Airbnb doesn't put rents up, landlords do

Over the weekend a story broke regarding a tenant who was evicted and later found that their former home had been listed on Airbnb. We thought this a good opportunity to give a preview of some of our research into the impact of Airbnb in Sydney.

Domain reports that after his eviction, Nicholas’s landlord listed the property on Airbnb at up to “three times the rent”, partly by listing separate rooms rather than the whole of the premises, but partly simply by making the nightly rate far more than could have been made from weekly rent. One element of our research into Airbnb is looking at how much business the Airbnb host really needs in order to replace the equivalent rent for that property.

As anyone who's rented in Sydney lately knows, our rents are extraordinarily high. Unsurprisingly then, our research finds that Sydney Airbnbs have to actually be booked for significant amounts of time in order to replace the rent. Of the top 10 Sydney post codes where entire homes are listed on Airbnb, 9 would need paid up bookings for well more than 6 months of the year.

This is about in line with research carried out by the city of San Francisco in 2015 which recommended the Mayor's proposal of limiting listings to no more than 120 days. It does not make financial sense for a landlord to remove a private rental from the market unless they could be assured of Airbnb bookings at least within cooee of the rental replacement number.  San Francisco has subsequently adopted a limit of 60 days.

The recent inquiry into short-term lettings in NSW has also recommended a limit of sorts, where an Airbnb host would need to seek council approval before using the property on Airbnb over a certain number of days. A common number discussed was from the City of Sydney, which suggested 100 days in a year should be the limit.

Across Sydney, there are very few listings which go over 100 days, and even fewer who come close to replacing the rent.

Readers of the property pages know that not all property owners, or landlords, always act in the most economically rationalist way. The host of Nicholas' former home is a bit unique as far as Airbnb hosts go – from the info on Airbnb it appears he manages 3 other properties around Sydney, all divided into multiple listings. He also links to his TV appearance regarding his commitment to the ‘sharing economy’. It's entirely possible that this host, and others, would choose to list properties even if they didn't happen to be more profitable than the regular rent.

But let us step back and consider who - aside from tenants, of course - would be so upset if someone was evicted in order for a landlord to take another tenant at a much higher rent. We suspect the response would largely be “let the market decide!”, “it’s the landlords right” and "who can blame them if that's what the tenant is willing to pay?" It is curious then that a landlord responding to a market demand for short-term lettings does not attract the same type of response.

Could it be that concern for this particular tenant is a little on the shallow side? Why do we only hear about the evils of property owners extracting maximum value from their investments when it's actually something else that's bothering us? We understand there's a party going on across the hall that it seems everyone else was invited to, and no doubt that can be frustrating... but for tenants it's been someone else's party all along.

Of course, Nicholas couldn’t have been evicted to make way for Airbnb at all without NSW's tenancy laws that allow for terminations without a good reason. From the article it appears that Nicholas was misled into believing that the owner would be moving back in themselves. This kind of disappointment is well known to tenants as a consequence of no grounds notices.

Those dismayed at this story must recognise that no complaint about the impact of Airbnb can match the impact of our unfair and one-sided housing system. We do not mean that Airbnb has had no negative impact – but whatever impact exists is a direct result of the way our housing system has been designed, and the values that we place upon it.