Global short-stay company Airbnb has a mixed reputation. Many love the convenience of staying in a home as opposed to a hotel. Others argue that the platform displaces the long-term residents of popular areas and pushes up rental prices.
If you own an investment property, it’s wise to keep an eye on property trends. Some property owners will naturally think of using a short stay website as an alternative to a tenancy.
But is it a good idea?
What impact has Airbnb had on the Sydney market?
The Sydney Morning Herald reported recently that “the top five Airbnb hosts have more than 100 listings”. Many critics argue that the platform has had a negative impact on the availability of long-term rentals. This is particularly apparent in central Sydney suburbs such as Darlinghurst and the CBD. Airbnb can also turn a suburb with good local nightlife into a party postcode. Groups visiting the city for a big night out can cause a disturbance to local residents.
In contrast, a recent report from thinktank SGS Economics and Planning found no significant impact on the Sydney market. But this study was across Greater Sydney, and obviously there is a greater impact in more central, tourist-heavy suburbs.
Should you list your rental property on Airbnb?
Airbnb can attract a higher weekly or nightly fee than a traditional long-term rental. And even more if your property is in a desirable area. But you need to understand some key differences about listing your home on Airbnb.
With a traditional rental, your tenant moves in and that’s that – once you have ensured it complies with all safety regulations. If you have a property manager, any ongoing work is done for you.
An Airbnb property must be cleaned between every booking. Someone has to handle admin and guest communication. As the landlord, you must provide furniture, bed linen and other conveniences such as wi-fi and cookware. And a high turnover of short terms guests will lead to greater wear and tear on your property.
While your property may be booked out at peak times, you’ll still have quiet periods. This is not great for security or your bank balance. Airbnb also prefers owners to make their homes available for instant booking, which can make it harder to screen guests. And if your property is in a popular, central area, guests may treat it as a party house. This can lead to issues like property damage, lengthy insurance claims and noise complaints.
Additionally, your guests will review your home, so you are under pressure to ensure it really stands out if you want to receive more income. Added to this is the fact that Airbnb suggests a price that may be lower than you would like to receive. The constant management requirements means it can all get quite stressful.
What does the law say?
Councils are increasingly looking to manage short-stay accommodation so that it doesn’t impact negatively on the hotel industry or local residents.
New legislation announced in 2018 in NSW will stipulate that if you do not live in a Sydney property yourself, you can only make it available as short-stay accommodation for 180 days per year. Certainly something to consider if you are thinking of turning your investment property into an Airbnb listing.
Is Airbnb worth it financially?
Airbnb is one way to generate income from your investment property. But it comes with risks and may end up being more hassle than a reliable, quiet long-term tenant.
Any big earnings will be offset by times when your property is empty. And you are also in competition with other listings, which drives the prices down further. Any income you do make is subject to all of the same tax liabilities of a normal investment property.
In summary, we believe that while listing your primary residence on Airbnb as a way of generating extra income for holidays may be a good thing, converting your investment property into short-stay holiday accommodation for the long term is a different matter entirely.
Please feel free to contact us with any questions about managing a rental property in central Sydney – and feel free to share your own experiences of listing a property on Airbnb.