An incredible 4 million guests have now stayed in AirBnB properties when visiting London, 3 million of those guests have chosen the capital in the past 2 years alone.
In this article, DMZ looks at the rise of AirBnB and questions whether it has materially disrupted London’s residential lettings market.
The rise of AirBnb is staggering, with millions of satisfied customers and hundreds of thousands of homeowners equally happy to be generating income from their spare room.
In their 2016 London report, the company found that Lambeth beat off the competition to record the highest growth in guest numbers. Tourists and locals alike have been attracted to Brixton, Clapham and Waterloo; with it’s vibrant South Bank attractions it’s easy to see why the area is a popular choice.
However, the company’s growth and influence in London has caused divisive issues, sparking debate from all areas of the real estate community.
DMZ has previously reported on noise complaints, property damage, ignored safety regulations, non-existent insurance policies and tenants subletting flats through AirBnB. These just some of the numerous alleged illegal issues that management has had to contend with.
Last year, concerns were raised that its popularity could increase London property prices and that the solution may be to place restrictions on its hosts. Ian Wright, Chair of the Business, Innovation & Skills Committee, claimed that “extensive use of AirBnB by landlords can help to drive up property prices, affecting affordability…meaning less properties would be available for the rental market.”
Senior AirBnB exec James McClure hit back, stating that the company has “taken important steps” to make sure that the service is beneficial for everyone in a city.
These important steps include a 90 nights limit to be put into effect this year, which could cost the disruptive firm a whopping £400million in lost bookings. The limit will ensure that whole homes are not available on AirBnB consistently throughout the year.
London isn’t the only city to be affected by AirBnBer’s – other major cities have been in dispute and imposed their own fines and penalties.
DMZ thinks the new restrictions will be good news for many, including the residential lettings market, but our long term view is that AirBnB have opened pandora’s box on short term rentals.
The 90-day ban does constrain the firm somewhat, but there is still a real threat to lettings agents as after three months renting via AirBnB the guest can easily strike an ‘off-market’ agreement to continue the ongoing arrangement with their tenant, effectively cutting out the agent.
This exchange of security and regulation for a discounted rate may seem trivial on it’s own, but multiplied by hundreds, thousands and even millions, the continued growth and success of AirBnB can only be viewed as detrimental to the traditional lettings market. Add to this the governments letting fee announcement last year and the emergence of cheaper online competitors – times could be tougher than even for traditional lettings-only agencies this year.