A company exposed by Flat Chat three years ago for encouraging Chinese investors to get around proposed “ghost apartment” taxes by letting their properties on Airbnb, has gone bust, owning creditors $3.6 million.
According to a story on the AccomNews website, quoting The Australian newspaper, Sydney startup AndChill was placed in administration last month owing 940 property owners sums ranging from $20,000 to $100,000 in unpaid rental payments.
Exactly three years ago, Flat Chat exposed the holiday letting management company’s pitch to Chinese investors, offering healthy incomes for properties that would otherwise have lain empty and might have attracted a then mooted tax on unoccupied properties.
AndChill set out to provide a full service for investors, from furnishing the apartments to vetting the guests. But many clients claim that not only did they fail to follow through on their promises, they were slow to hand over rents.
According to media reports, during more than two years as rental agent, AndChill took Airbnb bookings worth an estimated $20 million.
The company was supposed to forward the Airbnb rentals to clients, minus an agreed commission, but payments quickly dried up and clients say they weren’t told when properties were let or at what rates.
In October 2016, Flat Chat (then running in the Sydney Morning Herald) reported that the short-term letting management website had launched a page under the headline “Avoid the Australian Ghost Tax” which added “we transform your property into a five-star Airbnb”.
They claimed short-term letting could offer foreign investors a loophole with which to avoid fines of up to $5000 for properties left vacant for more than six months – an initiative announced by Treasurer Scott Morrison in the federal budget the previous week.
Another page on the site showed Chinese script urging potential clients to take advantage of the property boom, and says the company is “actively changing the real estate industry”.
Despite having the look and feel of an Airbnb site, the andchill.com.au website, which had been running for about a year, was not connected with the online holiday letting giant, merely promising to take over management of Airbnb lets on behalf of hosts.
Back then, Sydney state MP Alex Greenwich criticised the AndChill pitch, saying the “ghost tax” was intended to put more properties into the residential market, not increase holiday lets.
However, Callum Forbes, 27, principal of AndChill denied that he and his co-founder Jeffrey Seng were undermining the “ghost tax” proposal and said their service wasn’t just for tourists.
“What we’re doing is still increasing the housing supply,” he told Fairfax Media. “We also supply accommodation for people between houses, or who are undertaking renovations or who have visiting families from overseas who need somewhere to stay.”
He said AndChill had about 150 properties in Sydney under management and about as many again across Australia. Their business model locked clients into long-term management contracts with an allowance of up to six weeks per year for private use of their property.
By the time they went bust, AndChill had trebled the number of properties under their management, numbers they were clearly unable to sustain.
Last year, one angry owner took to Airbnb’s community website to complain about AndChill’s service … or lack thereof.
“I cannot say one good thing about my experience with AndChill airbnb property management,” says Brisbane Airbnb host “Arto0”. “They promised the world and delivered nothing of what they said they would do. I recommend you avoid this company at all costs!”
The Airbnb host claimed he paid the company $8,000 to furnish his apartment but they provided only one bedside table and lamp in each bedroom.
When he complained about there not being bedside tables and lamps beside the beds, the budget had been spent on furniture they got directly form an importer, but if he went to Freedom he’d find similar quality items.
“I then happen to stumble onto the bedside tables at Kmart for $19 a piece, and the lamps $12 each,” he wrote. “I found all the other cheap furnishings at Kmart also.”
And then there were the guests to whom they were letting his apartment.
“They promised also to screen for the best guests. They do not screen at all,” he wrote. “I had so many complaints from the other residents in the apartment block on the standard of guests they were allowing in – causing havoc, parties all night, etc.”
The Airbnb post is a litany of complaints, from poor service, damage when they emptied the flat of the cheap furniture, to loss of personal items and security keys.
“I recommend everyone stay well clear of this company. They made my attempt at turning my apartment into an Airbnb a very stressful affair and a complete nightmare,” Arto0 wrote in August last year.
Twelve months later, they had gone to the wall owing millions of dollars.