Landlords: Are short-stay tenants a long term solution?
Your news feeds are currently full of stories on our “rental crisis”, with record low vacancy rates in Brisbane now meeting high demand from opened borders and a surging population. Rents are rising and this growing cost pressure on tenants has led to calls for government handouts.
An unlikely alliance of the Real Estate Institute and QShelter has a simple solution: convert short-stay rentals into long term tenancies. The two are campaigning for government bonuses to encourage investors to make the change. But from what we’re witnessing, Brisbane’s long stay returns are so much higher, there’s already reward for landlords to immediately ditch short-stay renting.
In recent weeks a growing number of landlords have made the switch, leaving the serviced apartment rental pools to secure local tenants with 6 and 12 month tenancies. Business and holiday travel is up, but nowhere near pre-Covid levels, and some are questioning whether hotel returns will ever justify the risks again.
One CBD landlord who’s just left a hotel pool is Sue McMaster: “Interestingly, as painful as the covid debacle has been, it has probably bought us to the best place. It shone a light on the shortcomings of the <hotel name deleted> model and made us ask the questions to get the right answers!”
Incomes have been dropping and are, even at the best of times, tied to the fortunes of the hotel operators. Investors can wear high monthly fees for marketing, the impact of high changeover guests (and “party houses”), and the ongoing expense of maintaining furnishings. Even before the shift in the market these were all deterring landlords from short-stay.
The long term market provides a growing tenant demand from city workers, predictable incomes and certainty over who is staying in your property.
According to REIQ’s Antonia Mercorella there’s approximately 200,000 Queensland properties currently vacant or used for short-term and holiday letting. “The government could do a lot more to reward property owners who chose to place their property on the long-term rental market,” Ms Mercorella said.
Yes the government can do more – even without financial incentives. And it could be a long-awaited win for permanent apartment residents who are tired of sharing their spaces with serviced hotel guests.
A body corp has limited powers and can’t ban holiday stays and AirBNB from its buildings, but regulating where this ‘tourism’ use can be mixed with long term residents is definitely within government and council’s powers. Brisbane City Council could limit the number of homes offered to travelers and demand they be accommodated in purpose built developments, for example.
Noosa recently introduced ‘AirBNB’ laws aimed at helping residents impacted by neighbouring party houses. They stopped short of legislating a maximum nights a year a home can be offered short-stay, but cities like Los Angeles have done exactly that. To preserve affordable inner city homes for their residents.
Limiting short-stay visitors in our city’s apartment buildings would be a very popular move for those who’ve suffered as neighbours of noisy holiday-makers, party weekends and the mismatch of having these alongside residents who are trying to go about their daily lives.
How will the State Government respond to these growing calls to help tenants in tough times? There’s not a lot of new rental supply under construction and the government’s own public housing stocks are overwhelmed. And they won’t concede this point – but its new tenancy laws are discouraging investors from buying property and a boom sales market is incentivising current landlords to sell up. Our team are witnessing this every day.
Landlords are already voting with their feet in the hunt for better returns. But any support to shift serviced apartments back into the local rental supply, especially by limiting their noise and disruption, could be a welcomed win-win for Brisbane’s tenants and many inner-city communities.
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