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Landlords shun short-stay rentals

03 May 2018

Landlords shun short-stay rentals Image

By Shane Scanlan

What legislation and the courts couldn’t do, market forces are now starting to turn the tables on short-stay apartments in Docklands.

While some real estate agents are reluctant to declare a definite trend, one agency says it returned 16 apartments to the long-term market in the last month.

Lina D’Ambrosio of City Residential said many landlords are now yielding more from long-term rentals, but only if they let their properties fully-furnished.

She said 55 per cent of all her long-term rentals were now offered furnished, often with utilities and other services bundled into the price.

“We’ve let 16 former short-term apartments in the last month,” she said. “But this has been going on for a while now.”

Lucas Real Estate property manager Dylan Emmett said he’d had a few landlords say they were sick of short-term, but there were not enough of them to constitute a trend.

“Some are happy to get a little bit less and not have to worry about it anymore,” he said. “It’s clear that the long-term market is as good as it’s ever been.”

NewQuay landlord Elena Tsapatolis said she recently returned two furnished apartments to the long-term market because the bottom had fallen out of the short-term industry.

She said, at its peak, one of her apartments was returning $4000 per month, but had recently dropped to only $1500. But, she said, the apartment was now bringing in $3500 per month by being rented fully furnished on the long-term market.

She said long-term renters had greater respect for the apartment itself and, more tellingly, for the local community.

Ms Tsapatolis said an over-supply of short-term rentals in recent years had led to a price war, which had now made long-term rental more attractive.

Barry Plant associate director Steven Heaven said low occupancy rates was at the heart of the move for landlords to return rentals to the long-term market.

He said short-stays in the past were occupied 95 per cent of the time, but this figure had recently falled to 30 per cent.

He said one landlord recently returning his property to long-term renting reported just 10 per cent occupancy.

Mr Heaven said Barry Plant had recently regained the “handful” of apartments it had lost in the past to short-term rentals.

Ms D’Ambrosio said the demand for long-term furnished apartments was enormous, with many being snapped up before they were even advertised.

“If I was buying a new apartment, I would furnish it and rent it out long-term,” she said.

She said an apartment which would yield $875-$900 per week unfurnished, would return $1250 per week if it was furnished.

She said online booking agencies were now taking massive commissions from short-term landlords, making many of them question their approach.

“When you throw in the other costs like cleaning, they are better off renting to people who want to stay longer,” she said.

Short-stay operator Paul Salter acknowledged the issues facing the sector, but said the market would “correct” again in the future.

“All markets are driven by supply and demand, there is simply an over-supply of short-term properties at the moment and, like all markets, it will correct itself,” Mr Salter said.  “Those who offer poor quality and poor service will not survive.”

“Some consumers are still a little naive and not reading the property’s reviews. The best guide to see what you are getting for your money, is previous guest experiences.” 

“Some of the online travel agencies are letting anyone who thinks they can run short-stay, put their property online, with little or no checks, hence the over-supply and the low prices, which is good for the consumer, provided they are checking reviews.”

“My tip for the consumer is, if the operator is not a member of the Victorian Accommodation Industry Association (VicAIA), don’t book it. If you do, good luck if the sheets have been changed!”

“Consumers learn quickly, and only those operators who are prepared to follow a code of conduct and agree to deliver at a high standard, will survive.”

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