New research has shone a light on the impact accommodation sharing site Airbnb is having on home use in central London. The revelations come amid strengthening accusations that the site is being used to take rental homes out of the market, and let them as pseudo-hotels.
London is one of Airbnb’s leading city markets, close behind global leader Paris, and in 2015 the platform recorded two million overnight stays booked, according to the report from Colliers International, which draws together work by Hotelschool The Hague and AirDNA.
Of more than four million properties listed on Airbnb from across the capital, the majority are in five boroughs: Westminster, Tower Hamlets, Camden, Kensington & Chelsea and Hackney.
While initially Airbnb’s impact was thought to bear mainly on the hotel sector, others are now pointing to problems created with the supply of rental accommodation in the capital. In particular, it is argued that a growing number of residential landlords are using Airbnb to rent out flats night by night, removing them from the long term rental stock.
Short term rental also adds to noise nuisance problems in residential blocks, as Airbnb users are sometimes leisure visitors in the capital to enjoy its night time economy.
Existing regulations are in place to restrict the rental of properties owned as private accommodation, for more than 90 days in a year. Above this amount, permission is required for an effective change of use. In September, MP Iain Wright claimed some London landlords were flouting this regulation, and using Airbnb to do so: “Landlords who use companies like Airbnb to illegally let properties for more than 90 days are driving up prices and leaving tenants vulnerable.”
“These landlords are hoteliers in all but name and gain an unfair competitive advantage by dodging regulations and taxes which hotels are required to pay. Disruptive technologies make a valued contribution to the country’s economy and it is important to embrace such disruption and innovation as a means of improving prosperity and customer choice, but the rules must be enforced and a level playing field provided. Where those rules are unenforceable, then the law may have to change.”
The claims prompted Airbnb to defend its position. European managing director Olivier Gremillon responded: “There have been a few studies done by academics which said no, it doesn’t really increase the price of housing.”
“There is a housing shortage in London but is it because of Airbnb? No. There are a lot of other reasons why prices are high.”
More recently, the mayor has responded, writing to MPs: “If boroughs are finding that the legislation needs to be revisited to make sure that we find a better way of balancing the benefits of the sharing economy with the protection of local residents and the retention of housing for long-term use, then I will be happy to work with them and discuss with Government whether any changes may be needed.”
And an official statement from City Hall added: “The Mayor supports the right of Londoners to be able to benefit from renting out their homes for short periods and welcomes the fact that Airbnb helps make it cheaper and easier for people to visit London. However, these benefits must to be balanced against the need to ensure Londoners are not adversely affected and London’s housing supply is not lost through short-term bookings.”
“Sadiq welcomes dialogue between London Boroughs and Airbnb about how existing legislation could better be enforced in the capital, and whether the legislation needs to be revisited.”
A review carried out ahead of the Olympics in 2012, revealed a wide disparity in the way London boroughs were preparing to police home rentals. Some, such as Westminster, warned they would take tough action against those flouting sub-letting rules, while other boroughs insisted at the time they had no resources to carry out checks.
Speaking at the recent LPA conference, GLA planning official Tony Devenish said that he, personally, suffered from nuisance due to Airbnb lettings near his own London home. But he could detect no appetite at City Hall for new regulation to deal with the issues that Airbnb creates.
LPA Perspective: In a city such as London, with an accommodation crisis, Airbnb has provided a number of positives. It has helped cash-strapped residents let a spare room for some extra cash, and arguably allowed more visitors to pay a sensible price for accommodation, in what is globally a very expensive city to visit.
In distinct contrast to the poster child of disruptive tech, Uber, Airbnb’s management adopt a conciliatory tone when it comes up against problems. And it has shown itself willing to do deals with city authorities, to limit some of the negatives from its arrival. In Amsterdam, for example, it even collects and remits the city’s tourist bed tax.
However, it does still insist it is a home sharing website, when in reality the platform does allow professional landlords to list and rent out whole properties. And, when night by night rental offers a better return than long term rent agreements, why wouldn’t they? After all, buy to let landlords need to make up for a shortfall as George Osborne’s tax changes clip their incomes.
As to the impact on housing in the capital, so far all we have is anecdotal evidence – but there is plenty of it.
One ironic twist is that new technology platforms such as Airbnb gather massive amounts of data about how property is used in a city. That information could, if accessed sensibly, provide massively useful information for city authorities – about usage, and about demand. Some information is already shared by Airbnb, perhaps a smarter approach is needed.
More fundamentally, the question needs to be asked as to whether, in the digital age, the planning use classes are fit for purpose. Right now, a company building a block of studio apartments must decide before it obtains permission, whether those will be rented for long term residential accommodation, or sold night by night for visitor accommodation. Both properties could, essentially look the same – the only difference being the way they are managed and rented. Right now, the night by night option looks the most attractive for many. Time for a bonfire of the use classes?