Renting in Australia: How ‘zombie houses’ are contributing to the country’s rental crisis

There are thousands of ‘zombie’ homes in Australia – and they could hold the key to the country’s rental crisis.

There might even be one in your neighborhood.

Simply put, “zombie” homes are properties that sit empty or are not used 100% of the time.

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“Nobody rents them… nobody lives there,” Money Finder expert Rebecca Pike told 7NEWS.com.au.

And they’re widespread – last year’s census found there were more than a million unoccupied homes, although this was at a time when much of the country was in lockdown and borders were closed for more than a year.

But with Australia’s rents skyrocketing and tenants struggling to find a roof over their heads, these ominously named properties could drive up prices – and take rental properties away from desperate families.

Governments around the country are working to crack down on zombie homes and make them available for renters, but experts say more can be done.

What is a “zombie” house?

It might be a terrifying term, but the idea of ​​“zombie” houses originated in a much more benign way than their name suggests.

They can include short-term rentals and vacation homes – investors can choose to rent their property short-term to earn more money and have some flexibility.

“It seems safer to have Airbnb tenants just for a few days at a time, a week, a few weeks — there’s less attrition to worry about,” Pike said.

And there’s more money to be made.

“The other side is you can just charge more money for an Airbnb. So what you could get in a week’s rent, you can get in a weekend.

But while there are benefits for investors, turning properties into short-term rentals means there are fewer homes for rent, Pike said.

And it’s a problem at a time when residents have been squeezed out of the rental market as demand rises and rents rise – forcing some to live in their cars or stay in a caravan while they find a rental. .

“Investors are offering their properties to Airbnb, but that’s taking rental properties away from tenants and this lack of…properties available for rental drives up demand and prices,” she said.

Why owners don’t want to change tactics

Melbourne property investment adviser Goro Gupta understands the challenges of the rental crisis.

He has an Airbnb on the Gold Coast that doubles as a vacation home and is in the process of turning a second property he owns into an Airbnb.

Gupta said he bought the Gold Coast property – a four-bedroom, two-bathroom home – because it would have less impact on the rental market.

“Not everyone needs a four-bed, two-bath house for one family,” he said.

“That’s why we bought an Airbnb that wouldn’t really affect the crisis market.”

He and his family fly to the Gold Coast and use the property approximately every two months. Every other weekend it is booked by travellers, Gupta said.

“It’s not like it’s empty, it’s just empty on certain days of the week,” he said.

“Typically two families wanting to have a family reunion or get together…have at least one house as it’s a nice four bedroom house with a private pool.

“It’s cheaper for them to use our house than a hotel.

“With the second property, there was a long-term tenant, but he wanted to leave and buy his own property.”

Using the property as an Airbnb generates around 10-20% more revenue than a long-term rental.

“(And) it gives us the ability to use the house as a vacation home whenever we need it,” he said.

Brisbane resident Raine Gaisford knows there are challenges in the rental market but needs her investment property listed on Airbnb.

She and her husband bought an investment property in Noosa last October, planning to use it as a holiday home which they would eventually move into – but it got too expensive with their mortgage.

Instead, they listed the property on Airbnb. It is now booked about 50-60% of the time.

“It’s not about us trying to make a profit. It’s really just trying to pay the mortgage,” Gaisford said.

“We wouldn’t be able to honor the mortgage if we didn’t have it on short-term rental.

“We would make a pretty big loss… if we were to rent it out as a longer-term rental.”

The couple use the property when they can, but need it to be rented “for a good part of the year in order to repay (the loan)”.

What needs to be done?

Although short-term rentals are contributing to the rental crisis, Airbnb investors and landlords are not to blame, said Ray Ellis, CEO of First National Real Estate.

“You can’t blame the consumer or the owner because they see it as a return on investment,” Ellis told Money News.

“If we have a good property in a regional town or close to the beach or even in central Sydney, that’s $800 a week – if you can get that $1,000 for the weekend, without… Having a long-term commitment with tenants is an easy financial decision to make.

Instead, the responsibility should rest with state governments, Ellis said.

Across the country, local councils and state governments have introduced rules and restrictions on short-term rentals.

At Brisbane City Council, landlords who list residential properties on short-stay websites will be hit with a 50% surcharge on their current tariff bill.

“Brisbane has lots of big hotels with lots more under construction, and our suburban streets were never meant to be home to mini-hotels which house different tenants every week,” Mayor Adrian Schrinner said in June.

Archive image of residential houses in Sydney. Credit: Getty Images

“I hope that instead of paying extra, many landlords will put these homes and apartments back on the long-term rental market, which will help ease our housing shortage.”

Across the border in New South Wales, landlords who rent out their properties for short stays must register the accommodation with the state government and abide by a code of conduct.

In Greater Sydney and several areas, non-hosted short-term rentals – where the owner does not reside at the property – are limited to renting their property for 180 days per year.

Yet there is still much to be done to help ease the rental crisis.

“Australia hasn’t built enough houses,” Ellis said.

“As a government – state or federal – in the post-war period, in the late 1950s, early 1960s, we built almost 240,000 of what we called social housing in the era.

“They were full and since then no state government has made the same commitment to it.

“State governments need to address this.”

Money-finding expert Pike said the rental crisis is set to worsen over the coming months and agrees urgent action is needed.

“We’re definitely seeing that demand for rental housing go up because we have so many more people coming into the country, whereas during COVID we’ve really seen that drop,” Pike said.

“There is certainly more demand at the moment, but there is also less supply.

“Also, with the RBA cash rate, if investors pay more for their loans, they potentially pass it on to tenants.

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