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      How Full-Time Airbnb Landlords Are Making the Housing Crisis Even Worse

      By Corin Faife

      February 4, 2016

      BellBoi is a tiny cafe just off Brick Lane in Shoreditch – though, perhaps to call it a cafe would be misleading. It does serve coffee, and there's the obligatory peg board with prices for cappucinos, espressos and flat whites marked out in white letters. But there's barely seating room for more than two people inside, and no toilets. There is, on the other hand, a large computer terminal that the barista uses to update calendars and spreadsheets, and a wall of luggage lockers at the far end of the shop floor.

      BellBoi is the client-facing hub of a small Airbnb-letting empire in Shoreditch, made up of more than 30 properties in the surrounding area, plus a few in New York. Guests arrive to pick up their keys and receive a laminated map directing them from the cafe to their accommodation – a model imported from the US, where sharing economy support services have already taken hold. It's a business founded entirely on professionalised use of the Airbnb platform, and like many similar operations in London, it's operating in the grey area between what's legal and what's actually enforced.

      All of these rooms and apartments are listed by "Vincent & Alice", a prominent hosting couple I first discovered through the Inside Airbnb website, an online tool that aims to "add data to the debate" around Airbnb's effect on housing and communities across 31 cities worldwide.

      Click to enlarge (Source: Inside Airbnb)

      By scraping data from publicly available listings and plotting them on a map, it gives the kind of insight that Airbnb's own statistics lack – like the fact that, as of September 2015, there were 4,680 listings in the capital for entire homes or apartments, frequently booked and with high availability all year round. In other words, properties which are used virtually full-time to host Airbnb guests.

      Ignoring questions around the morality of keeping these properties out of the long-term rental market during a housing crisis, the majority of these lets are also likely to be in contravention to London housing law. Section 44 of the Deregulation Act, an amendment to existing housing legislation introduced in February of last year, states that if a property is let out to short-stay guests for more than 90 days in a calendar year, the homeowner must receive planning permission from their local authority for a change of use to short-stay letting – something London authorities are reluctant to allow. (Camden council lists disturbance to neighbours, decreased sense of community and reduction of the permanent housing stock as reasons for resisting all development of short-stay accommodation in the borough.)

      In fact, up until the amendment in 2015, planning permission was technically required to undertake any short-term letting at all in London. When Conservative housing minister Brandon Lewis introduced the deregulation bill to Parliament, he outlined the need to remove "unnecessary red tape" in order to provide extra income to householders, and boost the sharing economy in London.

      But while the new bill specified a new (and relatively generous) quota for unregulated short-term letting, it also greatly complicated the work of the enforcement teams who were tasked with identifying illegal lets. Paul Simmons, a manager within the planning enforcement team at Westminster Council, who objected to the bill, explained:

      "When this went through Parliament, Westminster [council] lobbied very hard firstly for the laws not to change, but secondly for there to be some requirement for the flat owner to notify the council – maybe just through clicking a button on a website – to say that a person was staying, for how many nights, etc. But the government said no, that it was too bureaucratic, and so as a result it's very difficult for us to know without reasonable doubt when the limit has been reached."

      He estimates that his team investigates between 2,000 to 3,000 cases each year – the same as before the change in legislation – except that the amount of work needed to successfully serve an enforcement notice has increased significantly. And it's the difficulty in enforcing the new laws that has opened the door for London's new breed of professional Airbnb landlords.

      Click to enlarge (Source: Airbnb)

      In a phone call, Vincent and Alice of BellBoi were somewhat evasive when I put it to them that their business was based on illegal use of rental housing. But both were adamant that a large percentage of Shoreditch is now Airbnb'd full-time, and that there were thousands of other landlords in London who were doing exactly the same thing. The first claim is hard to verify (although utterly believable for anyone who's been to Shoreditch recently), but the second is completely in keeping with the data.

      Like Brandon Lewis MP, Airbnb promotes the idea that the typical host is just an individual renting a spare room now and again, but the data suggest this is only partly true. If, as InsideAirbnb's figures show, 10,000 of the Airbnb listings in London are from hosts with more than one property on the site, that's a huge number as a proportion of the 24,100 active hosts that Airbnb claims operate in the city.

