During the shutdown of Airbnb properties during Covid lockdowns, the Irish-American had to dip into her savings to stay afloat – because her operating expenses were far higher than the €350 she received from the Pandemic Unemployment Payment.

Now MacEvilly – who acts as a voluntary community leader for Airbnb hosts based across Co Kerry and Co Cork – believes the financial cushion provided by an Airbnb ‘side hustle’ faces a bigger existential threat than it did during the pandemic.

The spectre of stricter regulations of short-term lettings, combined with rising costs and lacklustre bookings is already driving some Airbnb operators out of the market.

The wags on social media have been quick to christen the phenomenon an ‘Airbnbust’.

Professional owners of multiple Airbnb properties in Dublin may grab all the headlines, but Airbnb community leaders say older women make up the bulk of hosts outside the capital.

Airbnb itself says most of its hosts are those letting out a room in their own house for an average of three nights a month.

Tighter rules

Regulations aimed at curbing Airbnb-style holiday lets were introduced in July 2019 for rent pressure zones (RPZs).

Change-of-use planning is required if a person’s main residence is being let on a short-term basis for more than cumulative 90 days, or if a second property is being rented as an Airbnb within an RPZ.

Breaching these rules is a criminal offence that can be prosecuted in the district court, where fines of as much as €5,000 or a six-month imprisonment – or both – can be imposed.

The Government and the EU have started to clamp down further on short-term lettings.

Under proposed EU laws, properties must be listed on a register that is then shared between local authorities and short-term letting websites. Legislation signed off on by Cabinet in December paved the way for a new online registration system run by Fáilte Ireland.

This means hosts of any short-term rental would have to list their registration number when advertising their properties for rent – a system Airbnb has supported. Using the register, local authorities could keep track of properties offering short-term lettings – and issue warning letters or begin investigations into properties without the required planning permission.

“The new register will shine a light on those properties that need planning permission and make it easier to enforce,” says Brendan Slattery, head of the planning and environment group at law firm McCann FitzGerald.

It was reported earlier this month that owners of properties in RPZs with populations of fewer than 5,000 would not need planning permission to register their listings, after the EU forced the Government into a climbdown.

The European Commission had raised concerns over how new Irish laws would apply “indiscriminately” to both rural and urban properties.

The Department of Housing is working to update planning guidelines on short-term lettings in a bid to provide clarity over the planning permission requirements and exemptions.

Last month, the Government’s plan to introduce a registration scheme for short-term tourist accommodation was put on hold until the end of 2023 after the EU Commission extended a ‘standstill period’, so it could consider the proposed legislation underpinning the register until December.

“None of us know what’s going on, but it feels like a death sentence reprieve,” says MacEvilly.

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Planning permission

If you do require planning permission to operate an Airbnb in any part of the country, you’re currently unlikely to secure it.

Indeed, few operators of short-term lettings have even bothered to seek planning permission.

Just 36 property owners in Dublin City have applied for planning from Dublin City Council since mid-2019, and only eight of those have been granted it.

“Few planning authorities have sufficient resources to enforce the controls that were introduced in 2019,” Slattery says.

One Airbnb host told the Sunday Independent that operators have been deterred by the cost of applying for change-of-use planning, saying it can amount to “several thousand”, depending on the size and location of a property.

However, a division set up by Dublin City Council’s planning enforcement section to police properties used as short-term rentals has said it has investigated 1,600 properties since 2019. It sent 1,770 warning letters advising owners the council believes them to be in breach of planning legislation and directing them to regularise their position.

While local authorities in 11 counties took no action at all against property owners leasing homes to holidaymakers in 2021, Kerry Co Council has been more vigorous than most.

Between the start of the year and mid-March, it issued 347 warning letters to homeowners thought to be using their properties for short-term rentals. Out of that figure, 245 of the files were closed for various reasons, including owners ceasing short-term letting or returning the property to the long-term rental market, a council meeting heard.

The warning letters and enforcement action has been applied not just to Killarney, which is an RPZ, but to other parts of the county where the council has evidence of significant numbers of properties being withdrawn from the long-term rental market.

“We’ve gotten the brunt of the cease-and-desist orders in Dingle,” says MacEvilly, who has not received one herself. “It’s causing a lot of fear. Some people have dropped off the platform, but they are not turning [the properties] into long-term rentals.”

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Lower margins

Statistics compiled for the Sunday Independent by AirDNA, a short-term rental data and analytics provider, suggest more Airbnb operators are leaving the market.

While supply and demand for Airbnb listings recovered somewhat in the 12 months through February 2023 from the previous 12 months (especially in the cities), average monthly listings were 29pc lower than in the 12 months through February 2020 – and the number of nights stayed was down 8pc.

This effect is more dramatic in Dublin, Waterford, Galway, Limerick, and Cork, where supply is down 52pc and demand down 55pc from 2019.

Average daily rates (ADRs) across Ireland are up 46pc to €160.05 from 2019, thanks to a surge in prices in 2021, but ADR growth slowed to 9pc – close to inflation – in the 12 months to February 2023. This suggests rising costs are putting pressure on operators’ margins, AirDNA says.

Higher energy costs have driven up electricity and laundry bills for Airbnb operators, as have rising mortgage interest rates, at a time when slow economic growth is affecting demand from tourists.

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Tax expenses

Your ability to offset expenses against your tax bill is hugely dependent on whether you  occasionally let out your property, or if you’re a frequent host, says Marian Ryan, consumer tax manager with Taxback.com.

“The expenses you can write off your Airbnb tax bill if those earnings are deemed to be trading income include those relating to the trading activity, as well as a portion of expenditure on fixtures and fittings,” she says. “A certain amount of pre-trading expenditure will also be tax-deductible, such as the cost of repainting a bedroom or purchasing bed linen.

“If you’re an occasional Airbnb host, you can expense commission paid to Airbnb, cleaning fees, the cost of breakfasts provided to guests, as well as a reasonable apportionment of electricity, gas and heating used by guests.

"However, the costs of insuring or maintaining the property would not be tax-deductible, and neither would any costs you incurred in advance of a property or room being made available for guest accommodation.”

Leaving your Airbnb idle? You could face the vacant homes tax

Despite current regulations restricting property owners from operating short-term lettings in an RPZ, lax policing by local authorities means thousands of property owners are still taking the risk of listing their units on short-term rental platforms in cities and large towns.

Indeed, the average daily rate for an Airbnb means many property owners can earn more in a single week from a short-term let than they could from renting the property to a full-time tenant for a month.

A survey of 181 Airbnb hosts taken earlier this year by the platform’s voluntary community leaders, found that more than 90pc of Airbnb hosts outside Dublin would leave their property idle if they were forced to stop operating, rather than renting out their property to long-term tenants.

The most common reasons given by those who said they would leave their Airbnb units vacant were because the accommodation – often granny flats and converted farm sheds – were too close to their own home, or because they were concerned about long-term tenants’ rights.

However, if they did that, property owners could find themselves getting a bill for the upcoming vacant homes tax, a measure announced in the last budget to encourage owners to sell or rent underused homes.

Under the tax, a property is considered vacant if it’s occupied for fewer than 30 days out of 12 months.

The levy will be three times the amount paid in Local Property Tax (LPT) – in addition to the annual LPT they already pay for that property.

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