NAMA weighing in on Airbnb regulation

NAMA weighing in on Airbnb regulation

MAIN IMAGE: Coenie Groenewald, COO of the National Association of Managing Agents (NAMA).

Airbnb’s and other short-term let’s in community schemes are regulated by the rules of such a scheme, and this is how it should remain says Coenie Groenewald, COO of the National Association of Managing Agents (NAMA).

Groenewald is commenting on the recently published Tourism Amendment Bill which proposes that short-term accommodation, which includes Airbnb and other home-sharing apps, be legislated under the Tourism Act.

The Bill, if approved, also allow the minister of tourism to set certain “thresholds” for short-term rentals – this could include limits on the number of guests and the number of nights that they stay over, even a limit on the income made.

Blessing Manale, chief director of communications at the Department of Tourism, told Fin24 the intention with regulating isn’t to ‘kill’ the short-term online rental industry as it is an industry that works but to find the best outcome for the local tourism industry.

A little background on Airbnb

Airbnb is an international online booking platform where private home owners can sign up to offer accommodation in their homes for visitors from all other the world. Since it’s launch in 2008 in San Francisco, thousands of home owners have jumped at the chance to earn an income from their property in this way.

This is also the case in South Africa – according to recent figures there are more than 35 000 hosts in the country, and most of them are women. It is also a money spinner – it is estimated that by October 2018 South African hosts had earned more than R14 billion since the launch of the platform in 2008.

Read more about Airbnb’s impressive rise in SA here

Business has however slacked down in recent years for the formal hospitality industry who has repeatedly called on the South African government to step in and level the playing field saying it is unfair that Airbnb hosts aren’t subject to the same regulations and rules.

Governments stepping up regulations on Airbnb’s is nothing new, internationally cities such as New York, Berlin and Reykjavic (Iceland’s capital) have all brought in regulations affecting short-term rentals on online platforms.

Community schemes

In South Africa Airbnb’s are in general self-regulated, however, when it comes to short-term rentals in community schemes, Groenewald says they are regulated by the conduct rules of that scheme.

These schemes are regulated internally by scheme specific rules registered with the Community Scheme Ombud Service (CSOS) under the Sectional Titles Schemes Management Act. This Act and the Community Schemes Ombud Service Act regulate the rules and scheme governance in respect of, among others, the following: occupancy of a unit, use and enjoyment of a section and common property, maintenance, security, common property generally and running of a business.

NAMA intends to address various issues in their comments on the Tourism Amendment Bill.  With regards to community schemes their comment is that to regulate and prescribe the use of privately-owned property is unconstitutional and infringes on the rights of property ownership within a community scheme and that tourism as a sector cannot involve itself with the governance and regulation of community schemes and the manner in which they apply and enforce rules.

Furthermore, the association says enforcing limitations on income, regulating registration, licensing or even application to operate an Airbnb will be detrimental to the growth of property investment. Groenewald explains that many first-time home owners find it difficult to enter the property market being hindered by strict credit scoring from financial institutions. These home owners rely on the additional income generated through Airbnb to alleviate the financial burden of owning a property.

In conclusion, says Groenewald “Airbnb as an affordable option should remain at the sole discretion of the property owner within a community scheme and short term letting must be regulated in the conduct rules of such a scheme”.

What do others say?

Chris Hattingh, researcher at the Free Market Foundation, says the Tourism Department can’t be judge and jury of what you are allowed to earn as an Airbnb host – “this indicates a fundamental lack of understanding of the nature of the business, and of wealth, which is: each person is not entitled to a slice of the economy; wealth is created by each person, for himself”.

Letting specialist, Grant Rea, said Airbnb has brought in healthy competition in the “heads on pillows” space as it forces overpriced establishments to not only up their game but also ramp up the client experience overall and consider their pricing. However, he feels “some regulation is needed to both protect the industry and to protect the industry from unscrupulous Airbnb hosts who simply want to abuse the desire from tourists for more choice”.

He says there are complaints about Airbnb units in sectional title schemes, however, he says, this would require input from the Department of Human Settlements (DHS), not tourism, as the regulatory body of these schemes, the CSOS falls under the jurisdiction of the DHS.

The Tourism Amendment Bill was published in the Government Gazette on Friday 12 April, and again on Monday 15 April due to a printing glitch. The public has 60 days from Monday 15 April to submit comments on the Bill.

You are welcome to share your comments on Airbnb’s and how their regulation (or no-regulation) should be approached to editor@propertyprofessional.co.za .

Showing 5 comments
  • Paul Davies
    Reply

    What is interesting here is that NAMA, a body that has no standing in the property industry other than a name, has a voice in this matter. Even the NAMA code of conduct is a joke in my opinion. Use some of those clauses in a rental contract, and the courts would be a laughing stock.

  • John
    Reply

    The world of today is so over-regulated that we are fast reaching the stage where it is impossible to comply with all the statutory regulations that politicians and corporations are calling for.

    It is time that the honesty, integrity and morality of each individual – and ultimately the country as a whole – started being the guiding norm again.

    We in RSA are already over-regulated and did that stop the process of State Capture and the associated fraudulent acts – by especially the politicians and corporations? Has that stopped current lawlessness? The regulations are in place to act, but the morality is lacking.

    Hold the guilty, in relation to the existing regulations to account first, before promulgating new laws and regulations.

  • Velma van den Berg
    Reply

    I think if a private individual can airbnb a property or portion of a property it should have nothing to do with the Tourism board or government. The only requirement being that they act within the areas by-laws and rules of a scheme.
    these people are creating work and making ends meet in a very difficult economy.

  • Dawid Fourie
    Reply

    Short term letting is part of the bundle of property rights of an owner. But, where some members of a community scheme wish to pool their sections for short term letting, they can not use the bank accounts of the body corporate to run their business.. A separate enterprise must be registered in terms of the Tax administration Act and The Vat act. The Trustees of the Scheme allowing or doing this would be acting contrary to the STSMA in the following ways:
    1. Letting of common property without Unanimous resolution of owners
    2. Distributing the profits of the Body Corporate which is not capital in nature and not according to the PQ schedule
    3. Spend the money of the BC not according to an approved budget
    4. Prejudice to an owner in the Scheme who is not participating in that such owner will be liable to any judgement creditor including SARS.
    5. By not reflecting these financial transactions in the annual financial statements of the BC.
    6. Change of Use of a section, or EUA without unanimous resolution of owners
    7. Not being registered as an Estate Agent as required by the EAAB
    8. Violating the provisions of Municipal bylaws
    9. Violating the provisions of the schemes insurance policy
    10 A general violation of ownership rights of residential owners by changing the nature of a residential scheme to a mixed-use scheme
    11 Running a business on the common property
    12 Using BC personnel to maintain owners sections
    13 The fees charged for this service to owners is NOT LEVIES, it is taxable income

    If a community scheme wishes to allow or conduct short term letting, the Management Rules must provide for the Regulation thereof; using the conduct rules as suggested by Coenie Groenewald will be contrary to the PMR’s in the STSMA.

  • Dawid Fourie
    Reply

    Most importantly, persons who receive direct or indirect financial benefit from the BC is disqualified to Act as Trustees, unless he is an owner. One of the biggest mistakes made in the STSMA was to change the provision that the majority of Trustees does not have to be owners.

    These disqualified trustees then goes to great lengths to NOT look after the interest of the owners, as they are deemed the owners of the common property under the ACT. No person can not own or occupy common property if you are not the registered owner or occupier of a section, period.

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