Is short-term rental accommodation (STRA) a feasible answer to the nation’s rental and property excess concerns?
Turning unused property into STRA may offer homeowners a viable option to generate supplemental income to cover their monthly mortgage expenses, despite it possibly causing inconvenience for other unit owners, suggests Albert Tan, a financial adviser with expertise in real estate dealings.
Tan informed NST Property that, considering the ongoing residential property surplus year after year, such a rental model could serve as a temporary relief to the financial pressure associated with mortgage loan repayments.
“A vacant building constitutes a waste of resources. In areas where the demand is low and supply is high, some units can remain unoccupied for six months to a year, or sometimes even longer. Keeping the unit idle for an extended period can lead to various issues, from accelerated decay to uninvited issues like break-ins.
“Another challenge is that the developers often sell the properties in housing projects at exorbitant prices, thus requiring a higher rent to finance the monthly mortgage repayment. But, due to the oversupply in the housing project, most property owners struggle to obtain favorable rental prices.
“This situation arises when home buyers are misled by developers into thinking they can secure a high rental income from their property, which will assist in paying the monthly loan installment and other charges. However, since the pandemic, many homeowners have had difficulty in meeting their monthly mortgage payments, leaving them no option but to consider the STRA concept,” Tan explained.
Tan pointed out that Malaysians often opt for Airbnb accommodations during festive seasons and school holidays, primarily due to price considerations.
“Airbnb units are more affordable than hotels. Compared to a hotel room which is limited to two occupants, an Airbnb unit can house more people. Booking an entire apartment unit appears more economical than reserving multiple hotel rooms.
“Additionally, those traveling with families can benefit from access to the kitchen, and ample parking space is available. Most units that are leveraged in this business model are condominiums or apartments,” Tan added.
While Tan recognizes the benefits the STRA business model can offer to unit owners, he highlighted various common issues that need addressing, including regulations, local laws, unauthorized parties, high turnovers, unruly guests, poor host customer service, market understanding, finding better guests, compensation for missing or damaged assets, and complaints from neighbors.
Former Joint Management Bodies (JMB) chairman for Tropicana @ 218 Macalister, Michael Goh Boon Tat, urged all strata buildings to deliberate on the regulation of STRA.
“The government’s guidelines are mere suggestions for JMBs, and strata buildings can frame their own STRA by-laws under the national Strata Management Act. In my experience, issues like noise and nuisance in strata buildings can be resolved more effectively through JMB management rather than by-laws aimed at curbing STRA activity,” he said.
He mentioned that the JMB at Tropicana @ 218 Macalister had introduced measures such as a dedicated resident lift, fines for non-compliance, a hotline for complaints, and group chats for homeowners to amicably discuss and resolve issues.
Airbnb’s stance: STRA should be considered when forming guidelines
Airbnb suggested that STRA should be allowed in the surplus vacant apartments to address the property glut in regions including Penang, Johor, Kuala Lumpur, and Selangor.
It pointed out that a recent survey by ClearPath Strategies revealed that seven out of ten Penangites reported that renting out their homes through Airbnb had positively impacted their community and its residents.
The survey, conducted by ClearPath Strategies between February 8 and March 2, 2023, with 1,267 respondents in Malaysia, found that 75% of Penang residents strongly supported STRA in the state.
According to National Property Information Centre (NAPIC) statistics, Penang had the third-highest number of overhang or unsold residential properties in Malaysia at the end of 2022, with 3,593 units valued at RM2.74 billion.
Affordability continues to be a top priority for Penangites when it comes to travel, with locals surveyed expressing their primary concern is the rising cost of living which is making it harder for people to afford to travel.
Airbnb urged JMBs and Management Committees (MCs) of local strata buildings to consider STRA when formulating their guidelines at the individual building level.
Looking forward, Airbnb noted a strongly growing interest among Penangites to be either a host or guest on the platform.
The survey revealed that 68% of Penangites surveyed are considering booking stays with the platform, while over half, or 57%, intend to become a host on Airbnb next year.
More than 70% of those surveyed stated they have traveled with, and/or hosted with Airbnb.
Mich Goh, Airbnb’s head of public policy for Southeast Asia, India, Hong Kong, and Taiwan, commented in a statement that the latest survey results underscore the increasingly significant role that STRA plays as tourism experiences a strong rebound across the region, particularly in tourist hotspots like Penang.
“At the national level, the federal government is developing STRA guidelines that all states can reference. This could potentially enable more Malaysians to contribute to, and benefit from tourism through home sharing,” she said.