Permanent versus short-term rental

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Own an investment property and pondering the prospect of short-term letting rather than offering a permanent rental?

Well you’re far from alone, with lots of investors seizing on the short-term letting trend in recent years, particularly in holiday and lifestyle locations. But is it all it’s cracked up to be?

In this article we’ll take a deep dive into permanent versus short-term rentals, including the pros, cons and things you need to consider…

What is short-term letting?

Made popular by platforms such as Stayz and AirBnB, short-term letting sees your property rented out for short stints, often at a higher nightly price than the residence would command in the permanent rental pool.

In many ways it’s a bit like offering your property as an alternative to a hotel.

Appliances, bedding and items such as plates and cutlery are included with the property, allowing renters to come in, holiday in your property and leave.

In contrast, permanent rentals are rented out for longer periods of six or 12 months and are governed by strict state rental laws relating to privacy, maintenance and more.

The majority of permanent rentals are not furnished, and the renters are responsible for utilities, as well as daily upkeep of the property.

Short-term letting lowdown

Offering your property as a short-term rental can be a great way to enjoy a solid return on your investment.

After all, your property can generate a high income, and you can still access it for your own holidays or when you feel like it.

That said, it does come with some drawbacks that range from unexpected vacancies to local laws, property wear and tear, and even an impact on your local area vacancy rate.

Local laws

More and more councils are now introducing specific laws for short-term rentals. In some regions they require a special permit, and in others, short-term rentals command higher rates than other investment properties.

Property wear and tear

Short term rentals can be subject to increased wear and tear due to the sheer volume of people using the residence. They also need specific insurance and require administration such as cleaning between rentals, laundry etc.

Wider implications

There’s also the wider implication of short-term rentals on the greater rental market, At present, Australia is suffering a rental shortage, with the vacancy rate sitting around 1 per cent across the country. Short term rentals are contributing to this issue.

Realestate.com.au notes there are an estimated 170,000 short term rental properties nationally, and in popular tourist locations like Byron Bay, short-term rentals can tie up as much as 17 per cent of the available housing stock.

Permanent rental lowdown

Offering your property as a permanent rental comes with certainty of income in the long term. It also comes with the coverage of the relevant rental law, where there are repercussions if the renter damages your property or fails to abide by their rental agreement.

In the meantime, it often also involves less administration, especially if you entrust your property to a qualified and experienced property manager.

This property manager will then handle tasks such as:

• Rent collection
• Maintenance and repairs
• Routine inspections
• Compliance
• Rental agreement renewals
• Renter screening and selection
• And more

How we can help

Our experienced property managers pride themselves on establishing great relationships with both rental occupiers and owners.

We manage every property as if it were our own and you can learn more about our property management services here.

Alternatively, if you are looking to rent a property, you can view the properties we currently have available here.

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