A young couple who were asked to leave their rental unit in Kirribilli after a two-year stay to make way for the family who owned it, were shocked, after they’d moved out, to spot it being advertised on Airbnb.

What’s more, their small two-bedroom, $540-a-week apartment was being advertised for a weekly rate of $929.

In what critics of Airbnb say is now happening across Sydney, “bleeding the residential housing market dry”, the couple have now been forced to move to a completely different part of the city.

They were left devastated. “What chance do people like us stand who want to rent in the area they grew up in, when people push them out of their beautiful homes just so they can make so much more money by renting them commercially?” says Nicholas Louisson, 28, who works in marketing procurement.

“It was our first home together, we loved living there, it was just opposite my work, and we imagined staying there for up to the next 10 years of our lives. But then when we started looking for another apartment in the suburb to rent, there was so little available, and so much competition for it, because so much there is now on Airbnb.

“It’s wrong that this is being allowed to happen.”

However the landlord who sub-let the unit, Chris Cooper, said that the tenants had been given the legally-required notice of 90 days, and the lease had been terminated “due to renovations, and family making good use of the property including myself actively residing there”.

An advocate of the “sharing economy” and its role in helping to provide him with an income as a single father, Mr Cooper also disputed the comparison between the rent paid by Louisson and the rent he could receive on Airbnb.

“The Airbnb rental covers all furniture, cleaning services and more – which is a large amount of ‘value’ that is being ignored. To compare rent versus a ‘serviced apartment’ is completely different,” he said.

There are currently 13 one-bedroom apartments and 18 two-bedroom apartments to rent in Kirribilli listed on property site domain.com.au. On Airbnb, there are 306 listings of properties to rent. Kirribilli was named as one of the Airbnb hotspots in a study conducted by Fairfax Media this year.

The group Neighbours Not Strangers, critics of Airbnb when it pushes homes away from residential use and into short-term lets, says this is typical of what’s happening everywhere in Sydney, and globally. “We’re at a crisis point with housing now,” says convenor Trish Burt.

“From May this year there’s been a 75.5 per cent increase in listings in Airbnb in Sydney, that’s 23,558 Sydney dwellings no longer available for people to live in. They’re bleeding the residential housing market dry.”

North Sydney Council, when told of the couple’s situation, said it would investigate. A spokesman said: “At the moment, North Sydney Council defines an Airbnb-type stay as short-term accommodation [which] is considered a commercial activity and outside the permitted use within residential zones in terms of the North Sydney LEP.

“Properties in residential zones are considered to be for residential occupation and not for short-term letting except as permanent residential occupation, usually defined as a period of three months or more.”

Airbnb spokesman Dylan Smith said the company proactively reminds its hosts of their obligations to follow locally set rules and regulations.

“Overwhelmingly, Airbnb hosts in NSW are everyday people – mums and dads, seniors and young families – who occasionally list their primary residence or spare room to make a modest extra bit of income,” he said. “Our hosts tell us this extra income helps pay down the mortgage, cover bills and household expenses. Others list their home to pay for their own holiday away with the family once or twice a year.”

With the same family owning more than one of the four units in the boutique block on Hipwood Street, it effectively has control of the Owners Corporation, so no one can stop them. A family with two small children renting the fourth apartment have already complained about all the noise, strangers in the block and people barging their way constantly through the common areas with luggage, but are fearful their landlord will choose to evict them and do the same.

When contacted by Fairfax Media, however, the owner of Louisson’s old apartment, Louise Ommundson, a director of custom-made furniture company Evostyle, said she’d received complaints from the people living in the block and had now, as a result, decided to stop it being used for Airbnb.

She said her brother, Cooper, had rented the unit from her and subsequently turned it over to Airbnb. “It’s going to go back to a rental place,” she said. “It isn’t working out with the other residents. I’m not against Airbnb, but that place isn’t the right environment for that sort of thing. It’s caused a lot of anguish.”

At the time of publishing, the apartment was still being advertised on Airbnb.

When Fairfax Media suggested she offer it back to Louisson, Ommundson said: “I hadn’t thought of that but I’d be happy to. He was a good tenant.”

Louisson says he complained to North Sydney Council but nothing had been done.

“It’s actually not legal to turn a residential apartment building effectively into a commercial business, but nothing has happened,” he says.

“You’re not meant to have tenants there for less than three months, but now it’s changing nightly. And you wonder how much money they’ll make on New Year’s Eve.

“I’m just incredibly upset about what happened. I love Kirribilli and imagined I’d be spending the next 10 years there. It’s so peaceful and quiet and yet nearly everything’s within a 10-minute walk. But now it seems it’s just for rich people or for tourists.”

Ironically, under proposals currently before NSW Parliament, North Sydney could soon no longer be able to ban short-term holiday lets such as Airbnb.

Burt, from Neighbours Not Strangers, says the success of Airbnb is the envy of all short-term lease operators who are now all trying to follow suit, too. “We are just leaking housing now, even while everyone debates the lack of affordable housing,” she says. “It’s so distressing on so many levels.”

CORRECTION: An earlier version of this story has been amended to:

– Remove an incorrect reference to eviction in the headline and first paragraph.

– Remove an implied Airbnb rental fee based on three rooms being occupied at the unit and remove remarks by Mr Louisson that assumed three rooms would be occupied. Fairfax Media accepts that the Airbnb advertisement, while showing three rooms with beds, was for a single room for a maximum of three guests.

– Add additional paragraphs of explanation from the landlord who sub-let the unit, Mr Chris Cooper, in paragraphs five, six and seven.

Fairfax Media acknowledges that the original report caused distress to Ms Ommundson and Mr Cooper, and apologises for the errors.

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