black and white house with airbnb logo on top
Ubiquitous short term rental companies Airbnb and Bookabach impact permanent residents too.

BusinessSeptember 30, 2022

Do platforms like Airbnb spell bad news for long-term renters?

black and white house with airbnb logo on top
Ubiquitous short term rental companies Airbnb and Bookabach impact permanent residents too.

Short-term rental platforms create income for property owners while altering rental markets and contributing to the gentrification of communities. 

A few years ago, Kirsten Turner and her whānau had to leave the Queenstown home they’d been renting. The owners had done the maths and realised they could make a vastly greater profit by listing the property on Airbnb. In the nine years that Turner has been renting in Queenstown, she’s seen it all: rent bidding, house viewings where 40 people show up to apply, and lots of rejections for places where she would have liked to live. “We’re doing the best we can to create a stable environment, but it’s really hard to trust when a landlord can pull the rug out from under you to make more money,” she says. 

But the rise of Airbnb as a favoured option for travellers to the holiday hotspot is particularly grating; it feels like Queenstown prioritises visitors over full time residents, Turner says. “So many people are out of the long-term rental market because the owners make more of a profit with Airbnb.” Finding a long-term rental in Queenstown has become “horrendous” with Airbnb’s popularity increasing both rents and rental scarcity in the region. Real estate agents in the area agree that Airbnb is one contributor to the competitive rental market, and potential regulations of the platform are a contentious issue for candidates in Queenstown Lakes District Council’s local elections. 

Airbnb, along with similar platforms like Bookabach, impact even those who aren’t using the technology directly. Research published earlier this month by William Cheung, a senior lecturer in property at the University of Auckland confirms the experience of Turner and thousands of other renters: the presence of Airbnb in a rental market can affect the cost of renting – in both directions.

Short-term rentals can be great for tourists, but permanent residents paying high rents might be less enthused.

Using data from Melbourne, where information about property is easier to access, Cheung and his co-author analysed thousands of property prices and Airbnb listings to see whether the increase of Airbnbs in an area led to higher rents. What they found was surprising: in areas close to central cities and tourist amenities, often denser, short-term rental accommodation such as Airbnb placed pressure on the long-term rental market, increasing prices. But in lower-density single-house neighbourhoods, the presence of Airbnbs, with lots of strangers coming and going, apparently decreased the desirability of the location and caused prices to go down. 

Short-term rental platforms are eager to point out that many of the properties listed on their sites wouldn’t be suitable as long-term rentals. Eacham Curry, director of corporate affairs at Bookabach (owned by international corporation Expedia Group), said in a statement to The Spinoff that housing shortages go far beyond short-term rental platforms. “Many properties [on Bookabach] are luxury homes and would never be considered “affordable” to lower and middle-income tenants.” 

Chris Williams, an Airbnb “Host” (the term Airbnb insists on using for those renting via its platform) who lives in Hamilton and leases a family bach in Raglan via Airbnb, as well as using it for his family and friends, says “we don’t see it as depriving the area of a long -term rental – if we didn’t have it on Airbnb we’d be using it ourselves”. 

Airbnb hosts earned a median income of $4,400 from their listings in 2017. Over 70% of hosts were women and the average age of hosts was 48 years old. (This hillside is actually in Wellington but you get the gist)

Williams says navigating Airbnb has been straightforward; there are few rules to follow, other than providing visitors with a clean house in a desirable location and paying tax on income he makes through the property. Airbnb has been resistant to regulation in the past, calling rules in Christchurch that required those renting via the platform to get a $1000 resource consent “restrictive and outdated” earlier this year.

In a statement to The Spinoff, Susan Wheeldon, country manager for Australia and New Zealand at Airbnb, said the piecemeal approach to regulation across New Zealand, with rules from the central government, as well as the 78 different councils, makes things difficult for hosts and vitiros. 

But while the digital aspect of short-term rental platforms makes using the services straightforward, the regulations of the platform are less clear than they are for long-term rentals. While guests can stay for several weeks, no tenancy is signed: the main source of regulation is the platform’s terms and conditions. Multiple horror movies feature Airbnb houses as a setting, perhaps reflecting the well-documented real nightmares that can happen in short-term rented accommodation. 

But perhaps the greatest threat of Airbnb is not the monsters of horror movies, but the more subtle threat of gentrification, where the perceived desirability of an area increases costs and encourages lower-income residents to move elsewhere. “An influx of tourists can rapidly gentrify an area,” Cheung says. 

As well as displacing local residents by making rents higher, Cheung adds that tourists “can change the diversity of retail shops available in a neighbourhood”. Dairies become high-end retail stores; a hardware store can’t afford its lease and closes up shop, a travel influencer tags the five most aesthetic Airbnb stays in the area, and the visitors keep coming. That the digital world of Airbnb and Bookabach can shape the look and feel of housing available in cities shouldn’t be surprising; technology often has flow-on effects that go far beyond its intended use. 

Spokespeople for these platforms argue that they’re financially good for the places where they operate, regardless of what impact they may have on renting. In fact, they say that given the cost of living crisis, short-term rentals can be financial lifelines. Bookabach’s Curry describes many of those renting properties via the platform as “mum and dad retirees”, and Wheeldon says that, according to Airbnb research, 30% of hosts in New Zealand use the platform to help make ends meet and ensure they can stay in their own homes. 

As a renter, Kirsten Turner is sympathetic to the financial struggles of landlords who depend on Airbnb for income. Living in Queenstown, she’s seen people building small annexes for guests behind their houses, or buying bigger homes that depend on the ability to service a mortgage through Airbnb. “All the houses for sale are listed with ‘great Airbnb potential’,” she says. But for renters like herself, this just locks in the inaccessibility of secure rented housing. 

Ultimately, the impacts of scarce and expensive housing in markets overwhelmed by visitors go beyond individuals and families struggling to find homes near to friends and schools. “There’s absolutely less community,” Turner says. “It’s a beautiful area but it’s hard when none of your neighbours are going to stay permanently.”

Rent Week 2022 runs until  October 2. Read all our renting coverage here.

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