At a time when many cities are worried about the effect of short-term lets on the availability of housing for local people, research in Australia has suggested that stricter regulation may not be a solution for housing shortages.
This week it was revealed that in 2025, 97.2% of all traditional Short Term Let (STL) applications in Edinburgh were refused by the council. A significant majority of these have been previously granted full STL licences, indicating a new enthusiasm for protecting long-term accommodation in the city.
We randomly selected an application on the planning portal. Its refusal was explained: ‘The loss of the residential accommodation has not been justified. Whilst it is recognised that there is an economic benefit to the city as a whole from the provision of tourist accommodation, in this case it does not outweigh the adverse impact on loss of residential accommodation.’
In Western Australia, the problem is perceived to be so serious that an incentive scheme has been launched, offering owners $10,000 if they transition their property to a minimum 12-month long-term tenancy, rather than offering STLs.
The Australian research looked into the merit of such policies, using at New York City as their case study. In late 2023, the city introduced strict restrictions on STLs, which caused listings to drop sharply. However the expected benefits did not materialise: long-term housing supply did not increase and rents rose faster than in comparable U.S. cities.
At the same time, hotel room rates soared, reducing the city’s competitiveness as a tourist destination.
Lead researcher Professor Peter O’Connor said: ‘Our analysis shows that recent efforts to impose strict regulations or outright bans on short term rentals, including in one of the world’s most must-visit destinations – New York City – fail to have any meaningful impact on the housing market.’
‘Data suggests that restrictions neither significantly increase the supply of long-term housing, nor reduce rental prices. Instead, in NYC specifically, (long term) rental prices have increased at a faster rate than comparable cities and residential vacancy rates remain largely unchanged.
‘NYC hotels have benefited from the ban, experienced high growth in occupancy and room rates compared to before regulations were introduced. Not only has this turned New York into a hyper expensive destination for travellers, but the knock-on multiplier effect to the local economy has plummeted due to both lower visitor numbers and more concentrated visitor spending. Hotels win out, at the expense of tourists and locals.’
Co-author of the research, Dr Jessica Mei Pung added: ‘Regulating short term rentals allows governments to appear proactive on addressing the housing issue but the relative effectiveness of such restrictions is generally not considered. If the aim is to increase the availability and affordability of residential property, the evidence clearly shows that restrictions and bans have limited, if any, demonstratable effect.’
The full research can be read here.
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