Japan Combats Globalization, Hits Airbnb With New Law

Japan Times: New minpaku law will alter Japan’s rental and hospitality landscape

A new law will go into effect in June to regulate minpaku, private residences rented out by their owners as short-term lodgings. To most, the new law will address changes that have occurred in recent years due to the rise of Airbnb, the worldwide online service that allows travelers to book rooms in private homes directly from the owners of those residences.

Japan has long had a similar type of system called minshuku, which usually involves rooms in private homes that are offered as lodging. But people who want to let rooms as minshuku must apply for a license, which requires that the room be a certain size. Also, a management-type person must always be on the premises. These rules, however, have never been strictly enforced, which is why Airbnb was able to gain a foothold in Japan, even though, technically, such rentals are illegal.

The new minpaku law will lower the legal hurdles for renting out properties as short-term lodgings.

...Probably the most contentious aspect of the new law is that it contains no restrictions with regard to the type of property that can be used. One of the main sources of complaints about Airbnb rentals has been condominium owners and tenants who object to neighboring units being used as de facto hotel rooms without their approval. The new law will not expressly address this problem, but the land ministry has drawn up guidelines for owners associations that wish to ban minpaku from their buildings.

A little deeper in the story we can get a hint of the what the new law may be targeting:

Many modern condos have auto-lock systems that require residents to first use a key or key code to enter the building and then another key or key code to enter units, the point being to keep non-residents out of the building unless a resident is there to give allow entry. This situation will become more of an issue because many minpaku owners don’t live in the buildings where they have rooms. In Osaka, for example, two-thirds of Airbnb owners are non-Japanese who don’t live in the country. There are, for example, Chinese real estate companies that sell Japanese condos to Chinese investors and then manage the units as minpaku. The owners may never even physically see the unit they bought.

Bloomberg in 2017: China's Answer to Airbnb Sets Sights on Japan

The Beijing-based startup aims to increase the number of properties available for holiday rental to about 100,000 by 2019 from 10,000 now, Tomoko Suzuki, chief executive officer of the Japanese unit, said in an interview in Tokyo. About half of the listings are owned by Chinese investors, she said, adding that Tujia may buy lodgings of its own in the future.

There are foreign companies such as Airbnb skirting local laws. Some people describe companies such as Uber not as technology innovators, but regulatory violators. It is easier to make money when you ignore taxes and regulations.

Additionally, we have the effects of large foreign populations moving into another nation (temporarily or permanently). Chinese buy up properties in Japan and then list them to Chinese tourists, allowing them to recapture a lot of money that would otherwise go to Japanese. Since the relevant laws can vary from place to place, it is possible this isn't as easy to pull off in other countries. Even leaving that aspect aside, some cities in Italy have had anti-tourism protests because they do not like the volume of people coming into their city and effectively turning it into a theme park.

Finally, there is a lot of concern about authoritarianism these days. Companies such as Airbnb are anti-democratic companies that flaunt local laws. The Japanese example shows how quickly these companies can be hammered by government enforcing or creating new laws.

The problem is that the law was only written four months ago, meaning few owners associations may know about the guidelines. Associations can ban minpaku, but after June 15 they must include any prohibitions in their own sets of rules and regulations, otherwise they will not be legally binding

And according to the law, since associations must gain three-fourths approval of their voting members to amend their rules, adding such prohibitions could be difficult. Presently, under the special district rule, minpaku can still be banned by condo associations without any kind of formal declaration in writing.

Consequently, the new minpaku law could exacerbate well-publicized existing problems associated with Airbnb properties, such as garbage being thrown out on non-designated days, visitors staying up all night and making lots of noise and, most significantly, loss of security.

I don't know to what extent the "unicorns" are valued on the assumption of globalization. I expect more governments will follow the Japanese example and that Japan isn't done with putting restrictions on Airbnb. If governments don't act, there will be a lot more gated communities. If national governments won't protect their nation's borders, local people will create new borders.