New Victorian Airbnb legislation could negatively impact the unit rental market, says RiskWise.
This comes following the Victorian Government’s move to make Airbnb apartment owners pay neighbours compensation of up to $2000 for property damage caused by guests, while unruly visitors could face fines of up to $1100.
Airbnb had proven a lifeline for investors unable to find tenants in an over-supplied rental market in Melbourne, such as inner-Melbourne.
Airbnb in Victoria helped absorb the large number of rental properties available in the market.
One of the reasons investors went ahead with buying these rental properties despite there being a high risk of oversupply, and therefore also low rental returns, was because they knew they could use Airbnb as an alternative to generate rental income outside of the standard long-term rental property cycle.
When it was introduced into Victoria, Airbnb had a big impact on the rental market and we clearly saw very large numbers of properties absorbed into the market and an increase in rental prices.
The Melbourne market has demonstrated resilience with recent data showing that rents for houses and units are increasing compared to last year.
Considering the very high level of new units, these are outstanding results, even when the strong population growth is taken into account.
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The new legislation could serve to deter investors from listing their properties on Airbnb and this would have a flow-on effect of increasing the pool of rental properties in the ‘standard’ rental market, and could, consequently, impact rental prices.
This legislation didn’t come out of the blue.
There’s been lots of complaints and the problems have been widespread with owners not having to face up to any responsibility for the actions of those staying in these short-term leases.
But now they can face a fine of up to $2000, it is certainly going to stop a lot of them entering into Airbnb short-term stays, which will mean an increase to the ‘standard’ rental market.
According to Airbnb research house AirDNA, and as reported in the Australian Financial Review, there are 2200 Airbnb listings for whole apartments in the CBD alone, a dramatic rise of 70 per cent in just 12, but it is doubtful with this new legislation this figure will hold.
Interestingly, New York is a good example of how Airbnb can affect the rental market.
There, Airbnb is said to be responsible for ‘aggravating’ soaring rents and new legislation aims to significantly clamps down the company’s accommodation listings.