Housing minister deflates Airbnb with overdue curb on rules

Housing minister Eoghan Murphy has taken a stand in a country where telling people what they can do with their property is a tricky business. Picture; Gerry Mooney
Housing minister Eoghan Murphy has taken a stand in a country where telling people what they can do with their property is a tricky business. Picture; Gerry Mooney

Housing minister Eoghan Murphy reckons that by slamming the door on professional landlord short term lettings with Airbnb, he could free up between 2,000 and 3,000 housing units for longer term tenants in key cities including Dublin.

Airbnb won’t be best pleased. And professional landlords are not overly excited either. The move by the Government has been well flagged and really needed to be done.

Airbnb started out as an ingenious accommodation sector disruptor where people could rent out part of their home or the entire dwelling for short periods. It has long since turned into something else.

It is no longer part of the fluffy concept of the “sharing economy”. Airbnb has said there are around 22,000 listings in Ireland. Around 7,000 of these are in Dublin. One in three of those hosting accommodation on the site are not renting out their principal dwelling but some other form of housing.

There are substantial numbers of houses and apartments which could be used to alleviate the residential crisis in places like Dublin.

Once you see landlords giving out about the measure, it shows how widespread and popular the Airbnb option has become for them. It also illustrates how far the company’s business operations have shifted from the original model based on the sharing economy.

Government policies telling people what they can and cannot do with their property is an unusual and tricky business in Ireland where property rights are seen as sacrosanct. However, there is a housing crisis. And it isn’t just with homelessness.

The high demand and short supply of rented accommodation, combined with the Government’s failed rent control policies, is hurting a lot of people.

So will it work? There is no reason to doubt that it will bring at least some of these properties into the long term rental market.

Trying to play down the figures, the landlords organisation said the kind of properties targeted in this Airbnb clampdown represented just 0.1pc of the housing stock.

The housing stock is over 2m in Ireland so 0.1pc is 2,000 houses and apartments. That is a significant number. Many landlords may find longer term tenant leases more hassle but if the short term Airbnb option is closed off, they will have to bring in some income on those properties. So they either rent them out to tenants or sell up and let somebody else do it.

Bear in mind Paschal Donohoe gave landlords a boost in the Budget by granting full interest relief on loans connected to rented properties. Surely business involves give and take, a bit of swings and roundabouts.

The most interesting knock-on effect could be on tourism. We don’t have enough hotels in Dublin, hence hoteliers have hiked prices beyond recognition in recent years.

They got the sting in the budget tail earlier this month when the lower 9pc Vat rate was scrapped and it goes back up to 13.5pc for the hospitality sector.

How many customers currently using Airbnb apartments will end up seeking alternative accommodation in Dublin and what price will they pay for it? Will it be the difference in them deciding not to come at all or will this move be a further boon for the hotel sector, especially in the capital?

We will have to wait and see how the tourism numbers are affected. Given that they are at record highs and growing, the industry may just have to live with it.

Brexit is still a worry for C&C

Brexit could not come at a worse time for beer and cider maker C&C. The company behind Bulmers in Ireland and the Magners brand in the UK has done a superb job in recent years arresting declines in cider sales across the water.

And its half-year results published during the week were a culmination of that steady hard work. C&C said its total group revenue jumped by 186pc to £838.7m in the six months to the end of August while operating profits rose by 16pc to £58.4m in the six month period. Within that, Magners sale volumes were up 12pc, helped by great weather and the World Cup.

Compare this with 2014 when the group’s UK cider sales fell by 15pc as Magners volumes dropped by 10pc the following year. It was the first major decline since the 1990s as trends .

Management responded by consolidating their UK and Ireland production in Clonmel and let 200 staff go in England. Production of its other cider brands moved to Clonmel and the company re-branded Magners by emphasising its Irishness and its heritage.

Then comes Brexit with the uncertainty; the fall in sterling; the possibility of tariffs on exports to the UK – the list goes on.

The big advantage for C&C is that Brexit hasn’t actually happened yet. And if there is an orderly exit with a reasonably solid free trade agreement afterwards, the business will have limited damage.

In the event of a no-deal crash out Brexit, the company has made contingency plans to pre-produce quantities of Magners in Ireland and have it shipped across the Irish Sea. This could buy it two years.

During the week C&C chief executive Stephen Glancey talked about how continental European drinks companies are contacting him to see if they could brew their product at their British plants.

This would ease logistical and tariff issues if they were to arise. Glancey presented it as something of a silver lining from Brexit. But this would be a lower margin production contract rather than a significant Brexit dividend.

Management have put their faith in Clonmel and it has worked for them. C&C shares were trading at €3.43 after the results during the week, up from €2.93 a year ago.

Budget measure hits Tesla fans

Electric Ireland is to start charging – for charging. The state company has up to now allowed electric car users to top up for free. And the company has paid to install the infrastructure.

On one level, who can blame them for charging a fee, from next year, given there are capital investments required and a cost to maintaining and upgrading the facilities. And Electric Ireland’s owner is a commercial state company.

But surely the state could take a view that it could subsidise electric motor vehicle recharging in order to encourage more people to buy them, which would be good for the environment.

Not so it seems. Government policy on the environment is getting ever more muddled. No carbon tax in the Budget was accompanied by a clawback of Benefit-In-Kind (BIK) exemptions for executives driving electric cars worth more than €50,000 per year.

It was like a Tesla tax. Executives whose employers gave them the use of a Tesla, could avoid BIK for three years was how the Government put it, just a year ago. But the rug has been pulled from under them after just one year.

Of course executives driving around in €120,000 Teslas might not deserve a BIK exemption you could argue. But what kind of gas guzzlers will they switch to now? And what better way to encourage a switch to electric vehicles than to have the suits driving them.

Sunday Indo Business

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