NEW STRAITS TIMES. 24TH MAY: Is short-term rental accommodation (STRA) a viable solution to the country’s rental market or property overhang?
While it may be inconvenient for other unit owners, converting underutilised property into STRA may be one of the viable solutions for homeowners seeking to generate additional cash to cover their monthly mortgage payments, said Albert Tan, a financial adviser who is knowledgeable with real estate transactions.
He told NST Property that, with the residential property overhang continuing year after year, such a rental business model could be a short-term solution to alleviate the financial stress associated with mortgage loan repayments.
“A vacant building is a waste of resources. Some units can sit unused for six months to a year, and sometimes even longer, in areas where demand is low and supply is plentiful. Many things can happen if the unit is kept idle for too long, from rotting faster to inviting undesired problems like break-ins.
“Another difficulty is that most properties in housing projects are sold at exorbitant prices by the developers, necessitating a higher rental to fund the monthly mortgage repayment. However, due to overstock in the housing project, most property owners are unable to obtain good rental prices.
Tan said Malaysians choose to stay with Airbnb during festive seasons and school holidays mainly because of price concerns.
“It is cheaper to stay in an Airbnb unit than a hotel. Airbnb can accommodate more people compared to a hotel room which is limited to two people. Booking the entire apartment unit would seem more economical than making a reservation for several hotel rooms.
“Secondly is the accessibility to the kitchen for those who travel with families and there is ample parking space. Most units that are utilised in this business model are condominiums or apartments,” he said.
Tan said that, while the STRA business model can be beneficial to unit owners, there are common issues to be addressed, such as regulations, local laws, unauthorised parties, excessive turnovers, unmanageable guests, poor customer service for hosts, not knowing your market, finding better guests, compensation for missing, broken, or damaged assets, and complaints from neighbours.
Michael Goh Boon Tat, former JMB (Joint Management Bodies) chairman for Tropicana @ 218 Macalister encouraged all strata buildings to look at whether or not to regulate STRA.
“We know that the government’s guidelines are suggestions for JMBs and that strata buildings can implement their own STRA by-laws under the national Strata Management Act. From my experience, noise, and nuisance issues in strata buildings can be resolved through effective JMB management instead of by-laws that aim to reduce STRA activity,” he said.
He shared that the JMB at Tropicana @ 218 Macalister had introduced a dedicated resident lift, fines for non-compliance, a hotline for complaints, and homeowners group chats where owners can amicably share and resolve issues.
Consider STRA when implementing guidelines: Airbnb
STRA should be allowed to take place in surplus vacant apartments, to tackle the property overhang in areas including Penang, Johor, Kuala Lumpur, and Selangor, said Airbnb.
It said that seven in 10 Penangites polled in a recent survey by ClearPath Strategies said that renting out their homes through Airbnb has had a positive impact on their community and its residents.
ClearPath Strategies polled 1,267 respondents in Malaysia between February 8 and March 2, 2023, for the survey, whereby 75 per cent of Penang residents showed strong support for STRA in the state.
According to statistics from the National Property Information Centre (NAPIC), Penang has the third-highest number of overhang or unsold residential properties in Malaysia as of the end of 2022, with 3,593 units valued at RM2.74 billion.
Affordability remains a top priority for Penangites when it comes to travel, with locals polled saying their top concern remains the rising costs of living which are making it harder for people to afford travel.
Airbnb encouraged JMBs and Management Committees (MCs) of local strata buildings to consider STRA when implementing their guidelines at an individual building level.
Looking ahead, it is seeing a strongly growing interest among Penangites to host or be a guest on Airbnb.
The survey revealed that 68 per cent of Penangites polled are looking to book stays with the platform, while more than half, or 57 per cent intend to host on Airbnb next year.
Over 70 per cent polled said 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, said in a statement that the latest survey results underscore the increasingly important role that STRA plays as tourism sees a strong rebound across the region, especially in tourism hotspots like Penang.
“At the national level, the federal government is developing STRA guidelines that all states can look towards. This may enable more Malaysians to both contribute and benefit from tourism through home sharing,” she said.