Why ‘leveling the playing field’ is a bad reason for regulating Airbnb in Singapore

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Singapore’s government is scratching its head over regulating short-term stays in private houses. It is currently “illegal to lease a home for less than six months in Singapore,” points out the Straits Times.

There are strong reasons to side with either camp, but one argument that stood out for me was this: “Any change in rules should ensure a level playing field.”

We’ve been down this road before – and the road leads to a dead end. Incumbents tend to want a “level playing field,” but their justifications for wanting it is shaky.

Remember all that hullabaloo about regulating Uber and Grab, and the taxi association crying foul about how they should be regulated just like taxi drivers?

Ultimately, the taxi association has no evidence to back up its claim that these transportation apps are less safe than taxis. One incidence of rape by an Uber driver does not a trend make.

Back to the Airbnb debate. The Singapore Hotel Association (SHA) has voiced its concerns about the safety and security of Airbnb’s services.

Yet the SHA hasn’t furnished proof that Airbnb stays are less safe than hotel stays, either for the tenant or the property owner (SHA did not respond to our queries).

And even if somehow it can show proof, we should question whether the difference is meaningful enough to matter, and whether consumers should be concerned.

Let consumers speak

We live in a free market. Consumers should make their own informed choices and trade-offs. Airbnb is unsafe by 0.5 percent? Let consumers know, and let them decide whether to use it. Regulation is no panacea.

The arguments I’m making are hardly original. But they’re worth repeating, because the same regulatory battles are happening again and again.

Surely, underlying the SHA’s statements are these concerns: Airbnb tends to be cheaper than equivalent hotel stays, and that is a legitimate threat to the hotel business. Hotels might shut down, and people might lose their jobs. The government has reasons to be concerned too: unemployed voters are unhappy voters.

But consider the flip-side. A more efficient tourism market, brought about by Airbnb, can offset a shrinking hospitality sector. And if the government will consider letting public housing owners rent their homes to tourists, it’ll be a powerful enabler for the middle-class.

Of course, It’s perfectly understandable why the state is taking its time to weigh this up. There are potential side-effects to opening the floodgates to Airbnb rentals – such as causing a housing shortage or price inflation for people who actually want to live in the houses they buy.