shut down in January after one of the administrators conceded that there were nowhere near enough reasonable rentals available per month for the 10,000 members of the group. “This group is no longer viable,” she wrote. “Check out Gumtree instead.”

Byron’s acting mayor, Michael Lyon is very much aware of the problem. He told me, “You can see it in our low rental vacancy rate. You can see it in the cost of rentals. You can see it anecdotally in the amount of ads, or lack thereof, in the local paper for accommodation. There are countless stories from locals as well.

"I’ll tell you how I can sum it up for you, exactly how Airbnb view it all," says Michael. "When they talk about Australia, they talk about us as the most penetrated market. This is a direct quote."

The mayor is right: back in 2016, one of the bigwigs at Airbnb, Sam McDonagh, described Australia as the "most penetrated market in the world” for Airbnb. The mayor clearly finds this word troubling when it comes to describing his community. "When you say something’s penetrated, I think you’re really hitting the nail on the head there," he says. “We have to abide by rules in all areas of our lives and if the rules aren’t strong enough well then people get penetrated.”

Michael goes on to explain that it’s been very difficult to impose any rules at all on Airbnb. Anyone with a spare room, granny flat or multi-million dollar beachside investment property can go ahead and register it on the app and start running a holiday rental.

In the Northern Rivers of NSW, 74 percent of Airbnb rentals were entire houses as of 2017. In that year alone, one host in Byron Bay made $3.7 million from the 40 properties they had listed. And more than half of Byron’s "hosts" have multiple listings.

But these stats don’t stop Airbnb from running well-funded advertising campaigns that paint the opposite picture. Airbnb tends to promote stories like that of Kyra and Dave, two creatives who rent out the spare room of their stylish loft in Sydney’s inner west in order to pursue their freelance lifestyles. It’s a nice, humble story, but the reality is that it’s investors who dominate the platform, rather than humble creatives subsidising their rent.

In February, the NSW state government pledged to create a special plan for Byron Shire Council, allowing Byron to impose stricter sanctions than the rest of the state. The mayor suggested a bed tax on Airbnb but the NSW government wouldn’t support it. At the moment, the Council is attempting to negotiate with the state government to limit the amount of Airbnb properties in specific precincts around Byron and to put restrictions on new developments so that they can’t be Airbnb’d at all.

But Michael Lyon admits that the council is at the mercy of the Gladys Berejiklian-led state government. “Unfortunately, in this instance we don’t have local planning powers,” he says. “We work within a framework where they hold all the levers, where they hold all the authority. We have to ask and beg and scrape.”

Airbnb on the other hand, represents a massive global entity with enormous lobbying power and financial backing. Airbnb run digital marketing campaigns, their own print magazine and in NSW they recently registered as a third party campaigner at the NSW state election (a compulsory measure for anyone who spends more than $2000 on lobbying). Airbnb spends at least some of that lobbying budget on mailing information to their "hosts" about who to vote for if they want to keep their businesses going.

How is it that a Silicon Valley tech company can have more power than the government? The acting mayor’s answer is remarkably frank: “Because we have a system that allows corporations to donate to political parties and buy policy outcomes.”

Ilona tells me about the time her landlord raised the rent by $70 a week on the spot, forcing her and her 17-year-old son Kaelen to move.

“I won’t forget it,” says Ilona. “It was the day after my son’s 17th birthday and so at that point it would have made the rental way beyond my capacity as a single parent with the income I was earning.” She hadn’t signed a formal lease so there was no chance of taking it to tribunal. She was forced to stay with friends and her son Kaelan moved in with his dad.

“It just cost thousands of dollars,” she says. “The mover, all the furniture – I bought all this amazing new stuff for the house and my stuff has been in storage ever since.”

@natkassel