Benefits vs Risks of allowing short-letting in BTR buildings
The growth of short-term rentals, through sites such as Airbnb, Booking.com, etc., is indisputable.
If you are skeptical, consider this.
Since its inception in 2008, Airbnb’s success has been nothing short of impressive. The company provides access to 5+ million unique places to stay in more than 81,000 cities and 191 countries. In terms of revenues, last year Airbnb outstripped its own forecastsand brought $93 million in profit on the back of $2.6 billion in revenue. What is more, the jaw-dropping results did not end there, and the company reported that Q3 of 2018 has been its strongest quarter to date with more than $1 billion in revenue. By 2020, Airbnb’s revenue is projected to top $8.5 billion. Wooha!
Numbers don’t lie. The demand for short-term rents is rising but debates on the value of allowing residents to offer short-term rentals abound within the build-to-rent (BTR) industry. As an institutional landlord, you need to weigh the benefits against the risks before you make the leap.
As with anything new, the short-term rental market in London has BTR owners’ guards up. Used to long-term-let model, stakeholders are weary to make the transition to a paradigm where people like to share their possessions and don’t like to commit.
However, the rise of the sharing economy does not have to conflict with the long-term goals of institutional entities.
The benefits of allowing short-term rentals in build-to-rent buildings are plenty: increased occupancy; increased rent; reduced time to stabilization; revenue sharing from participating residents; and more.
As a BTR owner, you are naturally looking for long-term residents to deliver steady returns. Nonetheless, the opportunity to allow short-term renting – to eliminate long periods with empty apartments and long-term residents illegally short letting their units to offset expenses – should not be brushed off.
By participating in the sharing economy in your building, you not only increase your occupancy, but you also get to regulate and oversee the process. Not to mention that your profits increase as an indirect result from higher occupancy. Furthermore, in the case of short-term renting in your building will help you quickly reach that coveted stabilisation . In simpler terms, short-lets enable you to keep your buildings full and get faster returns on your investment.
While the benefits undoubtedly exceed the risks, some concerns include changes to the feel of the community, liability issues, operational costs and the hassle of coordinating site teams.
Building owners and managers still wag a concerned finger when the question of community is raised. Who can blame them, they simply don’t want to lose their long-term residents by giving way to what some experts consider a fad among millennials. The truth is that there is no real data on how residents view short-term rental activity in their communities to support a negative backlash.
When it comes to liability issues and operational costs, new protect companies such as STAYKEEPERS offer an end-to-end solution that not only addresses and alleviates such concerns but does so in a compliant and transparent manner.
The short-term rental market is uncharted territory and many questions remain unanswered. But if you look at the wave of research-backed technology provided by proptech start-ups, institutional owners are able to address emerging concerns, such as the lack of control and visibility over short-term rental activity in their buildings.
Platforms like the one developed by STAYKEEPERS provide a solution-in-a-box to BTR owners and community managers, granting them control and helping define hosting rules, manage listings and track participation with the click of a button.
Sounds promising, right?