Whilst most people are turning into Airbnb as a form of making passive income, it is known that not all residential developments adopt such short-term rental services. And the Loft Residences is one of them.

As stipulated in the House Rules of Jesselton Residences under Clause 2.1 Use of Housing Units and Common Areas, homeowners are not allowed to use their units as a hostel, office, SOHO, workers' quarters, Airbnb, motel, hotel, homestay or any means of the housing to a group of people.

The Loft Residences does not fulfil the fire safety requirements set by the Fire Department for short-term lodging by way of license. On 3 August 2018, Shelley Yap Advocates and Solicitors issued a notice to cease and discontinue all commercial activities related to short-term lodging/rental to the owners of the Loft Residences. Owners are to cease such operations within 90 days from the date of the notice. Failure to comply with the notice shall result in a fine of RM2,500 per day and keycard(s) to the units shall be deactivated by Syarikat Kapasi Sdn Bhd, the Developer of the Loft Residences.

On 16 October 2017, the Kota Kinabalu City Hall (DBKK) confirmed that it is illegal for Sabah residents to lease their properties through Airbnb.

The government continued to stand firm on that decision, reconfirming their stance and stating that they have to take action to prevent any parties from taking advantage of the tourist influx.

According to the Former Assistant Sabah Tourism, Culture and Environment Minister Datuk Pang Yuk Ming, "Airbnb is a business, but if an apartment is built as residential property, it cannot be used for commercial purposes.”

This move is also linked to protecting the interests of hotels, especially international hotel chains. According to the Minister, international hotels play significant roles in the development of tourism in the state.