Airbnb – the new way of letting residential property
This short-term letting app - launched in San Francisco seven years ago - has taken the residential property letting industry by storm.
Airbnb has become a global giant with a market valua of $25bn – more than three times that of the international 50-year-old Hyatt Hotels chain.
SA property owners jump on Airbnb bandwagon
Initially the online portal catered almost exclusively to tourists and business travellers seeking short-term rentals. Now there has been a surge in the number of local property owners and tenants utilising the online booking service for medium to longer term rentals. This in turn has led to an increase in the amount of pop-up rental agents who manage only Airbnb properties.
134 000 international guests,100 000 SAs
According to Airbnb, there has been a 190 percent growth in the number of local South African hosts signing up with the site in the past 12 months, bringing SA’s listings to 22 000. Half of these nationwide listings are in Cape Town, placing it in 21st position on the list of Airbnb cities worldwide. During the same period, 134 000 inbound international guests rented properties through the website, representing 250 percent growth from the previous year. Between 2015 and 2016 almost 100 000 South Africans used Airbnb domestically, revealing the extent to which property letting is changing.
Who can Airbnb?
Before you jump on the bandwagon, there are a few things you need to consider.
Firstly, for those owners considering listing flats which fall within sectional title schemes, it is important to determine whether your scheme allows short-term letting, since many prohibit the practice. To do so would contravene the body corporate rules. Even where short-term letting is allowed, owners must ensure that prospective guests are provided with a copy of the applicable conduct rules, and that they agree to be bound by these rules prior to finalising their booking – since, in the event of non-compliance, it is the owner who will be liable for any breaches, and not the tenant. Conveniently, Airbnb makes provision for hosts to add their own tailor-made “House Rules”, which you should utilise by adding a full set of the conduct rules applicable to your scheme.
Secondly it is important to draw up a detailed tenancy agreement which would serve as a short-term lease. This should make provision for deposit and payment terms, cancellation policies, breakages, and how the guest would deal with complaints.
As with any ordinary residential property rental, the rights and responsibilities of both parties should be clearly and comprehensively delineated from the outset. Although Airbnb has its own “Host Protection Insurance” – which covers owners against third-party claims of property damage or bodily injuries up to $1m – this is only available in 15 countries at present, excluding South Africa. Consult a specialist to understand the implications of operating without an inbuilt policy, and to gauge how much you should ask upfront from a tenant as a deposit, or what kind of added insurance policy you would need. Make sure that every conceivable scenario is anticipated and addressed.
Thirdly, if you are a tenant who wishes to sub-lease your property, you must first ensure that your lease agreement allows you to do so, or whether you are first required to obtain your landlord’s written authorisation. Should you fail to obtain the requisite permission, or should your lease expressly prohibit sub-letting, by listing your property on Airbnb you would be committing a material breach of your lease, and your landlord would, in such circumstances, be entitled to terminate your lease, which could have disastrous consequences should you, and your Airbnb guest, face eviction.
