Why Airbnb isn’t all it’s cracked up to be

It’s been banned in Berlin, sparked protests in Barcelona, and, if you look closely isn’t working well in London, either. So why is Airbnb causing problems for landlords and renters alike?

It started so cosily: three blow up mattresses on a San Francisco living room floor, rented out for $80 each. Nearly 10 years later, and Airbnb has grown to encompass 34,000 cities in over 191 countries, with over two million listings worldwide. It’s made a lot of people a lot of money, including the original ‘landlords’ and Airbnb founders, Joe Gebbia and Brian Chesky. (Nathan Blecharczyk, the third co-founder, lived elsewhere.) Business Insider recently estimated the company to be worth $30 billion.

It is, without doubt, and as the Airbnb website boasts “the easiest way for people to monetise their extra space and showcase it to an audience of millions”. But now it’s facing a backlash.

For 2016 may turn out to be Airbnb’s annus horribilis. Earlier this year Berlin passed a law severely restricting short-term rentals, particularly in areas with housing shortages. Following protests in Barcelona, the Catalonian government imposed a stiff fine on the company over illegal listings. Amsterdam has brought in a new law against any holiday rental being let for longer than 60 days a year.  And, as of October 2016, the company is undergoing further government scrutiny in both Sydney and Toronto as well as legal disputes with the cities of New York and San Francisco.

Legal disputes and illegal listings

The charges against Airbnb are similar the world over.  A failure to regulate illegal listings (i.e. hosts who haven’t registered with local government) or adhere to time restrictions and the fear that the ‘sharing economy’ is a threat both to local hoteliers and, more significantly, long term lettings and local housing supplies.

Airbnb appartmentAirbnb refutes these criticisms, and is keen to stress that the sharing economy is based on making use of people’s underused assets.  That more spare rooms are rented out than entire apartments. But clearly this is an argument that is seen to be wearing thin.

While many cities are clamping down on Airbnb and similar style lettings, London appears to have gone the other way, introducing the Deregulation Act in 2015. Prior to this all residential properties that were to be used for short-term rentals were regarded as having undergone a “material change of use” and required planning permission. With the Deregulation Act the government introduced an exception to allow for residential short term lets so long as the property isn’t let out for over 90 nights in succession.

Driving up house prices

Airbnb gives an overview of local government requirements on its website. But the onus is very much on the individual landlord to both inform themselves of local laws and comply. And in practice, of course, this is very difficult to regulate.

With that said, there are signs that London may begin to follow international precedent.  In September 2016 the chair of the business, innovation and skills committee, Iain Wright, wrote to the capital’s mayor, Sadiq Kahn, to complain that short term lettings companies like Airbnb are driving up house prices.

It’s not just locals’ wallets feeling the impact either. Demonstrations in Barcelona, for instance, were sparked by residents’ frustrations with the unsociable behaviour of rowdy tourists. Illegal subletting by tenants is also rife, not to mention stories of illicit parties and theft by guests becoming the stuff of urban legend.

For all the ease and affordability of Airbnb, then, there’s no simple solution to the company’s growing PR problem. How the company addresses these concerns could have huge impact on locals, landlords and property in the modern city.

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