Once upon a time Airbnb was under fire and criticized for playing a role in the housing shortage, accusing property owners of disadvantaging communities for financial gains. It would be wrong to blame these property owners – it was easy to do! Dress up their properties whether it was a full house or an extension of their home, add some art, take a few photos, make an online listing and you were on your way until councils and IRD wanted a share of your gains too – issues that were easily overcome.
But the arrival of Covid-19 and borders closing to international visitors is something no one imagined. There is even speculation that Airbnb properties will flood the market, causing interruption in supply and demand, but maybe not at all because you see not all properties that are suitable for Airbnb can meet current rental standards.
I can imagine some Airbnb property owners are thinking maybe they will put their properties on the long-term rental market. If you are considering this move, there are some things you need to be aware of.
Can you legally rent out your property?
As of August, 27 2019, under the Residential Tenancies Amendment Act certain types of dwellings became illegal to rent out separately.
Example – a converted garage or shed, does not matter how new, how beautiful it looks.
A small 1-2 bedroom, with its own access and bathroom facilities etc that is attached to the main house.
A master bedroom with en-suite, a basement or sleep-out that forms (or attached) part of the main dwelling on your property.
These are just some examples – one indicator that the property is not a legal dwelling is that it does not have its own water and power meters.
Check with your local council to be 100% sure what you are renting is a legal dwelling.
Do you have your fluffy ducks in a row and or does your property meet all these requirements?
Mentioning fluffy ducks, makes this area less scary! Currently under Covid-19 legislation even the most well-meaning landlords can incur $6500 fines.
Insulation – Since 1 July 2019, ceiling and underfloor insulation is compulsory in all rental homes, where it is reasonably practicable to install. A statement will need to be included in the tenancy agreement. The insulation statement can be or form part of the Healthy Homes statement of intent as well.
Healthy Homes – Your statement/intent will need to be in all new tenancy agreements – this statement is your intent to comply with Healthy Homes Standards Regulations 2019. The aim of this act is to make sure every rental home in the country both the government and private sector are warmer and drier, keeping our community healthy. There are five different component of the act – do you know what these are?
Insurance – Under Residential Tenancies Amendment Act 2019, tenants were made liable for careless damage in rental properties. As a landlord you will need to provide insurance information in any new tenancy agreement that is relevant to the tenant’s liability for damage to the property. This information must include whether the property is insured and what the excess amount is.
Furnished or not furnished – what is better?
If you are coming from Airbnb – you have furniture in place that needs to be dealt with. In my opinion most properties are best unfurnished because most tenants come with their own style and own furniture. However, given the unique nature of the current situation, there may be returning nationals looking for furnished rental properties, so you could offer as furnished but be prepared to be flexible to maximise your rent. It is generally better to sell your furniture or put it in storage. Plus, if you ever want to revert back to Airbnb you will still have your nice furniture.
What rent should you ask for?
Currently with some people having lost their jobs, or only getting part wages, it is paramount that you list your property at a price suited to market conditions. You are better off getting $20-$40 less a week than none at all for a week. Be aware that fixed term tenancy rent levels are not necessarily going to be as high as you would get under AirBnB. Talk to an expert in your region to find out more about market rates you could expect.
There is a lot more about renting out your house – I have just covered the minimal. There is marketing your property, presentation of your property and the tenant selection process to name a just a few.
Other things to consider and not forget, finalising your utility accounts, internet, power and gas, it would be easy to overlook these especially if you have direct debits set up for payments.
Property Manager or self-manage?
Get a property manager. You have no doubt done a great job in your Airbnb home, but long-term tenants are a whole new ball game. Choose a property manager that is local to where your property is located – tap into their local knowledge, presence, and experience. Don’t rush the process as you may end up being in a long-term relationship. Small mistakes made with your tenant and property can cost thousands of dollars.
If you get a property manager involved, not only you won’t have to worry about any of the above, they can also give you a rental appraisal. If you are in the Nelson/Tasman region, contact our Business Development Manager – Julian Kett – on 022 639 2620 or email at firstname.lastname@example.org for a no-obligation chat.
Original author: Shadi Salephour, The Rent Shop Manakau: edited by Julian Kett, The Rent Shop Nelson