18 May The new short-term lease
Through the digital marketplace, prospective renters and property owners can connect with one another easier than ever. Online lodging and hospitality services like Airbnb offer an increased number of options and leasing opportunities which can often circumvent traditional housing standards. These platforms succeed in simplifying the short-term leasing process, but consumers can fall victim to their lack of regulation. Here are a few ways the digital marketplace has changed the face of short-term leasing, for better or worse:
Renting a room or your entire home to short-term visitors isn’t a totally new phenomenon. People have been doing this for decades. But with real estate’s growing digital marketplace, owner-occupiers, individuals who own and live in their homes while renting the space to other parties, can connect with prospects and complete the rental process on a single platform. This makes it easier for owners to market their property and set important guidelines. Another upside is the ability to use short-term leasing as a way to subsidize housing expenses. Renting out a property a few times a year can often cover the costs of mortgage payments, particularly in popular locations that see an influx of tourists throughout the year.
From the consumer perspective, communicating directly with property owners has never been easier. Before investing in a short-term rental, renters can inquire about the property and develop a rapport with the owner without picking up the phone or visiting the property in person. The digital marketplace also expands the lodging options available to travelers and renters. Hotels and vacation rentals are no longer the cornerstone of short-term leasing, giving consumers a wide variety of housing options to choose from.
The most significant downside to the digital marketplace takeover is the lack of regulation normally required in the housing and hospitality industry. Public accommodations, such as hotels, are subject to laws that prohibit discrimination against prospective tenants. However, laws like Title II of the Civil Rights Act of 1964, do not apply to small owner-occupied rooming houses, which covers most short-term leasing scenarios in the digital marketplace. Renters must navigate a market that doesn’t have the regulations in place to protect them in cases of discrimination.
Changes in housing affordability have also resulted from increased use of the digital marketplace. Property owners can remove their homes from the long-term leasing market in favor of working exclusively with shorter-term tenants and charging higher rates. This increases local housing prices and limits the number of affordable rentals in the area.
The digital marketplace has had both positive and negative effects on the lodging and hospitality industry. Consumers have more options than ever, and property owners can define their own lease terms to maximize profitability. However, with unclear guidelines for discrimination and increased long-term rental prices, there are still shortcomings that haven’t been completely addressed. With time, the lodging industry will see if the pros outweigh the cons of the digital marketplace.