Homesharing or homesnaring?
Is the short-stay rental boom worsening the housing shortage? Nikki Macdonald reports.
‘‘It’s got the potential to get big, but it’s a blip on the radar at the moment.’’
Andrew Murray, of Auckland’s Apartment Specialists
‘Welcome to the new way to invest,’’ says one Airbnb management company. ‘‘Short-term rentals can earn a lot more than long term rentals,’’ trumpets another.
In the wake of $1000-a-night paydays for Lions rugby tour rentals, Kiwis are waking up to the possibilities of letting their homes on short-stay rental sites such as Airbnb and Bookabach.
And what’s not to love – homeowners can make a few bucks while they’re out of town; absentee landlords free up empty space for the nine months they’re overseas; cities get flexible accommodation for big events; and tourists get a unique window on how New Zealanders really live.
But globally, tourist hotspots are realising the phenomenal growth of whole homes being rented out full-time on Airbnb is taking properties out of the permanent housing and rental market.
Figures and anecdotes show the same is happening here, especially in Queenstown and Auckland, where Airbnb management companies target investors with promo lines like ‘‘Want more profit in your pocket?’’. Two have just expanded into Wellington and one has its eye on Christchurch.
What’s harder to unpick is just how much impact – if any – the trend is having on the ability of ordinary Kiwis to find a place to call home.
Acall home. ndrew Murray knows Auckland apartments. He specialises in selling them and owns two that he rents for visitor accommodation on Airbnb.
It’s still early days, but there’s no doubt central Auckland apartments are being rented out full-time on short-stay websites.
It’s basic mathematics, he says. His one-bedroom apartment in the Scenic Hotel complex might fetch $450 a week long term. When it’s put on Airbnb, he clears about $700 a week, after paying a management company to sort bookings and cleaning. His second property – a high-end, twobedroom apartment in the Metropolis building, would make about $1000 a week as a long-term rental.
‘‘I get about $1700 a week net, with less wear and tear. You can’t really argue with that.’’
One of Murray’s apartments A ndrew Murray knows Auckland apartments. He specialises in selling them and owns two that he rents for visitor accommodation on Airbnb.
It’s still early days, but there’s no doubt central Auckland apartments are being rented out full-time on short-stay websites.
It’s basic mathematics, he says. His one-bedroom apartment in the Scenic Hotel complex might fetch $450 a week long term. When it’s put on Airbnb, he clears about $700 a week, after paying a management company to sort bookings and cleaning. His second property – a high-end, twobedroom apartment in the Metropolis building, would make about $1000 a week as a long-term rental.
‘‘I get about $1700 a week net, with less wear and tear. You can’t really argue with that.’’
One of Murray’s apartments was previously rented to Auckland locals, the other was leased to a hotel. He estimates about half the Auckland apartments suddenly appearing on Airbnb were previously hotel rentals, so they’re not depleting the permanent rental supply. But if Airbnb continues to grow, it could affect the housing shortage, he says.
‘‘It’s got the potential to get big, but it’s a blip on the radar at the moment.’’
The short-stay boom has spawned a clutch of management companies designed specifically for Airbnb and Bookabach-type rentals.
Stefan Nikolic was so impressed with how lucrative his Queen St apartment proved on Airbnb last year he started Zodiak, to manage CBD apartments for others wanting similar returns, without the work of managing bookings, greeting guests and organising cleaning. He’s making almost double what he would on the longterm rental market, but cautions that only works for upmarket, central apartments that cater for both tourists and businesspeople.
Aaron Martin runs Auckland’s largest and longest-running Airbnb management company, My Hotel, which manages 120 properties. Most of his owners are investors and many are now buying apartments specifically as short-term rentals, he says. He doubts Airbnb apartments are affecting the broader rental market, as the skyline is alive with apartments under construction.
However, My Hotel is also branching out into full time renting four- and five-bedroom former family homes in Grey Lynn, Ponsonby and Parnell. The company’s also expanded into Wellington and is investigating Christchurch options.
Joanne Barreto, president of the Strata Community Association, which represents body corporates, says Airbnb’s growth is having a huge impact in apartment buildings. Complaints range from compromised security to excessive partying. In Melbourne, apartment residents forked out $100,000 in legal fees on a failed attempt to ban Airbnb. ‘‘People think they can just ban it. But you just can’t.’’
Barreto wants clearer regulations on what apartment owners can and can’t do. That might be coming – Auckland Council has introduced a new targeted rate for accommodation providers and is considering how that can be applied for Airbnb-type rentals.
You don’t have to hunt hard to find stories of slum rentals in tourism mecca Queenstown. In August, the district’s average rents were the highest in the
country at $575 a week, outstripping Auckland. Everyone agrees there’s a desperate shortage of rentals to accommodate the town’s mushrooming population, which includes tradies lured in by the construction boom and travellers pulling pints for evergrowing tourist numbers.
What’s less clear is Airbnb’s role in that. Airbnb itself failed to specifically comment on the Queenstown situation, with its Australasia head of policy, Brent Thomas, saying, ‘‘blaming Airbnb for housing unaffordability is as absurd as blaming smashed avocados’’. With low wage growth and high living costs, the ability to make extra cash on Airbnb makes housing more affordable, not less, Thomas argues.
Airbnb always quotes the average number of nights hosted per year – 44 in the case of Queenstown – to support its argument. However, average figures provide little insight into the use of Airbnb for full-time, short-term rentals, as they are skewed by the large number of people who only rent their property for a few days a year when they go away.
