Aussie investors love AirBnB, but it could leave long-term renters in the lurch
AirBnB is a growing trend in Australia’s major cities, but what is a lucrative business for some could be pricing long-term, private renters out of high demand markets, according to Mozo property expert, Steve Jovcevski.
The Short Stay Confidence report, released by And Chill Property Management, has shown that 1 in 3 Aussies would be willing to list their investment property on the platform.
And it’s no wonder, considering that according to Billy Hade from And Chill, “with the right skills and tools Airbnb can deliver returns up to almost 3 times traditional long term rents.”
But it’s not only property investors who are profiting the most from AirBnB’s popularity.
“What some people might not realise is that it isn’t just landlords or property owners making money from AirBnB. There are other people who rent multiple properties from private landlords, then list those properties on AirBnB to turn a profit, and run it as a business,” said Jovcevski.
According to him, these AirBnB “hosts” offer landlords above market rent in order to secure apartments in desirable locations, such as near city centres or universities, effectively pricing private renters out of the running.
Some landlords renting to private tenants have taken steps to stop their properties being listed on AirBnB with clauses written into leases, and Jovcevski says that in order to be legal, these short-stay businesses must be run with the full knowledge of the landlord.
“The landlord is happy, because they’re getting above average rent and someone else is doing the work of listing the property and managing the short term stays. So for landlords and the people essentially running short stay businesses through AirBnB, there are good profits to be made,” said Jovcevski.
“The people losing out are long-term, private renters. Because not only are they being priced out when applying for rental properties, but the the supply of rentals in key areas is quickly being soaked up.”
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Principal Economist at the Housing Industry Association, Tim Reardon, said rental costs had increased by 24% in Sydney and 17% in Melbourne, and are currently 25% higher than they were in 2011. He added that these cities, “continue to be under-supplied and inaccessible to new entrants.”
At a time when HIA data shows a 10% increase in the amount of renters in Sydney and Melbourne, this lack of supply could pose a big problem for the two-thirds of the population who live in our capital cities.
Although Australia’s housing affordability issues can’t all be explained by AirBnB rentals, the And Chill survey showed 69% of Aussies think the platform’s market is growing, and Jovcevski said the short-stay rental business is, “absolutely a growing trend.”
“Part of the reason why new building projects haven’t made such a big impact on housing affordability issues is that they’re being snapped up and rented out to short term tenants. And that’s bad news for private renters,” he said.