      Even Airbnb's own official statistics on London are revealing: the highlighted claim that 35 percent of hosts' income is at or below the median for the UK is slightly comical, since if the hosts represented a normal income distribution you'd expect 50 percent to be at or below the median. Put another way: two-thirds of hosts make more than the UK median income, and not far off half of them make more than £43,000 a year – which would put them in the top 15 percent of earners in the UK.

      Clearly, not only is there a lot of money to be made through Airbnb, but there are a lot of wealthy people listing properties on it. And things are being made easier than ever for these wealthy property owners thanks to a new type of startup with a uniquely tailored product: the Airbnb management service.

      Click to enlarge (Source: hostmaker.co)

      "Airbnb management" – a very 2016 industry – involves anything from providing a key exchange for guests, or employing cleaning staff to remake beds between stays, to professionally photographing a property, meeting visitors with a welcome pack, operating an account in the host's name and scheduling bookings to maximise occupancy. In fact, in exchange for a cut of the profit, a landlord can just hand over their keys, then sit back and collect a paycheque at the end of the month with no further interaction.

      Posing as a homeowner with a flat to let, I called Hostmaker and Airsorted – two prominent companies operating in London – and asked about what returns they could offer me. Both boasted occupancy rates of 75 percent or above, with average stays of between three and five nights. That would work out at somewhere around 280 days per year – again, well in excess of the quota for short-term letting.

      When I questioned the legality of the arrangement, representatives of both teams were well aware that there was a 90-day legal limit. Though they stopped short of advising me to break it, both were happy to admit that almost all of their customers chose to ignore it (with one reassuring me that the laws were "unenforceable"). Provided I was happy to aim for full occupancy, I was told that I could expect an income well above the market average for residential tenants, even in off-peak months for tourism.

      These companies are not in themselves breaking the law, but they're potentially facilitating an activity which often does. And even if the legal framework were to change and become even more forgiving of short-term lets, we need to ask ourselves: as the capital struggles to provide enough housing, is this really the kind of 'sharing economy' we thought would help?

      READ ON MOTHERBOARD: Kill Your Airbnb's Hidden WiFi Cameras With This Script

      When researching this article, I reached out to Murray Cox, creator of the InsideAirbnb website, to ask what he thought were the key points to pursue.

      "Superhosts are low hanging fruit in terms of discovering illegal use of housing," he told me by email, "but in aggregate, all of the hosts with a single investment property listed permanently on Airbnb can be just as disruptive, and are frequently under the radar of policy makers and enforcement."

      Though they may be under the radar for outsiders, they're certainly not for Airbnb. With the enormous amount of data they collect, it would be simple for them to spot infractions of the 90-day law and restrict hosts' accounts. So I contacted their UK office to ask if they'd consider sharing this data with local councils, and whether they thought short-term letting was driving up prices. A representative from their Public Affairs department sent this statement:

      "Airbnb hosts are regular people who share their homes and use the money they earn [to] pay the bills. The typical host in London earns an additional £3,500 by sharing space in their home for 50 nights a year. Airbnb helps grow and diversify tourism in London, helps countless Londoners stay in their homes and the city they love, and provides an economic boost to communities and local businesses across the capital."

      The thing about economic boosts is that some always get more of the boost than others. For all the talk of its disruptive nature, Airbnb still looks a lot like capitalism 1.0: people with property, or those who have access to credit, find it easy to generate more and more of it; people with money to consume the product benefit from greater choice; and people with none of the above are squeezed out of the equation and collectively absorb the negative impact of higher rents and increasingly transient communities. Above it all stands Airbnb itself, a £17 billion giant of a company, taking a cut of every pound, Euro or yen spent through the site.

      Newspapers still seem more interested in reporting the one-off, headline grabbing stories of sex, drugs and wild parties in rented flats. But if there's an out-of-control gang using Airbnb to wreak havoc in local communities, it's not the teenagers. It's the landlords.

      (Thumbnail photo by Raysonho via)

      @corintxt

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      Topics: airbnb, Corin Faife, illegal rentals, Sharing economy, UK, London

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