Property Management is vital to the real estate industry. It represents an ongoing cash flow for real estate businesses, and is the primary asset of that business. The “Airbnb” invasion is poised to attack this traditional service.
Those landlords who want long term tenants will continue to use real estate agents for the purpose of managing their property. Those however, who want a greater return on their property, may find that the “Airbnb” type portal may be an unwanted competitor.
The area which is most vulnerable is those who have based their business in the short term accommodation market. In tourist areas, such as, the Blue Mountains, Kosciusko and Byron Bay at the other extreme, are the ones most likely to suffer for an “Airbnb” service. Let’s consider the normal residential property market; Leverage has a client who in Western Australia has sacked her property managers and replaced it with an “Airbnb” service. All she has to do is;
- Allow the booking to be made online;
- Arrange for cleaners between tenancies; and
- Hand keys over before the person enters the property.
Yes, there are some alarm bells that ring in relation to protection of the property. In discussions with this client and a friend of hers who has a similar service running in New South Wales, may say the risk are worth it. In their opinion, they are trebling the return on their investment. Such return is in some cases to hard for people to reject.
This simple service also removes the problem of whinging tenants, bonds, termination and all the problems with NCAT. It’s a service that needs no skills and has very little compliance regime.
The short term accommodation market is the most vulnerable. All that is offered by the current agents is what has been set out above. Anyone can clean, and anyone can be available to hand over the keys. Neither of these services require a licence or a certificate of registration. Most of all, it can be done remotely and without access to locals.
The “Airbnb” type service does not need a licence. Specific exemptions operate under the New South Wales legislation for advertising portals. “Airbnb” is merely an advertising portal which has a booking system attached. It is this part of the service which may offer a glimmer of light for agents. There is no licence required, and therefore there is no protection for monies held in trust. “Airbnb” has proven to be a highly effective and efficient way of conducting business for property owners. Unfortunately, new upgraded versions will hit the market at some time who may not be as ethical as “Airbnb”. They can undertake they can provide this service and collect all rent and not distribute them to the landlords.
All state and territory legislation provide for property services compensation fund or something similar in each state. This means that, all monies go into a trust account of a Real Estate Agent are protected and underwritten by the government. “Airbnb” services have no such protection and if money does disappear, the landlords are not protected.
The three marketing advantages that Agents have against “Airbnb” services are:-
- Protection; and
“Airbnb” is a serious disrupter and a major competitor to agents. Most importantly, it is totally legal.