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Regulating the sharing economy

Home-sharing sites provide a useful service to guests and hosts but landlords may be exploiting lax regulation to make money from short-term lets, says Tom Copley

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Regulating the sharing economy

Concerns around the impact of home-sharing web platforms on private rental supply have been slow to emerge in London in contrast to major US and European cities. But they are now growing. The arrival of Airbnb and other sites in 2011 was heralded as exemplary of the potential of the internet and the arrival of the ‘sharing economy’. Staying in other people’s homes can provide an enjoyable ‘insider experience’ of cities that appeal to many, including myself. The economic contribution of tourism is indisputable and the benefits of hosting stretch beyond financial. No one wants to see the end of the opportunity Airbnb provides for guest and host alike.

Airbnb

Enthusiasm for this new economy is most evident in the Department for Communities and Local Government’s (DCLG) 2015 London-orientated reforms. This ‘modernisation’ relaxed the need for planning permission to provide any temporary sleeping accommodation. But this did not disturb the principle of restricting short-term lets to no more than 90 days a year so “any impact on local amenities is kept within enforceable limits”. Sadly, it also actively avoided any mechanism of realistic enforcement. As a result, London’s Airbnb market is an open invite to commercial entities with multiple listings.

There is little to prevent rooms and properties once supplying longer-term rents being diverted to Airbnb. The real issue is the creation of hotspots where the impact on private rental lets and neighbouring amenities are acute. Westminster and south Camden in particular are reporting problems. Research in Camden, home to nearly 8% of all London Airbnb offers, revealed the average nightly cost for a holiday let for an entire property is 140% higher than the median rent for the borough. Forty-five per cent of lettings were from a host with more than one property, confirming suspicions landlords now exploit this rent differential. The Residential Landlords Association has estimated this figure to be 41% London wide. Councils are anecdotally reporting shrinkages in their private sector supply and increasing caseloads of amenity issues, from noise enforcement to unsafe house in multiple occupation (HMO) accommodation.

“There is little to prevent rooms and properties once supplying longer-term rents being diverted to Airbnb.”

Councils are poorly placed to enforce the 90-day rule. Without data, the impetus is on them to prove a property is not only available but occupied over this limit. Furthermore, six years of austerity budgets from central government have severely restricted local authorities’ enforcement capacity. Councils simply do not have the budget.

Airbnb and other websites’ co-operation would therefore be key to limiting lets and preventing the incentive to commercial operators that in effect remove a large number of units from the private rented sector. Properties breaching this booking limit and multiple property hosts could simply be removed by the platform.

Camden’s statistics came from the ‘data-scraping’ website Inside Airbnb, a New York-based project mapping available properties, estimated the number of available nights per year and estimated monthly income. Even a quick glance at its London section reveals a number of properties let on an obviously commercial or extended basis.

Instead of this impetus from open data prompting platforms to co-operate with local authorities to prevent this illegal subletting, Airbnb disputed the ‘scraped’ data. Inside Airbnb also accuse the service of deleting over 1,000 commercial New York listings, intentionally misleading city authorities attempting to enforce the city’s strict laws on subletting.   

In London, the company’s charm offensive is evident not only in new lax law that decriminalised the de facto situation while rendering improved enforcement impossible, but in efforts to engage with local authorities’ economic development programmes. Airbnb maintain: “Our community is driving a renaissance for many attractions and experiences in London’s outer boroughs, spreading the benefits of tourism beyond the city centre to communities regular Londoners call home.”

It is also the case that sadly, fewer and fewer ‘regular Londoners’ are able to call central areas such as south Camden or north Westminster home. Of course Airbnb is far from solely responsible for London’s housing crisis, but where properties are leaving the private rented sector, it is certainly exacerbated and causing very real problems on a localised scale. Promoting the growth of suburban properties and the stories of ‘genuine’ Airbnb users is a PR offensive distracting from inner-London saturation and commercial operators distorting local rent markets.

Effective regulation needs to keep pace with technology. Without it, platforms that promised to ‘empower individuals’ are increasingly globally compromised by their reluctance to curb illegal and commercial offers. It is, after all, the high cost of housing in London that makes home-sharing attractive to both guest and host. As concerns about the impact on local communities and shorthold rents grow, Airbnb and others have the opportunity to move beyond the rhetoric and consider co-operating to limit the damage of their operations on the vicious housing market ‘regular Londoners’ are at the mercy of. It is us, after all, home-sharing promised to ‘empower’.

Tom Copley, Labour’s London Assembly housing spokesperson

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