Should government convert empty Airbnbs into affordable housing?

By Katie Johnson

Thousands of short-stay apartments which would usually be full with tourists and visitors have been left vacant, leaving a question mark over what to do with these now indefinitely empty apartments.

In Lisbon, Portugal the government has sought to solve this problem by offering an incentive to landlords to convert their short-stay rentals into affordable long-term housing for locals. It’s a scheme which could potentially be adopted in Melbourne where the issue of affordable housing is more pressing than ever.

Under the program, Lisbon landlords rent their apartment to the city for a minimum of five years, while the city takes on the burden of finding tenants through an affordable housing program targeted at young people and lower income families.

Rents are also capped at 30 per cent of the tenant’s net income, as the city subsidises the difference between the tenant’s payment and market rent.

Director of Housing All Australians (HAA) Rob Pradolin said that the Lisbon scheme had “a lot of merit” and that HAA was currently in talks with a major real estate firm interested in a similar deal.

“We haven’t approached the City of Melbourne or state government yet, but it’s very obvious to us that if the state or the city guaranteed the lease there’s a lot of people who would take that guaranteed income rather than leave the apartment empty,” Mr Pradolin said.

“There would be requirements in terms of occupants providing information about their income to make sure they qualify, but it’s a smart way of using existing buildings that are sitting there empty.”

Aside from Airbnbs, Mr Pradolin said that the scheme could also work for landlords seeking to fill their empty long-term rental apartments to help solve the housing affordability crisis facing the city.

This is a particularly pressing issue as the city’s vacancy rate is currently sitting at around eight per cent, while Southbank’s recently hit 16 per cent due to the unemployment and lack of tourism caused by COVID-19 restrictions.

“We’ve got an oversupply of apartments in the city and all these owners with empty apartments saying ‘what are we going to do with them?’” Mr Pradolin said.

“So, assuming the state government is for the idea, they could guarantee a rental for these apartments and forego the vacant residential land tax for foreign investors as well.”

Dr Tamlin Gorter, senior manager of strategic initiatives at Australian Housing and Urban Research Institute, said vacant private rentals could be converted into affordable housing.

“The conversion and use of vacant private rentals into affordable housing rentals could offer opportunities to increase affordable rental stock. It is important that these properties are of a suitable quality,” Dr Gorter said.

“Programs whereby government or community organisations lease homes from the private sector for affordable rental, and manage those tenancies, have proved successful, especially when they are accompanied by tenancy support programs.”

For local residents, the lack of regulation around short-stay rentals has been an ongoing issue for years and locals are looking for other solutions.

We Live Here representative and Dockalnds resident Barbara Francis said that until COVID-19 hit, residents had been “powerless” to stop commercial short-stay operators from damaging buildings and driving out potential renters.

“COVID-19 has turned Airbnb back to what they were intended to be, a vehicle for mums and dads to make a little bit of money which is what it should be instead of a commercial operation,” she said.

Ms Francis said that while she and other residents would be open to a Lisbon-style solution, Melbourne had a long way to go with Airbnb regulation first.

“Lisbon made it difficult for Airbnb right from the outset with a registration process they had to go through, which is what we’ve always wanted but have never had,” she said.

Dr Stan Capp, president of CBD residents group EastEnders, also said that locals were tired of commercial short-stay operators and were open to alternative solutions.

“The stories that we’ve heard from We Live Here are just horrific and the whole issue hasn’t been addressed well by state government since it was brought up over five years ago,” Dr Capp said.

“During COVID-19 Airbnb has been restricted and as a result many people have moved out of the short-stay business. For us this has been a good thing.”

Mr Capp said that with proper planning, the Lisbon scheme could be a long-term solution for the city which should be explored.

“The big downside of the way we’ve developed apartment towers in Melbourne is we’ve not really been inclusive of social housing and there’s a huge demand that needs to be aggressively met,” Mr Capp said.

“This is not just for affordable housing but also for homelessness. In principle, the ability to make integrated social housing initiatives is one that I would support, however it needs to be carefully managed and have infrastructure suited to the task.”

