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RiskWise CEO Doron Peleg said that Airbnb has proven to be a lifeline for investors in an oversupplied Melbourne rental market, but that the new legislation could deter investors from using the platform.
“Airbnb in Victoria helped absorb the large number of rental properties available in the market,” Mr Peleg said.
“One of the reasons investors went ahead with buying these rental properties despite there being a high risk of oversupply, and therefore also low rental returns, was because they knew they could use Airbnb as an alternative to generate rental income outside of the standard long-term rental property cycle.”
Mr Peleg’s comments follow the Victorian government’s move to make Airbnb apartment owners pay neighbours compensation of up to $2,000 for property damage caused by guests, while unruly visitors could face fines of up to $1,100.
He said that when it was introduced in Victoria, Airbnb had a big impact on the rental market, absorbing a “very” large number of properties.
But Mr Peleg said that the new legislation could serve to deter investors from listing their properties on Airbnb, and this would have a flow-on effect of increasing the pool of rental properties in the “standard” rental market.
He said that this could consequently impact rental prices.
“This legislation didn’t come out of the blue,” the CEO said.
“There’s been lots of complaints and the problems have been widespread, with owners not having to face up to any responsibility for the actions of those staying in these short-term leases.
“But now they can face a fine of up to $2,000. It is certainly going to stop a lot of them entering into Airbnb short-term stays. Interestingly, New York is a good example of how Airbnb can affect the rental market. There, Airbnb is said to be responsible for ‘aggravating’ soaring rents and new legislation aims to significantly clamp down the company’s accommodation listings.”
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