The government this week released a position paper on what has become commonly known as the “collaborative or “sharing” economy, which will guide the government’s efforts in areas such as adapting regulations to keep pace with technological advances and ensuring consumer protection guidelines are adequate.
“Digital innovation is transforming the way people do business in every city and every country around the world. The reality is the collaborative economy is here to stay,” NSW Minister for Innovation and Better Regulation Victor Dominello
“We are living in the information age and it is vital that government policies embrace new technologies and enable businesses to operate with certainty,” Dominello said.
According to a report from Deloitte Access Economics, commissioned by the state government, the sharing economy in NSW was worth around $504 million in 2015, with more than 50% of consumers using a digitally enabled shared product or service including accommodation, transport, education, employment and finance.
But while the position paper may lead to online accommodation platforms such as Stayz and Airbnb moving out of the grey area they currently operate in, Don Binkley director of Property Providers, which manages and operates short-term rentals in Sydney, had some words of warning for people considering venturing into the industry on their own.
“People underestimate what goes on, it’s not a set and forget thing. You have to make sure sheets are changed, you need to ensure that getting people access to the property is seamless and you have an obligation to make sure any issues are dealt with rapidly,” Binkley said.
“From an idle capacity point of view people think it can be a way to have a ‘paycation.’ But if you’re doing that do you want to be woken up at 2:30 in the morning when you’re overseas because someone’s having trouble with something like connecting to the internet?” he said.
With short-term rentals offering attractive returns, especially over peak holiday periods, Binkley said many people are tempted to go it alone to maximise the money coming into their pockets.
“People sometimes think they can save some money if they do it themselves. But in the long run people can easily cost themselves a lot more money, especially if they have to start giving out refunds if people aren’t delivered what was promised,” he said.
“If you start getting negative reviews you can start losing money. As soon as you get those negative reviews you lose the social currency you have and you can’t charge as much.
“A lot of people try and do this over the Christmas period, but that’s when it gets harder and harder to get hold of tradies to fix a problem or have the cleaners come in between stays. But an agency will probably have some leverage via volume of service, so people will be more likely to work for them.”
Binkley believes that those who go it on their own are also more likely to not understand market dynamics, which will again impact their level of return.
“The reality is we do this for a living and we know how much a property is worth. People think they might have a feel for the value but we know.
“For example, in the Mosman area we look after 70% of what’s available there and when the cumulative occupancy gets above 78% or so, the price goes up. It’s simple supply and demand.
“The other thing that will happen is that people will make a sale and then get excited. That’s when they make a four night booking in October that costs them a three-month stay in August.”
While Binkley recommends anybody considering opening up their property for short-term stays should use an agency, he recognises not all will do so.
“For those people who do want to do it themselves I recommend they familiarise themselves with things like the Holiday Rental Code of Conduct.
“You also need to consider your insurance risk. Do you have the right insurance coverage and have you notified your insurance provider of what you’re doing?
“You need to have robust terms and conditions that limit your liability and have clear policies and procedures in place that you adhere to and they need to be policies that are proactive in dealing with issues.”
