Disturbed sleep for Airbnb users Disturbed sleep for Airbnb users
Share this on WhatsAppBy Roznah Abdul Jabbar KUALA LUMPUR — The recent eviction of Henry Ikezi, a tenant staying under Airbnb in New York, the United... Disturbed sleep for Airbnb users

By Roznah Abdul Jabbar

KUALA LUMPUR — The recent eviction of Henry Ikezi, a tenant staying under Airbnb in New York, the United States, has raised fresh concerns over the legality of the businesses
transacted under the popular online portal.

Recently, Airbnb, a platform that allows homeowners to list their homes for shortterm rental, has been catching the limelight for all the wrong reasons, including a campaign launched against it and lawsuits challenging the hosts of the site.

The California-based company started in Aug 2008 and commands a listing of more than 25 million guests from 34,000 cities over 190 countries. Within less than seven years of its formation, the homesharing empire has reached a valuation of around US$10 billion (RM36.06 billion), consequently earning it the title Company of the Year 2014 by Inc.com.

Malaysians have not missed out on the opportunity and several home units especially in Kuala Lumpur, are listed under the alternative lodging service operator.

Last year, it was reported that most of Airbnb’s business is illegal.

Ikezi rekindled the controversy when he listed the apartment unit he rented on Airbnb. He pays US$6,670 (RM24,051) per month for the apartment, substantially less than the US$9,000 (RM32,452)-or-more market rate under a special tax-exemption scheme, and listed it on Airbnb for US$649 (RM2,340) per night.

The decision, while not the first eviction related to short-term rentals, could serve as a precedent for how the city’s courts deal with enterprising tenants.

The landlord alleged that Ikezi was renting the apartment like a hotel, while Ikezi said he lived in the apartment with his family and only hosted tourists occasionally. However, an employee for the landlord testified that when she confronted Ikezi about the Airbnb listing, he said he could do what he wanted and would not remove the ad.

New York Attorney General Eric Schneiderman, who is having an ongoing battle with the hospitality provider, argues that Airbnb has created a new kind of New York City real estate mogul – the commercial host. He said the portal raises serious concerns about the proliferation of illegal hotels.

On the homefront, the legislation may take some time to catch up. According to Mani Usilappan, the president of Board of Valuers, Appraisers and Estate Agents, legal issues can be anticipated only if the host is subletting the unit.

“Tenants are not allowed to sublet the units as they need to consult with the landlord before practising it,” he said. He pointed out that a tenancy agreement is not necessarily needed in Malaysia.

“Agreements are only made when long stays are involved. For short-term rentals, there is not much legal necessity,” he told Real Spaces.

Echoing this, Dr Azlinor Sufian from the Legal Practice Department of International Islamic University Malaysia, said that the law in Malaysia does not require the tenancy agreement to be made as a written contract; rather it may be just an oral agreement.

“While provisions on tenancies and leases can be found in the National Land Code 1965, Contracts Act 1950, Distress Act 1951, and Specific Relief Act 1950, the existing legislation remains rather vague and deals with the issue in piecemeal,” she states  in her journal entitled A Conceptual Study on Landlord and Tenant Law in Peninsular Malaysia: A Focus on Private Residential Tenancy.

Mani added that the suitable law for the kind of transactions made in Airbnb in Malaysia is the Innkeepers Act 1952.

Commenting on whether the practice would affect the property market in the capital city, he said that it is unlikely.

“The price is not lower than the market price of these units (for its area), but it is considerably lower than hotel stays in Kuala Lumpur,” he said.

He said that travellers are finding it much cheaper to rent a room via Airbnb compared to staying in a hotel.

“It could affect hotel businesses, especially those who are here for longer stays as they might opt for units listed in Airbnb rather than hotels nearby,” he concurred.

However, he said that hotels often offer reduced price for longer stay, so he does not see it as a major issue.

Mani added that Airbnb is well-known in Europe and US because hotel rates are slightly pricier, but in Malaysia, hotels are considerably cheaper.

He said that the practice might benefit property owners in high-rent areas such as KLCC and KL Sentral.

“I don’t think it is doing any harm to the market but helping the owners of units in these areas to get tenants,” Mani said.

“I encourage more occupancies in these areas as there are a lot vacant units in prime areas due to oversupply,” he said.

“But the government has to make sure suitable measures are taken in terms of safety,” he pointed out.

Similarly, New York Attorney General Schneiderman said, “We must ensure that, as online marketplaces revolutionise the way we live, laws designed to promote safety and quality-of-life are not forsaken under the pretext of innovation.

Property 360 Online

Property 360 Online is a news portal focused on major issues, views and major market movements in the Malaysian real estate sector.