Some people have been saying that traditional buy-to-let is past its sell-by date and that new players such as AirBnB are set to disrupt the entire model. It has certainly been the case that in cities with young populations such as Manchester, London and Brighton, we have started to see a new breed of landlords buying property in order to let it out for very short-term lets.
These may be what are referred to as “party pads” – accommodation for people coming in from other parts of the country, or abroad, to spend the weekend partying. Alternatively these properties can be marketed as holiday lets at very high rents during vacation periods, with often no attempt to let them at other times.
However, the whole AirBnB rental arrangement in big cities looks like it might be strangled at birth. And once again, those crying out that traditional buy-to-let is over look likely to be proved wrong.
For those unfamiliar with how it works, AirBnB allows landlords to list their properties at the price they choose for short periods. If you saw the recent TV ads, you’ll have been given the impression that this is a flat sharing site for young travellers who want to experience life in another city. The reality, at least in our big cities, is somewhat different.
People who live in blocks of flats in London for example, have found increasing numbers of flats rented out to very short-term tenants which means a constant procession of strangers in and out of the building. Added to this, where traditional buy-to-let adds to the housing stock available across a range of income groups and household types in any city, short-term lets can take housing stock out of supply. This is because what were residential units essentially become short-term holiday homes – in other words you have mini hotels springing up everywhere, that are not licensed.
Sadiq Khan, Mayor of London, is only the latest leader of a major city to put up a red flag. He is going to investigate what impact these short-term lets us having on the capital’s housing supply and has said that he is prepared to take a look at the relevant legislation. With 42,000 listings in London, he probably needs to. He referred to the “negative amenity impacts” of these lettings. Quite what this means is anyone’s guess.
However he went on to speak more plainly about the concern that permanent housing is disappearing into short term lettings.
The residential landlords Association (RLA) did some research into those short-term lettings on-air B&B that were available for more than 90 nights – in other words, that appeared to be a professional rental. They found that 65% fell into this category. A relaxation of the law in London last year allowed people to rent rooms for up to 90 days a year on short-term lets. It may have been this that created the boom in AirBnB lets in the capital.
All of a sudden, Khan is making it clear that the much vaunted “sharing economy” is going to have to be balanced against protecting local residents and making sure that housing is kept for long-term use. He said that he intends to talk to the boroughs to see if the legislation needs revising.
New laws to curtail Airbnb lettings have already been introduced in Amsterdam, Barcelona, Paris, Berlin, New York and San Francisco (the latter must hurt particularly since that is AirBnB’s home city).
So what about Manchester?
It has to be said that AirBnB listings in Moston seem to be mostly single rooms in occupied houses, so the party economy may have some way to go before it affects M40 lettings. However, it’s clear that flats in central Manchester are definitely being listed on the site.
The French, who as we know, do not tend to mess about once they have decided something is unacceptable, have been raiding “illegal” AirBnB apartments in Paris, particularly those that have been bought purposely as – well, it’s not really buy-to-let – perhaps we need to invent a new term – “buy-to-list”?
Like Uber, which recently lost a tribunal case on whether its drivers were self-employed, AirBnB is finding that its business model is not quite as straightforward as it thought, and that local councils, laws and politics may throw a major spanner in the works as far as its operations are concerned.