What hosts need to know about home sharing


The questions to ask before you list your property.

Look before you lease


Thinking of renting out your spare room or investment property to make some extra coin? Before you get busy listing, there are a few things to consider before you embark on short-term rentals through online accommodation platforms such as Airbnb, HomeAway, FlipKey or Stayz.

While per-day returns on short-term rentals are higher than long-term rentals, they're quite different beasts. And after you've covered all your expenses and paid the rental platform, it might not be quite as lucrative as you'd expected.

Here's a quick look at the major home-sharing, short-term rental and accommodation platforms for Australian properties, plus a checklist of things to consider before you get started.

In this article:

Are you allowed?

Currently, there are no Australia-wide regulations for short-term letting. Individual states are exploring how to regulate the industry to balance the needs of tourists, property owners and communities. For now it's mostly regulated through local councils, so you'll need to check to see what the rules are in your area. Some owners' corporations can also prohibit short-term holiday letting, so check your strata rules.

Renters, you'll need to check whether you're allowed to sublet rooms or the entire property – there could be restrictions spelled out in your lease.

In August 2018, the NSW Government passed new laws restricting short-term holiday letting. In Sydney, for properties where the owner isn't present, the property can only be let for up to 180 days per year. For the rest of NSW, and for properties where the host is present, there are no limits – although councils will be allowed to restrict the limit to no less than 180 days per year. This new framework will come into play in 2019.

Australia's rules are likely to change as laws catch up to the changing market, so watch this space.

Is your home suitable?

"Not every property is going to be suitable for short-term," says Malcolm Gunning, president of the Real Estate Institute of Australia.

How close are you to public transport? Are you in a popular tourist area? Is the tourist trade in your area seasonal? Is there enough privacy for everyone if you're living at the property too?

Inner-city locations like Surry Hills in Sydney, Docklands in Melbourne and Fortitude Valley in Brisbane seem to be less affected by the seasons, Gunning says.

What do you want from leasing the property?

Leasing an investment property to a long-term tenant on a traditional six or 12-month lease can be a kind of 'set-and-forget' arrangement – you may not need to actively do much. Short-term holiday letting can offer higher profits, but requires more work.

Is it a holiday home that you'd like to use yourself or open up to friends and family from time to time? If so, short-term letting allows you to block out periods of time so you can enjoy your asset.

Do you have time?

"There is a lot of effort in managing a fully-furnished short-term rental, starting with buying everything that you would normally buy for a home, as that's what you're trying to provide – a home away from home," says Linda, who owns a studio in inner Sydney and a house in the Blue Mountains, both leased out through Airbnb.

"Then there's the cleaning after each guest stays. If it's a house, there's gardening as well.

"It gets harder the bigger the property and the further away it is. Our studio in Chippendale is easier because it's smaller, closer and there's no gardening involved."

The 'customer service' side of things can also be labour-intensive. You need to respond promptly to prospective guests' enquiries, be available to let them into the property (or use a lockbox) and be on-call to handle any issues during their stay. This can be tricky to manage if you work full-time or have other commitments, particularly if you have more than one property.

Then there's the practicalities: cleaning the property (or organising a cleaner), laundry, garden maintenance, upkeep and restocking consumables like soap, tea, coffee and toilet paper, if you supply them.

You can pay a management agency to take care of all these details for you, but that eats into your profits. If you're juggling multiple properties plus work or family commitments, you might decide that these are worth paying for.

"Depending on the type of property an owner lists and the goal of their listing, the time commitment can vary from a few hours per month to a full-time job," says TripAdvisor Rentals spokesperson Laurel Greatrix.

"Being responsive will not only help travellers feel comfortable booking with you, but we've also found that owners who respond within six hours are more than twice as likely to turn an enquiry into a booking."

Crunch the numbers

It's worth comparing the costs of renting out your property long-term versus short-term, to see how it may affect your profit.

Rental costs for home owners

Long-term rental costs:

  • Real estate agent management fees.
  • Landlord insurance.
  • Maintenance and repairs.
  • Water and council rates.
  • Garden maintenance.
  • Strata fees.

Short-term rental costs:

  • Furnishing the property.
  • Booking platform fees.
  • Management fees.
  • Strata fees.
  • Water and council rates.
  • Electricity.
  • Gas.
  • Internet.
  • Cable TV and streaming services.
  • Maintenance and repairs.
  • Garden maintenance.
  • Cleaning.
  • Laundry.
  • Consumables such as soap, toilet paper, tea and coffee.

Booking platforms wax lyrical about how much extra money you can make through short-term rentals, but before you start mentally spending all that extra dosh, do the sums.

"If you're an owner wanting to outsource all the work of cleaning, maintenance and meeting and greeting guests, there wouldn't be a lot of difference financially than long-term leasing," says Linda.

"It's a gamble to go into short-term rentals as the returns are not guaranteed and can be very seasonal, so not a good idea if there is a big mortgage on the property. However, if you are not absolutely reliant on the income, and would like to use the property yourself, then short-term rentals provide a level of flexibility that might suit you."

Popular locations have higher occupancy levels – sometimes as high as 80–90%, says Nick Saliakouras, account and support manager with Aura. "Once fees are taken out, you should be left with almost double the regular long-term rental."

But don't expect to make your fortune through short-term letting. The average earning for an Airbnb host is only $5400 per year, and the typical listing is booked for 28 nights per year, says Sam McDonagh, Airbnb Australia country manager.  

For a two-bedroom apartment in Sydney, the median long-term rent is approximately $560 per week, and for three-bedroom houses it’s $520 per week, according to Real Estate Institute of Australia figures. A quick search on Airbnb at the time of writing shows an average nightly price of $213.

