Airbnb legislation could hit Victorian rental market

NEW Victorian Airbnb legislation could negatively impact the unit rental market, according to RiskWise chief executive officer Doron Peleg.

His comments come following the state 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.

Mr Peleg said Airbnb had proven a lifeline for investors unable to find tenants in an oversupplied rental market in Melbourne, such as inner- Melbourne.

“Airbnb in Victoria helped absorb the large number of rental properties available in the market,” he 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.

“When it was introduced into Victoria, Airbnb had a big impact on the rental market and we clearly saw very large numbers of properties absorbed into the market and an increase in rental prices.

“The Melbourne market has demonstrated resilience with recent data showing that rents for houses and units are increasing compared to last year.

“Considering the very high level of new units, these are outstanding results, even when the strong population growth is taken into account.”

Mr Peleg said 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, and could, consequently, impact rental prices.

“This legislation didn’t come out of the blue; 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, which will mean an increase to the ‘standard’ rental market.”