High-rise apartment buildings with hotel-like facilities, such as lounges and guest rooms, are growing increasingly popular in urban centres such as Tokyo and Osaka. However, these buildings are also proving popular with hosts providing illegal overnight accommodation through booking sites similar to AirBnb. The increasing number of foreign tourists coming to stay in these residential buildings is creating unintentional problems with building residents.

Facing complaints from residents, condominium management associations are scrambling to introduce building bylaws to ban short-term rentals.

Since new bylaws were introduced in The Tokyo Towers complex in Kachidoki, Chuo-ku, Tokyo, residents have found it easier to book the on-site guest suites. The two-tower complex has approximately 2,800 households. Residents can book the 11 guest suites at low rates for when family members or friends come to visit.

Until recently, it was almost impossible for residents to book the guest rooms. The chairperson of the owners association received numerous complaints and looked into the reservation issue. They discovered that several residents had made very large bookings. In many cases the reservations were cancelled about 2 days in advance each time, suggesting that the residents were looking to secure additional rooms as back up. The high number of last minute cancellations also meant that the guest rooms ended up being empty most nights, resulting in lost revenue for the owners association.

Three years ago, the chairperson introduced new rules limiting the number of reservations a resident could make. Residents are limited to 16 nights per year for suites on the low floors and 2 nights per year for the suites on the high floors. Cancellations still count towards a resident’s yearly count. There was an immediate drop in the number of reservations, while other residents were able to book rooms more easily.

Last year, the owners association in Brillia Mare Ariake, a 33-storey condominium in Tokyo Bay, introduced new rules to their bylaws that specifically prohibit the use of apartments for short-term or overnight accommodation. Major developer, Sumitomo Realty & Development, also introduced similar restrictions into the bylaws of their new condominiums.

Legal issues forcing market entrants to retreat

Last month, a Tokyo-based office office supplier announced that they were withdrawing from the short-term accommodation industry after being investigated by the police department under suspicion of violating the Inns and Hotels Act. The news came only four moth after company made an official announcement that they would be providing short-term accommodation in Tokyo’s Ota Ward, along with renovating properties for accommodation use with capital sourced from investors, real estate funds and crowdfunding.

Sources:
The Nikkei Shimbun, June 27, 2016.
Travel Voice, June 7, 2016.

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