In Melbourne, you're looking at long-term rental median prices of $400 per week for a three-bedroom house and $440 per week for a two-bedroom apartment. The Airbnb website shows an average nightly price of $144.

Bear in mind that these figures include both investment properties and properties that are leased only while the owner is away, so the occupancy rates and earnings could differ.

Know your obligations

Consumer protections

If you lease out a property or room on a regular or semi-regular basis, you're considered to be a 'trader' by the ACCC. This means that your customers are entitled to consumer protections like the Australian Consumer Law.

The three most important obligations you need to be aware of are:

  1. You must not make false or misleading representations or statements or engage in misleading or deceptive conduct, including fake or inaccurate reviews.
  2. You must comply with the consumer guarantees.
  3. You must comply with your product safety obligations.

The ACCC's guide to the sharing economy has a more detailed list of obligations.

Tax

Any money you make through a home-sharing platform needs to be declared in your tax return. If your turnover is below the GST threshold of $75,000 per year, you don't need to register for GST. If you're turning over $75,000 or more per year, you'll need an ABN.

You can claim some deductions too, but check in with the ATO to make sure you're only claiming what you're entitled to.

Make sure you're covered

Don't assume your existing insurance will protect you.

"Most insurers regard online holiday rentals as a business activity. As neither standard home insurance nor landlord insurance policies are intended for short-term letting, homeowners and renters who let their homes or bedrooms to holidaymakers could be exposing themselves to significant financial loss if things go wrong," says Campbell Fuller, general manager communications and media, Insurance Council of Australia.

If you're letting out a room or property through a short-term online platform, standard home insurance or landlord insurance policies may not cover you for:

  • theft
  • property damage
  • public liability.

Some home-sharing platforms provide public liability insurance for hosts, but don't assume you're covered – check the fine print to make sure so you're not left to foot the bill if things go wrong.

In response to the growth of home-sharing platforms, several insurers have developed insurance products for hosts. You can use the Insurance Council’s Find an Insurer tool to find insurance tailored to short-term holiday letting.

Home-sharing platforms compared

Ready to list your property? We've trawled through the terms and conditions of four major home-sharing platforms in Australia to find out the fees, features and fine print so you don't have to.

Home-sharing platforms at a glance
Platform Listing fee Host fee Insurance
Airbnb Free 3% (may be higher for hosts with strict cancellation policies)
US$1 million property damage protection; US$1 million liability insurance
HomeAway (Stayz) Free 5.5%
US$1 million liability insurance
FlipKey (TripAdvisor)
Free 3% None
Aura
Free Free None
  • It's free to list your room or property.
  • Host fee is generally 3%, but can be higher for hosts with a very strict cancellation policy.
  • You can charge a cleaning fee on top of the nightly rate to cover your cleaning costs.
  • US$1 million property damage protection.
  • US$1 million liability insurance.
  • Smart Pricing tool adjusts price based on changes in demand for similar listings.
  • Both guests and hosts can see one another's profiles and leave reviews, so you can screen guests before you commit to the booking.

There are more than 140,000 Airbnb listings in Australia, and there's certainly no shortage of demand for properties – the number of Airbnb guests travelling to Australia has increased by 65% year-on-year, with 5.09 million arriving in 2017.

Airbnb generally releases your payout 24 hours after your guest's scheduled check-in time, but it could take up to seven business days for the money to reach you, depending on how you’ve requested to receive the payment. However, if you're a first-time host, Airbnb may withhold your money for 30 days after your first reservation is confirmed.

  • Owned by Expedia.
  • Free to list your property.
  • Hosts are charged 5.5% commission on the price of the total booking value.
  • The guest deposit is paid to the host (minus HomeAway's commission) three business days after the guest makes payment.
  • Remaining balance is paid to the host within three business days of the guest arriving.
  • US$1 million liability insurance.
  • Market Maker tool shows average nightly rates for similar properties.

HomeAway owns a number of different home-sharing sites, including VRBO, VacationRentals.com, Homelidays, OwnersDirect and Stayz (which is now known as HomeAway). Where Stayz was previously an Australian website listing only Australian properties, HomeAway is an international site, so hosts' properties will be visible around the world.

According to HomeAway, your listing can reach travellers in 190 countries across 50+ sites. HomeAway claims to have more than 1 million listings worldwide.

  • Owned by TripAdvisor.
  • 3% booking fee.
  • No insurance.
  • You can request a damage deposit.
  • TripAdvisor provides a standard rental agreement that's automatically attached to your quotes, but you can also upload your own.
  • You can set check-in and check-out times and specify a minimum stay.

You can also specify whether the guest needs to pay the whole booking amount upfront or just the deposit. Guest cancellation policies range from 'relaxed'  to 'super strict'.

You'll get paid one business day after the check-in date.

  • Australian-owned.
  • Free listing – no listing fees, nightly fees or commissions charged to property owner.
  • No insurance.
  • You can set terms and conditions and house rules, plus the cancellation policy.
  • Offers property management in Sydney and Sunshine Coast for 25% of booking fee.

The Aura website doesn't offer pricing advice or guidance, but does have a customer service team. An Aura spokesperson recommends collecting a bond from guests to cover damage, plus taking out insurance that specifically covers short-term rentals.

Guests don't pay hosts directly through the site – the host must arrange payment through bank transfer, credit card or PayPal. An Aura spokesperson said this reduces the possibility of people posing as hosts to scam guests, as hosts have been vetted and verified by Aura.

To list your property, Aura needs proof that you own the property by showing a rates notice or water bill. This means Aura doesn't accept listings for single or shared rooms, so no subletting.

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