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Airbnb: Landlord rights and responsibilities

Smart Company logo Smart Company 8/06/2018 Michael Yardney

Airbnb business travel © Provided by Private Media Operations Pty Ltd. Airbnb business travel The rise and rise of Airbnb has some Australian landlords pondering whether they should list their properties on the online accommodation platform.

However, landlords must understand the ins and outs of Airbnb —   as well as their rights and responsibilities — before making the decision to opt in. After all, successful property investment is about the long-term result, not just the possibility of short-term rental returns.

How ubiquitous is Airbnb?

There has been much conjecture about how Airbnb is affecting the rental market, but recent research seems to show that it’s not nearly as pronounced as some would like to believe.

According to The Conversation, Airbnb properties in Sydney and Melbourne are concentrated around popular tourist areas, with little impact in the outer more affordable areas.

There are two types of Airbnb accommodation: entire houses or apartments for rent and partial listings where you rent a room in someone’s home.

Interestingly, entire house/apartment listings are more concentrated around the city centre and eastern beaches, while partial house/apartment listings spread out more to the middle and fringe suburbs in Sydney.

There is a similar pattern in Melbourne, with Airbnb properties existing mainly around the city centre but also extending beyond the inner core to the residential outskirts.

However, the composition of listings (entire versus partial) has less effect on their distribution in Melbourne than in Sydney.

Sydney leads the way with Airbnb

Interestingly, the cities have very different Airbnb market sizes.

The populations of our two big capitals are almost on a par, but Sydney has almost twice as many Airbnb listings as Melbourne.

According to the research, pressure from Airbnb was limited to a small number of high-end suburbs that were mainly locations attractive to tourists.

In fact, Airbnb only represents 3% of the total residential leasing market in Sydney.

The analysis also showed that 95% of entire houses or apartments were located in Sydney’s most exclusive locations, with 87% of partial property lettings also found in top-end suburbs.

The numbers were 80% and 70% respectively in Melbourne.

Landlord rights

One of the main issues with Airbnb to date has been cases of tenants listing a landlord’s property on the platform – whether it’s the entire property or an individual room.

There have been numerous cases of landlords finding their property on Airbnb without them having any prior knowledge.

State governments are considering how to balance the rights of landlords and tenants. In the meantime, it is vital that property owners have a thorough understanding of their leases, including whether subletting is approved without the prior consent of the landlord.

Generally, however, if a tenant has a general tenancy agreement, they must ensure they have the landlord’s written consent before listing the premises on short-term rental sites such as Airbnb.

Some real estate agents are even updating their rental agreements to say that tenants are not allowed to list their leased property on Airbnb without the express written consent of the landlord.

One of the best strategies for landlords is to ensure their professional property managers are conducting regular inspections and reporting any unusual movements, such as unusual luggage or a revolving door of “visitors” at the property.

Some recent updates to the legislation

This week, New South Wales Minister for Innovation and Better Regulation Matt Kean and NSW Minister for Planning, Housing and Special Minister of State Anthony Roberts announced reforms for investors who rent their properties on platforms like Airbnb.

Short-term holiday letting is currently unregulated in NSW; the new planning laws will impose a 180-day cap on the number of days empty properties can be rented out via Airbnb in Greater Sydney.

This restriction will not apply in regional areas, where councils will have the power to impose their own caps, but they cannot be lower than 180 days per year.

In a move that will please many apartment owner-occupiers, strata corporations will have the power to ban Airbnb in their buildings if the host (owner) does not live in the rented unit and if 75% of owners agree to pass appropriate by-laws.

Interestingly, the proposed reforms will not give strata committees the power to prevent owner-occupiers from renting out rooms within their apartments.

The 180-days-per-year limit amounts to roughly the number of weekends, school holidays and public holidays in any given year, according to Roberts.

“Councils outside Greater Sydney can decide if permitting short-term holiday letting for the entire year is acceptable for their local communities. This recognises the importance of tourism in some regional communities,” Roberts said.

Should I consider renting my property on Airbnb?

Many property investors are considering renting their properties on Airbnb because of the higher rent charged per night. 

Of course, like any short-term rental accommodation, the occupancy rate will determine whether the rent is superior to having a long-term tenant in the property.

This is, in most cases, unlikely, which could create problems with cash flow, not to mention mortgages, during months when demand is low.

There are also a number of costs involved in listing your property on Airbnb, including the cost of your time.

Unlike residential tenancies managed by a property manager, most Airbnb rentals are overseen by the landlord themselves. Preparing the property for guests and cleaning once they have checked out is a considerable time investment and, according to research, most hosts spend about eight hours a week doing this. Do you have those hours spare?

Making your property available on Airbnb can feel more like a job than an investment and many fed-up landlords are reverting to traditional long-term leases.

You must also understand the relevant laws and adhere to them. Owners’ corporation and body corporate laws may have regulations regarding where keys are left, for example. 

Of course, you will also have to pay your share to the Australian Tax Office and the property will also be liable for capital gains tax if and when you eventually sell it.

According to Airbnb, Australian hosts earn about $5,600 per year. This number is probably reflective of people renting out a part of their house or a room from time-to-time rather than the entire house all year around.

All these factors considered, securing a tenant who will stay for the long-term is likely to be a better financial outcome.

Ultimately, the decision to rent your property on Airbnb is one for you alone.

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