The online short term letting platform, Airbnb allows property owners to list their apartments and homes to attract travellers and charge daily accommodation rates. In June 2016, there were about 7 500 Airbnb hosts in South Africa, making this fast becoming an industry of its own.
“We are finding about 50% of buyer enquiries in Sea Point specifically request properties that can be holiday let,” says Lyonelle Venter, an estate agent from Jawitz Properties who specialises in apartments priced up to R4 million in the area. “Investors are seeing favourable returns with Airbnb, so the appeal is completely understandable.”
“We’re starting to notice some issues arising, however. The body corporates of many established sectional title schemes are starting to regulate the use of units in their buildings,” she says.
Many trustees have opted to enact new rules that limit the possibility of Airbnb activity. These rules include policies that require a minimum amount of months for units to be occupied by a tenant. The reason these rules are being brought in is to avoid security risks and maintain general quiet enjoyment.
“Agents have now started using the fact that properties are lettable on Airbnb in their marketing,” says Venter. “Airbnb approved properties are now in high demand and investors are snapping them up.”
Venter adds that investors should be wary. “When buying a property with the hopes of making a return with it via Airbnb, buyers should make sure it is in fact permitted.” There should be a stipulation in the deed of sale that the property can be used for short term letting.
Airbnb worldwide is causing a disproportionate rise in rental rates. Many residential units are now being let on a short term basis, which for some owners is viewed purely for commercial appeal - all the while, the day rental rate far exceeds what locals can reasonably afford. “This puts pressure on the amount of rental property available particularly over the summer season,” Venter adds.
Buyers seeking Airbnb approved properties are often willing to pay a premium for this benefit. “The effect of this being that many owners now consider their homes or investment property to be worth more than what the market will actually pay, regardless of whether the provision to short let has been granted.”
It is undeniable at this point that Airbnb offers better returns than most other letting options, but it could also arguably be called the riskiest to pursue. “Buyers and sellers alike must be aware of these risks before building Airbnb castles in the sky,” Venter concludes.