Airbnb jostles for rental market space

[Courtesy: iStockphoto]

The desire to make extra income-led Cecilia Koech to Airbnb - even though she does not own rental property.

She has found a way to work with landlords who allow her to rent out the houses to third parties, and they all make their money.

“You need to make the landlord aware just to cover all basics,” Ms Koech says.

When Airbnb was started in 2008 in San Francisco, in the US, by Brian Chesky and two friends, it aimed at revolutionising the hospitality market.

While the effect of the business, now worth over Sh10 trillion, in the tourism market has been documented, its impact on a rental property is slowly unfolding.

Through Airbnb, people can rent out the spaces in their homes, or rent out houses, furnish them and then sell the spaces to Airbnb guests.

Airbnb makes money by charging guests and hosts who stay in the units listed on its website.

The target is homeowners who are out to make an extra shilling and travellers seeking non-traditional low-cost vacations.

In 2020, an article in Forbes said the Airbnb effect on rental housing was a concern, saying it was ‘damaging’ the housing markets.

The concern was drawn from a report by the Washington, DC-based Economic Policy Institute titled, The Economic Costs and Benefits of Airbnb that was published in January 2019.

“Because housing demand is relatively inelastic (people’s demand for somewhere to live doesn’t decline when prices increase), even small changes in housing supply (like those caused by converting long-term rental properties to Airbnb units) can cause significant price increases,” the report said.

According to the report, studies had indicated that Airbnb introduction and expansion in New York City, for example, may have raised average rents by nearly USD400 (Sh43,600) annually for the city’s residents.

It may take some time before this becomes widespread in Kenya but Koech has already encountered it in her Airbnb business.

“There are some landlords who will ask for more money compared to what they would have charged per month as rent because ‘I’m doing Airbnb,” she says. “Others will say ‘as long as you pay me my dues when end month comes, I have no problem with your business.”

Sometimes, though, neighbours may raise an issue of security when the tenant next door keeps changing.

But it is not in doubt that Airbnb is taking root - taking up more space than was occupied by long-term renting. Property owners have found that in some areas, they can make more money through short stays than from the traditional tenancy.

Urban Landlords and Tenants Association Secretary-General Ephraim Murigo says the business of renting space to third parties is not a big deal.

“That is a normal business,” he told Real Estate. “It is the same as renting a car for Sh2,000 then you give it away for Sh4,000. Mr Murigo, however, says the Airbnb business is for a particular ‘class’ of people.

He says renting units target people who do not want to live in ordinary hotels and is expensive. “You will find such furnished units in places like Parklands. Most of them are also new houses,” he said.  

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