Changing from long-term to short-term rentals is more complicated than it seems. Here is some important information you need to know.
When it comes to renting out a property, there is a big difference between short-term and long-term stays. If you’re thinking of making the switch from one to the other, it’s important to be aware of all the potential implications before doing so.
As a follow-up to our blog post “Switching Between Long-Term and Short-Term Rentals – Watch Out!” we have made a detailed list of the differences between long-term and short-term rentals, as well as who is responsible for what in each model.
For those who are unaware, there are significant differences between traditional long-term rentals and short-term stays. Under a long-term lease, the residents of the property are tenants. They lodge a bond with the bond board, sign an REINSW lease agreement and pay their rent fortnightly or monthly, and the property owner receives a steady income. The property manager normally charges a letting fee and a property management fee. Most leases last from six to twelve months, and tenants have extensive rights under these agreements.
With short-term stays, the occupancy rate fluctuates and the length of a stay is under six months, varying from seven days to five months. Those staying at the property are guests. Although their rental is on a short-term basis, there are many cases where a guest wants to change their short-term rental to an extended stay. Instead of signing a formal document, they paid for their stay in advance and agree to the terms and conditions. The property management company normally charges a booking commission, a property management fee, and a contribution towards cleaning and linen.
Check out the below infographic, which highlights the differences between the two:
The below chart outlines what’s involved for the owner and the agent depending on the type of rental being orchestrated:
Switching between Long-Term to Short-Term Rentals
|Short-Term Stays – what’s involved||FURNISHED – LT Leasing – what’s involved|
|Documentation||STS Mngt Agreement||LTL Mngt Agreement|
|Legal Framework||Commercial Contract – Licence||Land Stock & Agents Act|
|Fees and Charges|
|Property Mngt Fee||Yes||Yes|
|Service||Property management + Hospitality||Property management|
|Marketing||Up to 15 different channels||RE.com and Domain|
|Utilities – Gas/Electricity||Owner||Tenant|
|Insurance||Required – Standard||Required – Standard|
|Bedding & Linen||Owner – PP to Provide||Optional|
|Setup Clean||Owner – PP to Provide||Owner|
|Exit Cleaning||Owner – PP to Provide||Tenant|
|Regular Cleaning||Guest – PP to Provide||Tenant|
|Garbage Disposal||Guest & Owner||Tenant|
As you can see, there is a lot to bear in mind for both types of rental, and assisting in moving between the two can be outside the scope of property management. While we are happy to offer guidance and assistance, owners must accept responsibility for making the changes required to operate these two types of rentals.
If you have any questions or need help with making the transition, please do not hesitate to reach out.
We look forward to offering you our flexible services.
Property Providers is Sydney’s most flexible residential rental agency. Our core purpose is “To Help People Live Better” by providing long-term luxury leasing, super-luxury holiday homes and executive rentals for extended stays. If you are interested in listing your property please contact us on +612-9969-7599 or if you are looking for a tenant or guest who is looking for a handpicked home please visit our website or brief us here
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British born and raised in London but currently enjoying all Australia has to offer. Living and breathing Sydney’s Manly Beach and forever promoting SUPball to all who’ll listen.