Figures from analysis company Airdna tell a different story. Of 1143 active listings in Queenstown, three-quarters are entire homes and more than half (52 per cent) are available for 7-12 months of the year, which is deemed full-time. So that could mean 450 homes are being used as full-time visitor rentals in a market so tight that Trade Me recently advertised just 30 long-term rental options, one of which was a campervan, for $340 a week.
The hitch is, there’s no knowing where those properties have come from: whether they’re owned by absentee landlords and were previously lying empty; whether they’re garden bedsits that homeowners wouldn’t want permanently occupied; or whether they would otherwise be available to Queenstown locals desperate for a permanent home.
Trade Me figures show new permanent rental listings in Queenstown fell by 51 per cent between July 2014 and June 2015, and another 22 per cent the following year, before bouncing back slightly (9 per cent) between July 2016 and June 2017. Queenstown Airbnb listings, meanwhile, have increased 58 per cent in the past 10 months.
Trade Me also runs its own short-term rental site, holidayhouses.co.nz. The company’s head of property, Nigel Jeffries, acknowledges the shortstay market has grown hugely, but does not believe it’s affecting permanent rentals. Instead, he believes the drop in long term rental stock is due to stricter lending criteria and unaffordability making it harder for Kiwis to buy homes, meaning they’re staying in rentals for longer.
Keith Hibbs, of Queenstown Harcourts property management, is also sceptical of Airbnb’s impact, as none of the hundreds of long-term rentals he manages have been switched to the short term tourist market.
Along the lake and up the hill from central Queenstown, Priscilla Uhrle has a slightly different perspective. The Harcourts sales consultant and Fernhill resident says her suburb has always had lots of short-term holiday rentals and she doubts Airbnb has changed that.
But it has eroded the supply of rooms available to transient workers. She’s still renting her spare room to an overseas couple working in hospitality who’ve been there almost 12 months, because she can’t be bothered with the work involved with short stays. But others are switching.
‘‘People are doing Airbnb because now they can have their house to themselves during the week and earn the same amount by renting the room for one or two days in the weekend.’’
Queenstown Lakes District Council planning policy manager Ian Bayliss is trying to establish exactly how short term rental sites are being used, and what to do about it.
Airdna data show visitors stayed 277,000 nights in Airbnb properties in the district in the 10 months to July. That’s 14 per cent of all stays – the majority are still in commercial accommodation.
Short-stay rentals help meet tourist peaks, help homeowners offset high housing costs and provide a cheaper holiday option for families, Bayliss says. But the boom also has risks.
‘‘We’re concerned about reducing the impacts on residential housing supply and the increased housing costs, rents and uncertainty for tenants that go along with the rampant growth of visitor accommodation.’’
In July, the council introduced differential rates – if you rent to visitors for more than 28 days a year you pay 25-35 per cent more; more than 90 days and you need resource consent; more than 180 days and you pay commercial rates (50-80 per cent more). But a small council can’t closely monitor that, Bayliss says.
So far, 1067 owners have registered as visitor accommodation and 801 have gained resource consent to rent their homes for 90 days or more.
The council is also considering approaches taken overseas. However, Bayliss says the more draconian measures, such as Berlin’s ban (see sidebar), do not fit with our Resource Management Act.
Down Happy Valley, past the tip, is Wellington’s famous container house. Formerly the home of architect Ross Stevens, its quirky interior is now offered full-time as a short-term visitor rental. Other Wellington properties being apparently rented fulltime as visitor accommodation include a three-bedroom bungalow in Lyall Bay and several city apartments.
The container house is owned and managed by Giles Middleton, who also manages another three properties for absentee owners.
Taking property out of a stretched rental market is an ethical dilemma, he admits. According to Trade Me figures, new rental listings in Wellington city fell 5 per cent, 8 per cent and 13 per cent respectively in the past three years and rental viewings have drawn queues of 40 people.
However, Middleton says he provides a venue for memories for young and old and pays more tax than a long-term rental, which is exempt from GST. The container house is not lucrative and was passed in at auction because noone actually wanted to live in it, he says. The other properties he manages are owned by absentee landlords who live in Malaysia and Turkey but need the place for a few months a year.
That’s also a common scenario for Grace Osvald, who runs Wellington short stay management agency Mind My Guest. She’s seen massive growth since the Lions tour, but 90 per cent of her owners are renting their own home when they’re away. Some spend eight or nine months overseas; others commute weekly from Nelson or Wairarapa and rent their pad at weekends.
While her website says Airbnb and short-term accommodation in Wellington is in demand so returns can be higher than with long-term rentals, Osvald says that’s not an option for many people, who need a fixed income to pay bills and mortgages. ‘‘The biggest issue with Airbnb is unreliability of income ... You have to be willing to wear that risk.’’
Back in Queenstown, planner Ian Bayliss hopes to have realistic solutions for public submission by the end of the year. ‘‘What we’re wanting is something we can manage consistently that really targets the more problematic end – which is where people might buy a house purely for the purposes of putting it on Airbnb with no intention to ever make it available for residential accommodation ... it’s just essentially a hotel in a residential area.’’
‘‘People are doing Airbnb because now they can have their house to themselves during the week and earn the same amount by renting the room for one or two days in the weekend.’’ Priscilla Uhrle, Queenstown