Investors who purchased residential properties with the hope of renting them out on short-term sites like Airbnb and individual tenants who have come to rely on extra income from renting out a room to travelers may have cause for concern now that the current pandemic has tanked the travel industry.
It’s early into the crisis, and data is scarce and circumstantial. However, many industry pundits are pointing to an apparent exodus of overnight listings, and an increase in monthly and long-term listings, including an uptick in ads for furnished homes. Coincidence? That appears unlikely.
Since March, overnight hosts have seen a surge in cancellations as vacationers steer clear of air travel and the potential for becoming stranded in a foreign city or country. Recently, Airbnb was forced to adopt a refund policy that deprived hosts of much-anticipated income for March and April.
According to numerous reports, Airbnb may be bracing for the economic fallout that is reverberating throughout the international tourism industry.
Given the cause of this downturn, it would appear to be a temporary blip. But the slowdown could lead to something more insidious for short-term hosts: statistical proof that dedicated overnight rentals actually do make long-term rentals less affordable.
City and provincial governments throughout Canada have for some time blamed short-term rentals for contributing to the lack of affordable housing. Some, like Toronto, recently restricted these rentals while others are requiring licences and taxing hosts. Social media platforms are filling with musings from tenants claiming that the temporary pause in short-term rentals already is lowering rents in major cities.
Such unscientific studies are dubious, but what if travel bans and widespread fear continue to have an impact for, say, 90 days or more? What if those statistics do show improvement — higher vacancies, lower rent — in the long-term rental market?
We can be sure that city and provincial governments will be watching the trend closely when considering future restrictions on the short-term rental industry.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.