Invest
Hard-to-swallow: Airbnb reforms' sticking points
Putting your eggs all into one basket is always an incredibly risky move and it's something that investors reliant on short-term letting for their cash flow need to realise. As reforms in NSW take shape, here’s what investors can expect.
Hard-to-swallow: Airbnb reforms' sticking points
Putting your eggs all into one basket is always an incredibly risky move and it's something that investors reliant on short-term letting for their cash flow need to realise. As reforms in NSW take shape, here’s what investors can expect.
Announced last month and heralded as “the toughest laws in the country”, the proposed reforms to short-term letting in NSW will introduce regulation to an industry that property commentator Anna Porter claimed was previously “exploited” for maximum profit.
“Airbnb are going back to their grass roots in NSW,” Ms Porter said.
“Originally the platform was set up for people who wanted to rent out some spare rooms in their own home as an alternative to backpacker accommodation for travellers, thus allowing home owners to make some spare cash.
The Airbnb platform has since been exploited and has become the short-term accommodation platform for investors to maximise profits. Without proper regulation and no barriers to entry this has resulted in many complaints from local communities and a need for government and other regulators to step in.”
Investors who saw short-term letting as a major source of returns should have anticipated sooner or later major reforms to a new concept.
“If you're going to invest hundreds of thousands into an industry in its infancy, you need to have an appetite for risk and be prepared that it may not last long. Investors should have assessed their numbers based on long-term rentals as well and ensured they were still able to afford their investment, without a supplementary Airbnb income,” Ms Porter said.
“We saw so many people jump on the band wagon without really understanding the risks associated with it.”
These regulations follow in the footsteps of similar actions taken internationally, such as in Japan where approximately 68,000 properties were removed from short-term letting services when regulations came into effect, which could be expected here too.
The knock-on effect, according to Ms Porter, will likely see more long-term rental properties cropping up.
“Airbnb hotspots will see more properties being taken from the short-term rental market and moved over to long-term leases and even some investors pulling the pin altogether as a follow-on effect from the regulation,” she said.
“Some investors will not want to conform with the legislation and will have to put their property on the market, as many of the properties are set up as rentals only and not in an area that the owner of the property resides. Some property owners simply can’t adapt and will have only two options, a long-term lease with significantly lower returns, or to sell.”
This is likely not the only changes that will hit the short-term letting space, with a review scheduled for June next year. One area that Ms Porter strongly advocates for is safety in relation to short-term letting properties.
The policy is set to be reviewed in 12 months’ time.
“We see many properties that are not compliance with fire regulations, pool safety, building codes, railing heights on balcony’s, and many other safety hazards that put occupants, including families with children at risk,” Ms Porter said.
“If you rent out a property on a long-term lease, or you are a commercial hotel venture you need to be compliant. But this sector of the DIY hotel space has continued to circumvent their obligations to other people’s safety”.
Property
RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attempts by APRA to cool the housing market. ...Read more
Property
Federal incentives are driving more first home buyers into the market
While property prices continue to grow, new research suggests that the government’s current crop of first home buyer incentives is having an impact on this segment of the market. ...Read more
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Property
RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attempts by APRA to cool the housing market. ...Read more
Property
Federal incentives are driving more first home buyers into the market
While property prices continue to grow, new research suggests that the government’s current crop of first home buyer incentives is having an impact on this segment of the market. ...Read more
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
