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Illegal, unlicensed and completely unregulated ... so why is Airbnb booming in Hong Kong?

Airbnb listings jump 59 per cent, even as Hong Kong outlaws unlicensed rentals

PUBLISHED : Monday, 08 August, 2016, 8:22pm
UPDATED : Tuesday, 09 August, 2016, 9:40am

Cushions with cartoon dogs on, neatly rolled towels and fresh flowers are the small details that mean the most for Airbnb guests and hosts.

For one host in Hong Kong, those personal touches are replicated across 52 listings, including at least 31 flats in one building near Lan Kwai Fong.

Taking up three quarters of the flats in one building on Glenealy, the Airbnb apartments share a common rooftop and range in price from around HK$500 per night to more than HK$2,200 for a four-bedroom flat.

The flats, which do not appear on the Home Affairs Department’s list of licensed guest houses, are among a growing number of short-term rental properties being rented illegally in Hong Kong.

Airbnb listings in the city have grown by 59 per cent since September to 6,124 rooms or apartments available for rent at the beginning of June, according to data compiled by Murray Cox, the founder of Inside Airbnb and a data activist.

Cox found 60.5 per cent of listings were from hosts with more than one room or property listed on the site, suggesting these are commercial operations rather than individuals renting a spare room.

“The main metric that stands out for Hong Kong is the large number of hosts that have multiple listings,” Cox said. “Cities such as London, New York or Berlin, which have introduced regulations that prohibit commercial Airbnb use of residential properties, generally focus their enforcement efforts first on commercial hosts with many listings.”

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The highest number of listings can be found in Central and the Western district, as well as Yau Tsim Mong – the area including Tsim Sha Tsui, Yau Ma Tei and Mong Kok – with 1,474 and 2,519 respectively, according to data by Cox. The average rental per night across the city is HK$785.

When the South China Morning Post called the telephone number for the Lan Kwai Fong Airbnb host given by a person at the property, the woman answering denied she owned the flats. She said she rented other Airbnb flats without a licence, but the government had forced her to stop renting some of those near the University of Hong Kong.

Airbnb was founded in 2007 in San Francisco by two roommates who were struggling to pay their rent and decided to rent out air beds in the living room to attendees of a design conference. The company is now seeking financial investments, based on the company’s potential valuation of US$30 billion.

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The site has faced opposition from regulators in cities from San Francisco, Berlin and London as well as from campaigners that say properties that would normally be let on a long-term basis are being rented by landlords for short stays affecting the supply of housing.

Regulation has moved to include provision for Airbnb properties in some cities. Laws introduced last year in London allow home owners to rent their properties for up to 90 days a year without any form of registration, but opposition remains even in the service’s home city.

Premises that offer sleeping accommodation for a fee for any period less than 28 days must be licensed, according to Hong Kong’s Hotel and Guesthouse Accommodation Ordinance.

The maximum penalty for operating an unlicensed guest house is a HK$200,000 fine and two year’s imprisonment. There is also a fine of HK$20,000 for each day the offence continues.

Enforcement is carried out by the Office of the Licensing Authority under the Home Affairs Department, and a spokeswoman said the office now has a dedicated team to browse the internet for suspected unlicensed guest houses.

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Last year the Office secured 132 convictions relating to unlicensed guest houses, some of which had been rented over the internet.

Airbnb told the Post it “encourages hosts to comply with locally set rules and regulations in Hong Kong.”

The company did not share the number of listings in the city and said Inside Airbnb data had flaws such as the price per night as this was based on an average of available listings rather than what has been booked or what guests are paying.

I don’t think this is something you should do for too long. It’s not legal ... I’m very surprised that we’ve lasted that long
Airbnb landlord S

Airbnb also said there was no reliable way to scrape data for the average income for a host each month or the average number of nights booked. The company did not supply the accurate data from its own internal sources.

Flats or rooms available on Airbnb in Hong Kong range from small, functional rooms in Mong Kok to penthouses with harbour views and houseboats moored in Discovery Bay.

While the Inside Airbnb data revealed hosts with as many as 80 listings and at least 20 with 22 or more listings, there are hosts in Hong Kong who rent just one flat or one room.

S, who asked not to use her full name, is a 33-year-old French woman working in retail in Hong Kong, who rents her 500 square foot apartment in Sheung Wan for around HK$1,000 a night fitting Airbnb guests around visits from family.

She said she has been renting the flat, which she and her husband own and previously lived in, since July last year and has seen 90 per cent occupancy . On average the flat brings in HK$30,000 a month, she said.

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While S knows Airbnb is illegal, she feels the company protects her and her guests if there is any damage or dispute. If the laws were changed to allow short-term rentals, she said she would be happy to be taxed if she could still rent through Airbnb.

Maintaining the flat and organising bookings is time consuming, S said, as she likes to provide a good service to her guests, but she does not see it as a long term plan.

“I don’t think this is something you should do for too long. It’s not legal. I might rent it out on a permanent basis,” she said. “I’m very surprised that we’ve lasted that long.”

Another Airbnb host, who asked to be referred to as Mary, rents out her spare room in the two-bedroom flat she shares with her boyfriend in Sheung Wan for 15 days each month to offset the rent.

Mary lets the room for HK$500 to HK$600 a night and has made between HK$6,000 to HK$7,000 each month since late last year.

She said her landlord does not know about the couple using Airbnb, but she is not concerned about the legality of Airbnb, even after a friend was evicted by their landlord for using the service.

Most of the guests from mainland China are respectful, Mary said, although the couple did once come home late to find chaos in their living room.

“We just opened the door and found stuff all over the living room. The luggage, some bath towels on the sofa, a bra hanging on my room door,” she said.

“They were quite surprised to see us. So we kindly asked them to maybe put the stuff in their room.”