LONG-TERM TENANTS DON’T STAND A CHANCE
Gold Coast landlords can’t be blamed for taking advantage of outrageous Airbnb prices but residents are paying the ultimate cost
HERE’S a question…
If you’re a landlord leasing a two-bedroom unit in Mermaid Waters, which tenant would you choose?
A long-term tenant who pays $650 a week … or holiday tenants who pay $670 a night?
The difference between the two is part of the reason why we are in the midst of a rental crisis.
The fact that, in this equation, paying $650 a week seems like a steal just further highlights the issue that is dividing our city.
But the heart of the problem comes down to simple economics: supply and demand.
Right now, demand is soaring. Between an already growing city, a peak in pandemic “refugees” from southern states and zero greenfield sites available for new housing stock, meeting this demand is all but impossible.
But there’s no need to make this mission even more difficult. Because when it comes to supply, there is a secret stash.
I’m talking about holiday homes. Airbnb, Stayz, “party houses” … whatever you want to call them, these are properties which could be used for long-term tenants (priced at, say, $650 a week) but instead are being used to house tourists (priced at, say, $670 a night).
It’s called the share
But the heart of the problem comes down to simple economics: supply and demand
economy but with this property model it’s hard not to be selfish.
And I know this because I used to own and operate a holiday home.
It was never my intention to be an Airbnb mogul but a simple matter of not being able to sell our house during the global financial crisis.
So, we did a pre-pandemic pivot. We leased where we wanted to live and rented our own house out to holiday-makers.
It was the early days of holiday homes on the GC and we were blown away by the property profits.
Ultimately, for us, it was too much stress – both in terms of debt and maintenance, so we sold up … to one of our guests.
To this day, we wonder whether we made the right choice.
And to be totally honest, if we did still own it … would I be shelving those profits in order to house long-term tenants?
It’s a question my conscience is glad it doesn’t have to answer.
Because, just as we did at the time, many of these holiday home owners rely on that income.
While it’s admirable to see bodies such as the Real Estate Institute of Queensland calling on the state government to offer owners of holiday homes cash incentives to list them on the long-term rental market, it’s simply not practical.
Take the example of two-bedroom apartments in Mermaid.
What cash boost can possibly make up the annual difference between the (potential) $244,550 earned by the holiday rental and the $33,800 earned via long-term letting?
Of course, the holiday rent does not remain at the $670-anight peak all year, nor is a holiday unit ever tenanted 365 days a year … but it still gives a good indication of the difference between the two.
Besides, it’s not like there aren’t already hurdles – financial and otherwise – when it comes to creating a holiday listing.
Since the early days of the “party house” controversies, where short-term tourists were driving residential neighbours crazy, Gold Coast City Council has done a great job in implementing rules and regulations for this Airbnb industry. New owners must obtain the correct planning approval, which is often a material change of use, the application fee for which is in excess of $8000.
If you plan to host more than four guests, you must also apply for a rental accommodation licence.
The licence itself is free but holding one will trigger a huge increase in council rates – often more than doubling the price.
And if you don’t comply with these conditions, the council is quick to issue a “show cause” notice … with plenty of penalties.
Yet still, our holiday homes continue to multiply.
Why? Because there is simply too much money to be made.
So perhaps it’s time to consider a pause on approving more holiday homes.
The numbers prove we’ll rarely, if ever, entice current short-term landlords back into the long-term market – and who can blame them?
So let’s put a moratorium on allowing more into that market. It doesn’t have to be permanent but let’s at least press pause.
Right now, it’s better for the business of our hotels and managed complexes, it’s better for neighbourhood residents and it’s a better solution for our housing dilemma … even if it’s far from a complete fix.
But at this stage, every little bit of help is critical.