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To Airbnb or not to Airbnb

Airbnb can give a better return than a long-term tenancy but not every property is going to perform well, and there are many things
Louisa Sanghera
June 20, 2017

In the right circumstances, Airbnb can give a better return than a long-term tenancy.

From September 2014 to December 2016, the number of listings on Airbnb in Sydney shot up from around 6,000 to 22,000.

But not every property is going to attract the same interest, and there are a myriad extra costs and time considerations to take into account before embracing the short-term holiday-letting model.

Location

Your property has to tick the right boxes for holiday/business guests.

If your place is beachside or close to transport links and entertainment hubs, you’ll have no problem attracting guests, but the further away your property is from the buzz of the big city, the fewer bookings it will attract.

Hotel Experience

Airbnb guests expect a hotel-comparable experience: from clean, comfortable accommodation, with all the mod-cons and fresh linen, to simple things such as personal soap and a ready supply of toilet paper.

This, of course, means a greater outlay for you than if you had regular long-term tenants.

You will have to spend more money on the upkeep and furnishing of your property, and if you are not willing to do the cleaning yourself, it will involve the extra expense of employing a property management service.

Your insurance needs will also change, requiring different, more expensive cover.

If your property isn’t a chic apartment in Bondi or Surry Hills that you can be sure of renting out 365 days a year, you’re probably going to be better off with tried-and-tested long-term tenants.

Rules and Regulations

While cities around the world are clamping down on people renting out their properties on Airbnb, Sydney seems to be embracing the service.

So far the NSW government has been very positive in regards to Airbnb-style letting.

However, it is still in the process of setting out legislation, and has yet to address concerns about what constitutes short-term letting and what triggers a serviced-apartment definition.

Indeed, in Victoria, there has been a lot of controversy about the short-term lettings of strata units, so it’s always important to do your homework about what is permitted.

In Sydney, at the moment, renting out a property purely through Airbnb is lawful, though in the long-term this may not be an option.

Tax Implications

Where there’s an income there’s a tax bill.

Whether you’ve long-term tenants or a series of short-term guests through Airbnb in your property, the same tax rules apply.

All assessable income must be declared in your tax return, and you’ll be able to claim any running costs or losses.

This is complicated territory that requires careful consideration and the guidance of a tax professional, to ensure short-term guests don’t leave you with a long-term tax headache.

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Louisa Sanghera
June 20, 2017
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