PENANG’S move to ban short-term rentals or homestays in high-rise units is unfair to those who have invested in them and could also backfire on the state’s tourism and real estate sector, local homestay groups said.

On April 28, Penang housing exco Jagdeep Singh announced plans for the ban, which would be in the form of guidelines for local councils to implement.

These guidelines are still to be worked on before the ban takes effect.

Jagdeep said the decision was made due to frequent complaints from residents about short-term tenants disturbing the peace.

It will make the popular tourist state the first in the country to enforce such a ban, but local investors say the timing is bad, coming just as the country has reopened its international borders after two years of Covid-19 movement restrictions.

Malaysia Homestay Operators’ Association (MHOA) Penang branch president Lydia Tan said people who have invested in these units to rent on platforms such as AirBnB will lose their return on investment as a result.

She said homestays have also helped Penang’s economy by providing accommodation to visitors because many hotels closed when Malaysia locked down its borders in 2020 and have not reopened.

“Many hotels have not reopened. Without homestays, how is Penang able to accommodate the huge number of tourists if it is peak season,” Tan said.

She added that homestays also give families or large groups alternatives to hotel rooms.

“If people come as a family of 10, do they want to spend more money renting five hotel rooms?”

Elvin Wong, vice-president of the MHOA, said he had “unofficial” figures that showed that visitors outnumbered available hotel rooms, adding that not all travellers can necessarily afford, or even want, a stay in a hotel.

“During a peak season, hotels can increase their prices, which can be a boon for them in the short-term, but not in the long run.”

Wong added that tourists may book hotel rooms but, if that takes up most of their holiday budget, they have no spending money.

That in turn will affect the wider tourism industry, he said, adding that other states may follow suit.

“It is not fair to the industry and those who have invested, and it is a hasty decision.

“It was made after listening to one-sided complaints from residents,” Wong said, adding that the Penang government should have consulted homestay owners as well.

A better way, Wong suggested, was to let individual building management and residents decide and draw up their own rules.

“I don’t deny that there can be irresponsible owners and tenants, but these can be handled by building management and residents with their own regulations.”

According to the MHOA, there are around 1,500 homestay units in Penang, including Butterworth and Bukit Mertajam.

Last year, the state government introduced new local by-laws, which required short-term rental service platforms like AirBnb get approval from 75% of residents in a building before it can operate there.

Owners are subject to a RM200 fine for each day they fail to comply.

Impact on real estate sector

Meanwhile, Tan said the ban will impact the real estate sector and high-rise buildings under construction.

“These have attracted buyers by pitching the chance to invest in the homestay sector. What will happen to these units now? Will they become unsaleable?”

Tan said the MHOA hopes for the chance to speak to the state government.

Mich Goh, Airbnb’s director of public policy for Southeast Asia, said in a statement that the ban will negatively impact local tourism recovery.

It will hurt local business and community activities, and it will be difficult for Penang to remain competitive in attracting tourists.

She urged the government to reconsider the proposal and hand it over to the respective governing bodies and building management companies to regulate short-term rental units.

“Let local residents decide whether to allow or regulate how short-term accommodation arrangements should be made,” Goh said. – May 3, 2022.