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Private residential properties may be subjected to 80 percent consent rule for Airbnb-type accommodation

by • April 16, 2018 • Property Market NewsComments (0)91

The Urban Redevelopment Authority (URA) today launched a public consultation exercise on a proposed regulatory framework for the use of private residential properties as short-term accommodation. The consultation exercise comes after Airbnb said that it is ready to make some concessions on short-term rentals here.

In 2015, URA conducted a public consultation exercise to better understand the public’s views on using private residential properties for short-term accommodation. Following a review of the feedback received, URA has worked with relevant agencies to develop a framework to regulate the use of private residential properties for short-term accommodation.

The proposed framework includes qualifying criteria for homes to be used as short-term accommodation; requirements and conditions which homeowners who use their properties for short-term accommodation must comply with; and the roles and responsibilities of stakeholders such as Management Corporations (MCSTs) and short-term accommodation platforms in ensuring that these activities are conducted in accordance with the proposed rules.

Currently, private residential properties in Singapore are subject to a minimum stay duration of 3 consecutive months. This differentiates residential properties from hotels.

URA has insisted that “this distinction is necessary, given the impact of transient occupants on other residents and the potential impact on safety and security in the estate.”

The URA acknowledged that while its planning framework has served it well, advances in technology and changing consumer trends have led to a blurring of lines between residential and hotel uses. Facilitated by online platforms and mobile applications, there has been a surge of short-term accommodation (STA) options in private residential properties all over the world.

“While this started off largely as an unregulated activity, the situation has evolved in recent years, due to concerns over abuses and the impact on housing affordability,” URA said. URA added that there were diverse views on the matter in Singapore.

“Some welcome the trend of STA, as it allows homeowners to supplement their income and provides more accommodation options for tourists. Others are not supportive of homes being used for STA and have raised concerns about noise disturbance, abuse of common property, and the loss of privacy and security due to transient occupants in their estates.”

private residential propertiesMeanwhile, the hotels and Serviced Apartment businesses have also lobbied the Government for a more level playing field in the regulatory framework.

Commenting on the public consultation exercise for private residential properties Minister for National Development Lawrence Wong said: “After studying the issue for some time, we think it is possible to allow such STAs in private residential properties, but subject to appropriate regulations and safeguards.”

The following are URA’s proposal for STA:

New STA Use Category for Private Residential Properties

  1. We propose that a new use category of STA be permitted for private residential properties. In other words, this will apply only to private properties that are already approved for residential use, and not for HDB properties.

Owners’ Consent

  1. Property owners have to agree for the STA use to be applied to their properties. For non-strata-titled properties (i.e. developments without Management Corporations, MCSTs), the owner(s) can decide on the matter, and put in an application to URA to be registered as STA, subject to the requirements highlighted below.
  2. For strata-titled properties (i.e. those governed by an MCST) such as apartments and condominiums, it is necessary to get the views of all strata-titled property owners, as each owner owns a share of the common property, as provided for in the Building Maintenance and Strata Management Act (BMSMA). Hence, they should be given a say in the decision on whether or not to fundamentally change the nature of their residential property to one with STA use.
  3. Nevertheless we recognise that it may not be practical to get consensus from 100% of the owners. Hence we propose the following solution:
  • It would be sufficient for the MCST to get the support of at least 80% of the share value in favour of STA use in the development. This is to ensure that a significant majority of owners (i.e. Subsidiary Proprietors or SPs) agree to the presence of short-term rental activities in their development.
  • This MCST endorsement will be valid for a 2-year period and needs to be renewed with an updated vote count each time. If the level of consent falls below 80%, the earlier endorsement will not be renewed.

Legislative changes will be needed to the BMSMA to provide for this arrangement.

Planning Criteria and Requirements for STA

  1. In assessing the applications for STA, URA will consider the impact of STA use on the surrounding community. This includes factors such as the type of residential development, the character of the area and the presence (or absence) of a formal self-governance structure within the residential estate.
  2. For example, strata-title developments have an MCST in place to administer by-laws and implement localised security measures to protect the amenity of their residents and effectively mitigate the impact of STA use. Hence if there is owners’ consent for STA use, URA will be prepared to consider the application for STA use favourably. This would be especially so for properties that are located in mixed-use areas such as commercial centres and business parks, or sites that are fronting major and arterial roads with good traffic infrastructure.
  3. On the other hand, most landed housing estates are located in areas that are relatively quiet with narrow estate roads. There is no MCST-like governance structure and the presence of STA will have greater impact on residents. Hence URA is unlikely to approve STA use in such areas. Likewise, properties where there are already dis-amenities in the surrounding area will not be allowed for STA use. This includes areas where there are existing social concerns related to security and vice.
  4. In addition, we propose to introduce the following measures to guard against the erosion of residential amenity and character of our housing estates:
  • Annual rental cap of 90 days that the property can be used for STA;
  • Occupancy cap of 6 persons per unit at any one time, in line with URA’s occupancy cap of 6 un-related persons for private residential units;
  • Compulsory registration by each individual property owner with URA prior to listing the property for STA use, or to allow such use to take place;
  • All approved STA hosts will be required to provide URA a record of guest details for each stay. This is aligned with the requirement for the particulars of all guests staying in hotels to be recorded for security reasons.
  • Compliance with fire safety requirements specific to STA use. (Please see the following section.)

