Short-term holiday lets back in rental market as tourists disappear amid coronavirus

Airbnb hosts and owners of other short-term rental accomodation are scrambling to get properties leased out longer term, as bookings from international and local visitors dry up due to the coronavirus.

Properties previously pulled from rental markets for more lucrative short-term stays are being put back up for lease, agents report, as investors seek more secure rental income amid the drop-off in tourists and increasing economic uncertainty.

“The honeymoon is over,” said Michelle Williams, director of @home Property Management Solutions in Launceston, who has been contacted by more than a dozen hosts – some with multiple properties – in recent days. 

“[Short-term letting] was a great opportunity for clients to achieve income well above that for the standard long-term investment property … [but now] it’s time to head back into your safer option … at current market rents.”

It is a move property managers across the country are reporting, and could be one of the key reasons why there has been a spike in new rental listings, says Domain economist Trent Wiltshire.

The number of rental properties that hit the market last week was up 12 per cent year on year, Domain figures show, while new rental listings nationally were up 14 per cent compared to the previous four weeks.

“It’s likely the new increase in rental listings is driven by the impact of coronavirus,” said Mr Wiltshire, but noted it was too early to confirm this.

“Short-term rentals are moving onto the long-term rental market, hosts are foreseeing that the tourism market is going to be very sluggish for the next few months … so that’s probably a big driver.

“[Then there’s] people moving out of their rentals and moving back to their family home, or [in with other] families or friends …  because of either losing their jobs or having hours cuts.”

Domain figures show new rental listings were up 18 per cent year on year in Victoria, 14 per cent in NSW and 10 per cent in Queensland. They were also up by 15 per cent or more on the previous four weeks, in all three states.

Eadan Hockings, of Living Here Cush Partners, said he received a number of calls from short-term letting clients in Brisbane in recent days.

“I’ve had about 10 in the last week, which would be an increase of 100 per cent and I would expect that to continue to increase,” he said.

Rachel Beadman, head of property management at Phillips Pantzer Donnelley in Sydney’s east, has had nine Airbnb hosts already make the switch.

While not huge numbers, Ms Beadman said she was also fielding inquiries from more former clients, some of who had put entire units block up for short-term rent and were looking to switch back.

“There’s a scrabble out there now, a mass scramble to try get stock out … it’s like a race to the end,” she said.

While it is still too early to determine the impact the rise in rental properties will have, Mr Wiltshire says, it could push vacancy rates higher and put downward pressure on rents.

In Launceston, Ms Williams said she was only taking on properties if owners were willing to meet current market prices and offer longer term leases, noting some had unrealistic expectations of being able to charge the same rates at a time when inquiries were falling.

“It’s going to be tough renting anything, let alone something furnished for the short-term,” she said. “They have to compete with hundreds of others in the same space, and it’s clear to me [we’ll] end up with a saturated market.”

“There’s about 165 furnished rentals in Launceston, which is four times as many as we would normally have and they’re all asking very high rent and for three and six-month leases,” added Tameka Smith from Key2 Property.

She’s had some 40 short-term hosts contact her over the past week, after losing most of their bookings in the wake of Tasmania tightening its borders.

Susan Wheeldon, Airbnb’s country manager for Australia and New Zealand, said the COVID-19 crisis had disrupted the tourism industry and caused significant hardship for the everyday people who relied on sharing their home for extra income.

“Understandably … some have to make really difficult choices based on their personal circumstances,” she said. “To date, however, we have not seen a material drop in the overall number of listings on our platform.”

Industry body Australian Short Term Accommodation earlier this week wrote to the Treasurer and Minister for Tourism, calling for more support. The letter, backed by both Stayz and Airbnb, called for several measures to help hosts – including mortgage deferrals, tax relief on rental income, rebates on tourism levies and land taxes, and for hosts to be eligible for the financial support announced for small to medium businesses.