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Sydney startup creates tech to help landlords tackle unlawful subletting in the Airbnb era
BnbGuard co-founders Reuben Schwarz (L) and Richard Frey (R)
Sun 11 February 2018 - 4:15 pmFeatured | Noticeboard | Startup
A property monitoring service that alerts landlords to unauthorised subletting through Airbnb and other rental websites has been launched by Sydney-based tech startup BnbGuard.
The brainchild of serial entrepreneurs Reuben Schwarz and Richard Frey, BnbGuard is an automated technology platform that monitors long-term and short-term rental websites such as Airbnb, Flatmates.com.au and Stayz for clients, sending them an instant notification when a listing for one of their properties is found online.
Schwarz told Dynamic Business that he and Frey co-founded BnbGuard, last year, to give landlords “peace of mind” that their properties weren’t – due to unauthorised subletting by tenants – getting trashed by out-of-control parties or pop-up brothels, sustaining uninsured damage, or incurring excessive wear and tear.
He added that while unauthorised subletting is an ‘age-old problem’, the risk has been heightened by the emergence and popularity of sites like Airbnb, where it is estimated 35% of properties are listed by tenants.
“It’s difficult for landlords to catch out illegal subletters online,” he said. “Airbnb, for instance, doesn’t reveal a property’s exact address – it gives you a ‘fake’ geolocation within a certain radius of the real address, which restricts search results.
“Further, landlords have to check sites very regularly because listings come and go pretty quickly, especially around peak season. For instance, it wouldn’t be easy for a landlord to find out if their tenant is subletting their property over Christmas – the listing may only be up for a week and if you’re not actively looking, you’ll miss it. One of our team members, not naming names, has had experience as an illegal subletter, so we know how easy it is to get away with.”
Schwarz said that landlords, through their property managers, carefully vet their tenants whereas the tenants themselves “don’t necessarily care” who they’re subletting to.
“In 99 per cent of cases, people who stay in short- or long-term sublets are good people who don’t cause any problems,” he said. “It’s the other 1 per cent of subletters who are the issue. If a property is sublet on a commercial basis (or a basis deemed to be commercial), the landlord’s insurance won’t cover that. If a tenant, without their landlord’s knowledge or permission, sublets a property and the subletter, say, burns it down, the tenant is liable for the damages… but good luck getting that money out of the tenant.”
Although BnbGuard was initially intended to protect landlords, Schwarz said the startup has been helping the strata sector to control the risks of short-term stays.
“In Australia, a lot of strata management companies have a problem with owner-occupiers subletting their properties for short-term stays,” he explained. “They’re worried about the security risk and damage to common areas, which their insurance might not cover.
“Although the laws around strata and short-term stays are very vague, courts have generally come down in favour of owners-occupiers being able to do what they want with their properties, leaving stratas relatively powerless to stop sublets in their buildings.
“Stratas know they can’t stop owner-occupiers from subletting their properties for short-term stays so they’re just trying to keep an eye on it and share the costs more equitably amongst all their landlords.”
To date, BnbGuard has been bootstrapped, with Schwarz revealing that he and Frey developed the MVP themselves, using loans and credit cards to “polish it up for market”. He noted, however, that discussions are currently happening with potential seed investors.
Although BnbGuard is currently focused on building up clientele in Australia – in particular, tourist hotpots Sydney and Melbourne – Schwarz said there are plans to launch the service into New Zealand, where he rents properties.
Describing existing regulations to prevent illegal subletting through short-term stay sites as “ineffective”, Schwarz said BnbGuard could play an important role in “helping governments enforce good policies around short-term stays and keeping subletters honest”.
Asked whether BnbGuard would partner with a rental website such as Airbnb, he replied: “Not at this stage. It’s something we’d like to do but we also want to be independent from the big players, so we can keep subletters honest across all sites.”