Currently social housing makes up only about 3.2 per cent of all housing in Victoria, well below the national average of 4.5 per cent.

And with thousands of apartments sitting empty while over 80,000 people wait for social housing in Victoria, there’s a clear opportunity for the state government to lend a hand to essential workers and vulnerable Victorians during this crisis.

At the time of writing, not the council nor the state government were considering any such solutions to use the plethora of empty Airbnb’s to combat the affordable housing crisis which has been exacerbated by COVID-19.

A spokesperson for Treasurer Tim Pallas said that there was already a number of schemes in place to address the issue of housing affordability, including the Homes for Victorians package, the HomesVic shared equity scheme and the Social Housing Growth Fund.

“There are all sorts of innovative ideas that we’re only too happy to have a good look at. Right now, our focus is on fighting the coronavirus crisis and ensuring Victorians are safe and supported,” the spokesperson said.

However, Mr Pradolin remains adamant the state government needs to work with the private sector now to make affordable housing an economically viable long-term solution.

“We need to get things done to scale and we need to do it now with the smarts from the private sector because we’ve got people struggling to make ends meet during this crisis,” he said.

“Housing and the lack of housing is an economic issue and we will never solve homelessness unless we solve the upstream supply of non-market housing.”

Lord Mayor Sally Capp said while the City of Melbourne continued to work with partners on long term accommodation options for our homeless community, it was also taking measures in response to COVID-19.

These measures included the roll-out of pop-up testing clinics, connecting Aboriginal people experiencing homelessness with culturally appropriate care and accommodation and establishing a network with Launch Housing and the Salvation Army.

“We commend the State Government’s decisive action to accommodate up to 1000 vulnerable people in temporary accommodation across Melbourne,” the Lord Mayor said

“Having almost everyone accommodated has provided a once-in-a-generation opportunity to re-envision our approach to homelessness.”

“We will continue to build on this momentum to secure a long-term approach in Melbourne”

The Victorian Government’s initial crisis response is in place until the end of July. In light of the re-introduction of stage three restrictions, we strongly support the continuation of temporary accommodation beyond July to ensure that those who sleep rough on our streets are cared for during this pandemic.”

“We continue to pursue the opportunity to refurbish buildings across inner metro municipalities to help create supported accommodation and wrap around services.”

On July 28, the state government announced a $150 million “From Homelessness to a Home” package.

Minister for Housing Richard Wynne said the funding would also see the government extend current hotel accommodation until at least April next year while the 2000 Victorians were supported to access stable, long term housing.

“We will arrange to lease 1100 properties from the private rental market, providing a permanent home for people once they leave emergency accommodation, Minister Wynne said.

“This investment will give Victorians a roof over their head in the short-term, while also providing long-term support to help them find their home – and the security, stability and sense of belonging that goes with it.”

The first of the government’s promised 1000 new social housing units are coming online now and will also support people to transition out of homelessness and into a home.

Each client will have access to flexible support packages while in crisis hotel accommodation – including mental health, drug and alcohol and family violence support for those who need it. This same support will be available to help sustain a tenancy once they move to other long-term housing.

The state government’s Private Rental Assistance Program will also gain extra funding to encourage more people leaving emergency hotel accommodation to set up their own private tenancy, helping with the bond and initial rent. Funding will also be allocated to homelessness agencies.

Council to Homeless Persons (CHP) CEO Jenny Smith said that while the package would make an “enormous” difference, more investment in social housing was still urgently required.

“To keep people housed permanently, after funding for rental leases expires, we also need the government to invest in new social housing,” she said. “Subsidised leases are a great medium-term housing option, but we don’t want to see people get a home now, only to lose it when the subsidy runs out and they return to a private rental housing market they can’t afford.”

“Victoria needs at least 6000 properties a year for 10 years to meet need for social housing, and to get Victoria’s level of social housing up to the national average. Social housing is perfect economic stimulus in this time of economic downturn and the federal government also has a vital role to play.” •