Around 2.8 million households across England casually rented out part of or their entire home on platforms such as Airbnb in 2017-18.
These platforms are part of the “sharing economy” and have opened up new avenues for tourism. Since its founding in 2008, Airbnb has enabled millions of “hosts” around the world to let out their spare space – whether this is an extra bedroom or an entire home.
In 2015, the UK government deregulated short-term rentals in London, allowing homeowners to share their home for up to 90 nights per year without planning permission. However, it is not just private homeowners who are taking advantage of this system.
Research has found that instead of offering their property as a longer-term rental, some landlords were moving their houses on to Airbnb where they can make higher profits. This raises concerns about the impact of short-term rental activity on housing availability and affordability in London.
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In our new research at Edge Hill University, we looked at the growth of Airbnb activity in London to understand in greater depth how properties are being shared on the platform – and by whom. Using data provided by InsideAirbnb and author and researcher Tom Slee, we analysed the Airbnb platform for listings in London between 2014-19.
Our findings reveal worrying trends amid considerable growth in Airbnb activity across London. Since 2014, there has been a 571% increase in the number of entire home listings, with nearly 45,000 entire properties available to rent. There has also been substantial growth in what could be classed as “commercial” activity rather than occasional home sharing.
Not just spare rooms
One indicator of commercial rental activity is the availability of a property on the platform. If a property is being shared when the host is away, then the property would only be available for a limited number of nights per year. On the other hand, a home that is available for more than 90 nights per year, we argue, indicates that this is a commercial activity.
We found that since 2015 the number of entire home listings that were available for more than 90 nights had increased by 123% to just over 18,000 homes. We further found that 61% of these properties were offered by hosts with more than one property, and this activity had increased by 275% since 2015.
An Airbnb spokesperson told The Conversation: “This research uses a flawed methodology focused on calendar availability data gathered from third parties. In reality the typical entire home listing on Airbnb in London is let for just 35 nights a year and there are very few exceptions where a listing is let for 90 nights or more. Airbnb was the first platform to introduce a 90 night cap to voluntarily enforce rules in London and has for years led calls in partnership with City Hall for a short-term let register to be introduced.”
Another indicator of commercial rental activity is to examine the number of entire property listings provided by hosts with two or more entire property listings. We found that these listings had increased by 480% since 2015 to nearly 20,000 homes. We also found that only 12% of hosts had more than one property.
We were able to break the data down further by examining the impact on different local areas within London. We found that there is a concentration of entire property listings provided by hosts with two or more properties in a few London boroughs, specifically Westminster (23% of listings), Kensington and Chelsea (15% of listings) and Camden (10% of listings). Other researchers found similar results in other large cities including New York, Madrid and Berlin.
Renting and displacement
The activity we found in Westminster, Kensington and Chelsea and Camden is likely to lead to displacement for communities in these neighbourhoods. Researchers term this tourism gentrification, where tourists displace residents from their local communities through increases in rental prices and decreased housing availability, making it difficult for people to find an affordable home to rent in their local neighbourhood.
Our findings reveal that a significant portion of the Airbnb activity in London is not what could be seen as the authentic sharing of homes, where the asset is being underused (a spare bedroom, for example), but commercial activity. It is unlikely that local communities can access and realise the benefits of the sharing economy as intended.
Landlords are attracted to the short-term rental market because of what is termed a technological rent gap. Platforms such as Airbnb make it easier for landlords to access the short-term holiday rental market – where they are able to make higher profits by offering their property as a short-term rental instead of a home to rent for the long term.
Airbnb has taken action to limit this activity by enforcing the 90 night limit in London, by automatically stopping properties being booked for more than 90 nights without evidence of planning permission. But there is evidence that some landlords are bypassing the system by setting up new listings for the property or using multiple platforms to advertise the property. There is a need to limit landlords from using homes on these platforms for the long term, by using a local registration and licensing scheme.
Airbnb and similar platforms could be a force for good, by enabling people to access unique places, and by sharing excess capacity in existing homes. However, the platform enables landlords to make higher profits by choosing tourists over providing homes for the long term – contributing to the gentrification of neighbourhoods and displacing local communities through higher rents and property prices.
Governments across the UK are planning on introducing significant rental reforms, such as the Renters Reform bill in England. Further reforms could drive more landlords to use Airbnb over providing long-term housing. Care must be taken to ensure that further properties are not lost from the residential sector.
This article first appeared in TheConversation and is republished with permission.