Fire Safety Requirements

  1. Transient occupants in STA units face greater fire safety risks than conventional residents, as they are less familiar with the environment and evacuation routes. This is the reason that hotels and Serviced Apartments are subject to more stringent fire safety requirements than residential buildings under the Fire Code.
  2. To ensure the safety of all persons in developments which are put to STA use, the following fire safety measures are proposed:
  • Require STA homeowners to equip their homes with equipment such as home fire alarm devices and fire extinguishers.
  • Require fire safety infrastructure in buildings where there are STA activities to be upgraded to meet the prevailing edition of the Fire Code. These requirements may include: provision of rising mains, hose reels at every floor, upgrading of one passenger lift to a fire lift.

The specific fire safety requirements will have to be assessed by SCDF and may depend on the number or proportion of units that are used for STA at any one time.

Role of Management Corporations (MCSTs)

  1. MCSTs play an important role in representing the collective interest of all SPs in a strata-titled estate.
  2. The MCSTs will need to ensure that a vote of support comprising at least 80% of the share value in the development has been obtained, before STA can be allowed, as indicated earlier in paragraph 10.
  3. To get support for STA use in the development, MCSTs can put in place additional measures to manage potential dis-amenity and disturbances, such as introducing by-laws to regulate STA over-and-above those prescribed by the Government.
  4. For example, by-laws could include an annual rental cap that is lower than the proposed 90 days; an occupancy cap per unit which is lower than the proposed 6 persons; and a requirement that only owner-occupied units can be used for STA.
  5. MCSTs can also consider requiring owners of STA units to pay additional maintenance fees for common areas and facilities. This may help to get buy-in and support from the other residents who do not intend to put out their units for STA use.

Regulation of Commercial Platform Operators

  1. Platform operators play a critical role in the advertising and marketing of STA units, and serve as the key intermediary between hosts and guests.
  2. We will consider the licensing of platform operators that advertise or market rental units in Singapore for STA use. Under such a framework, all STA transactions would have to be channelled through “Licensed Platform Operators” (LPOs). Platform operators without a licence will not be permitted to advertise or market units in Singapore for STA use.
  3. As part of the licence conditions, we envisage that the Government will require LPOs to undertake the following responsibilities:
  • Ensure that only residential premises registered with URA for STA use are listed for rent on their websites (and other advertising platforms).
  • Keep track of the number of nights for which an STA unit has been rented per year, and reject rental bookings if the annual 90-day quota is exceeded.
  • Pay any relevant taxes to the authorities on revenue generated from business activities in Singapore. Platforms may also need to facilitate the collection of taxes from STA hosts.
  • Provide information to the authorities on the activities of STA hosts on their websites/platforms. Such information will be used for regulatory and enforcement purposes, e.g. ensuring that STA hosts also pay taxes on the rental income that they earn.
  • Ensure that STA hosts comply with the requirements and conditions imposed by government agencies.
  1. LPOs that are in breach of their licence conditions will be subject to penalties, and their licenses may be suspended or terminated.

Other Related Issues

  1. In developing this regulatory framework for STA use, we recognise that there are growing overlaps between the different accommodation options. Private Residential Units, Serviced Apartments and Hotels are currently regulated separately. But with the overlapping uses, there is a need to look at these different accommodation options as a broad continuum, serving diverse customer segments. We will therefore continue to review our regulatory framework across the wider accommodation landscape to ensure that they stay relevant in the face of technological disruptions and continuous changes in the marketplace.

Your Views and Feedback

  1. The issue of STA is a complex one. We appreciate your views and feedback in working out and finalising the regulatory framework. Even as we do so, we remind all property owners and commercial platform operators to comply with the existing laws in Singapore, which means that the rental of residential private properties is subject to a minimum stay of 3 months.

If you would like to provide feedback, please send them to ura_sta_consult@ura.gov.sg by 31 May 2018.

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