News & Views

Ellie Gummer

Why London won’t reject Airbnb

We’ve seen urban Airbnb backlashes across different continents, always city-based -Berlin, San Francisco, New York, Barcelona have all taken action.

London on the other hand has gone the other way, with central government intervening and sweeping away a patchwork of historic regulation across the (often autonomous) boroughs in favour of permission to “Airbnb” up to 90 days a year. Lisbon has also extended a welcome.

So what’s going on? Why has London embraced rather than resisted? It’s not that there’s no resentment at high rents and high prices in London; the complaints of Generation Rent, the high proportion of earnings that go on rent, are genuine.

What is it that these other cities have objected to? To be absolutely clear, it’s not people renting out rooms in their own home, or even their own home for limited periods - take a look at all the articles linked above. It’s either:

Long-term lets for locals being diverted to more lucrative short-term lets for outsiders - this restricts supply and increases rents for locals
A buy-to-let boom, where large numbers of what were locally owned or rented apartments are diverted to permanent short-lets & tourism, changing the nature of neighbourhoods, with landlords operating multiple dwellings

In addition there is a third line of objection, that the new short-term let supply, brought on by the free route to market offered by Airbnb, doesn’t stick to existing licensing & regulations on hotels, serviced apartments and the like.

It’s the impact of higher rents and less supply, and/or the impact on neighbourhoods, that drives resentment and then action by local politicians.

So why not London?

1 London is huge. There are some 35,000 Airbnb listings in London, of which perhaps half are unobjectionable genuine homes or pre-existing bnb’s and some are pre-existing short-term lets like serviced apartments cross-listed on Airbnb. If that leaves even 15,000 that are crowding out local renters, that’s 0.4% of the 3.3 million households in London.

2 London’s tourist areas aren’t really local residential areas, and areas like Camden and Notting Hill, where the Airbnb’s are concentrated, are expensive anyway.

3 London’s house price ‘problem’ has been an issue for a lot longer than Airbnb’s been around, and is driven by lack of new build, coupled with London’s success.

4 We have someone else, much larger, to focus our ire on - absentee overseas buyerswho sweep up whole new developments, and then use them a few days or weeks a year. (Better that these are on Airbnb than not!). These owners dwarf Airbnb in numbers, drive prices up and remove properties from the rental market.

5 Homeowners like high prices, and high rents - London, like the whole UK, has a high percentage of owner-occupiers compared to cities where renting is the norm, like Berlin, so it’s not automatic whose voice local politicians hear loudest and respond to.

6 Buy-to-let - Chancellor Osborne has already launched an outright assault on the sector, according to the sector itself, with a triple whammy of extra stamp duty, higher Capital Gains Tax, and limited mortgage relief against rental income. (Is the buy-to-let sector, whose expansion has helped the UK rental sector grow back to 36% from an all time low of 31% in 2001, really a villain anyway in short-lets?)

So what do I conclude?

It’s not just the UK’s famous neo-liberalism that causes a much more laissez-faire and deregulation approach here - it just isn’t a problem that merits more regulation, perhaps other than safety licensing, let alone prevention.

In cities where there is a backlash, it’s NEVER against genuine second use by existing householders who want to generate income from idle space.

Vrumi always benefits householders, whether owners or renters. Vrumi also benefits freelancers and small businesses - it’s hard to see who, other than commercial property owners, coffee shop chains, and hotel groups, could complain. Certainly not Generation Rent.

On that basis, Vrumi should be welcomed by the cities above that are resisting Airbnb - we hope that will be the case!

By Roddy Campbell

Founder of Vrumi, on board of Sharing Economy UK