In New South Wales, the government has advised that it’s currently illegal for anyone to stay in short-term accommodation, such as Airbnb, without having a lawful or valid reason.
According to the new regulations laid out to prevent further spread of COVID-19 in Australia, nobody should be staying in a property other than their own permanent residence. Anyone found breaking these emergency measures faces fines up to $11,000 or six months imprisonment.
The advice has been made clear. Stay in your home. Now is not the time to visit family and friends, travel or to go on vacation. Many short-term letting agents have tried to bypass these restrictions by advertising properties as ‘working from home bases’ and ‘self-isolation packages’. However, these are now no longer classed as a valid reason and have been clamped down on.
By-laws are also expected to come into force on April 10th prohibiting the short term rental of a property that isn’t the primary place of residence of the host.
What does this mean for short-term rentals?
In the simplest terms, landlords who focus on short-term rental properties are facing financial uncertainty. While advertising is still perfectly legal, allowing guests to stay is not. Nobody knows how long these measures will be in place, meaning revenue and income will come to a grinding halt.
Of course, everyday running costs, maintenance and bills still need to be covered. This could place an unnecessary financial strain on property owners who are already struggling to survive.
What is the solution?
Shifting away from short-term rentals to long-term rentals is one way to protect your investment. While it’s true that renting out your property as an Airbnb or holiday home can attract a higher daily rate, occupancy levels are now at an all-time low and are expected to be so for many months, if not years to come.
The coronavirus pandemic has revealed the fragility of the short-term market, showing how quickly things can go wrong. By moving to long-term leases, you’re guaranteed a steady and regular income throughout the year. Looking away from the current situation, short-term rentals are also seasonally dependent, resulting in low occupancy for many months of the year.
As a property owner, investment security is vital. Having a beautiful property standing empty can be bad for your balance sheets – and the economy.
Long-term rentals vs. short-term rentals
To help you get a clearer picture of how switching to long term rentals can be the best choice to protect your investment, here a few comparisons between the two.
Short-term rental property
First and foremost, there is no guaranteed income for short-term lets. Seasonality, force majeure and economic downturns can all have a negative impact on occupancy. You could spend more trying to find guests than you receive, making your investment work against you instead of for you.
Excessive maintenance and upgrades, including providing a fully furnished property with modern amenities, decorations and cleaning can eat into your profit margins. Poorly maintained properties are likely to attract negative reviews, which could result in decreased bookings.
Management issues are also common. Coordinating gardeners, cleaners, maintenance, check-in and check-out, bookings and availability, guest complaints, refunds and more can eat into your time and revenue – especially if you don’t have the right support or tools on hand.
Lastly, competition in the surrounding area can be fierce. With the rise of Airbnb and similar property let’s, there will often be more properties than travellers, resulting in reduced supply and demand. Unless you have an amazing property at knockdown rates, it can be hard to succeed.
Long-term rental property
While short term rental properties don’t offer consistent income, long-term leases do. You are able to set the rental amount to cover all of your associated expenses, plus extra as disposable income.
Another benefit is that the majority of tenants take on unfurnished rental properties. This means that you don’t need to provide modern and expensive furniture, decorations and amenities. Of course, the property needs to be in a habitable condition, but other than that, your initial outlay is low.
Charging higher deposits provides you with an additional layer of security. Not only does it safeguard against damage and destruction of the property, it also covers any missed and unpaid rent payments. With short-term lets, the small deposit may only provide protection against gentle damage, costing you more in the long term.
Fewer people in and out is also a huge bonus. The more turnover a property has, the more likely it is to need expensive maintenance, repairs and upgrades. You are able to stipulate who is responsible for general upkeep in the tenancy agreement, reducing the time and cost spent on the property.
The issue some long-term landlords face is finding reliable tenants and dealing with legalities, however, that is where a good property manager comes in.
Why use a property manager?
Property management services are hugely useful at the best of times, ensuring you have a stress-free experience from start to end. But it’s at times like these where you could truly benefit from the knowledge and expertise of a leading property manager.
The current situation is evolving at a rapid pace, with new laws, rules and regulations coming into force on an almost daily basis.
A property manager help with:
- Determining how much your property should be marketed for to prospective tenants.
- Recommending property improvements to make it more appealing to tenants.
- Verify the suitability of applicants with industry tools to check rental history and references.
- Taking care of maintenance issues in a timely manner to prevent any issues from arising.
- Make sure that any strata levies, rates and insurance costs are paid on time.
- Perform regular inspections to ensure the tenant is taking care of your investment
- Rectify any payment issues and provide representation at any Residential Tenancies Tribunals.
- Advertise and promote your rental property in the best possible way.
- Keep on top of legal issues and current laws and legislations as per your governing state.
The easiest way to switch
While short-term property rentals can typically attract higher daily rates, running costs, maintenance, taxes and low occupancy can cost you dearly both long and short-term. With the current situation making it illegal to rent out or stay in private short-term accommodation, now is the time to take a new approach.
Forget about the complexities of entering the long-term property rental market alone. At Leased, we can take care of everything on your behalf, giving you maximum peace of mind during these uncertain times. Our job is to make your property work for you, not against you. Make the switch today and discover property management done right.