Jeff Salway: Rise of Airbnb ‘makes housing crisis worse’

Airbnb landlords are attracted by the short-stay market, which may mean a loss of long-term provision. John Macdougall/Getty
Airbnb landlords are attracted by the short-stay market, which may mean a loss of long-term provision. John Macdougall/Getty
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Airbnb and other short-term letting sites will be a godsend for many of the visitors descending on Edinburgh during festival month.

But the rapid rise of such services isn’t such good news for the city’s housing market, and calls are growing for local and national authorities to intervene.

The number of Airbnb lets in Edinburgh has soared past the 6,000 mark this summer, according to data given to Scotland on Sunday by Murray Cox, a New York-based community activist and founder of non-commercial data project Inside Airbnb.

Established in the US in 2008 as Airbedandbreakfast.com, the popularity of Airbnb in the UK has rocketed over the past four years and it now has more than two million listings worldwide, including over 80,000 in the UK.

There were 6,272 Airbnb listings in Edinburgh at the end of July, according to research by Cox, the second-highest UK figure by some distance. But there are concerns that the service is exacerbating Scotland’s housing crisis by using properties that may otherwise have been available to rent or buy.

READ MORE: Edinburgh among most expensive cities on Airbnb

The Edinburgh data shows that 43.8 per cent are multiple listings and more than half are for entire homes.

“Data on Airbnb use in Edinburgh shows significant activity by commercial operators, who have permanently converted residential properties into vacation rentals,” said Cox.

“Although Airbnb describes its business model as ‘hosts’ renting out spare rooms to tourists, the majority of Airbnb properties in Edinburgh are entire homes or flats, where the host isn’t present.”

READ MORE: Scotland’s most unusual Airbnb destinations

While Airbnb listings account for only a small proportion of Edinburgh’s housing stock, they tend to be concentrated in areas with low vacancy rates.

“Airbnb rentals could be displacing city residents, and in many other neighbourhoods challenging their residential character,” said Cox.

Almost two-thirds of Edinburgh listings on Airbnb are available for more than 60 days a year, with an average occupancy of 82 nights a year. While in many cases the unoccupied listings will be used by their owners, it seems plenty remain empty while they don’t have guests.

“When Airbnb started it was about spare bedrooms and people going on holiday and letting out their home, it wasn’t something that affected the availability of properties to rent or to buy,” said Stuart Montgomery, director of lettings and management at Rettie & Co. “It will grow and become like a booking.com or a Tripadvisor, where it’s heavily commercialised and people are making a living out of it.”

One key question for local and national policymakers is the extent to which short-stay rentals displace long-stay accommodation and drive rental prices up, said Dan Cookson, spokesman for PRS 4 Scotland.

“The short-stay rental market has clearly played a key role in enabling Edinburgh’s success as the festival city and provides much-needed accommodation for visitors throughout the year,” he said. “But with the recent rapid expansion of sites like Airbnb there are signs from cities around the world that unfettered short-stay rental expansion may not be entirely benign.”

Housing and homelessness charity Shelter Scotland said it was keeping an eye on services such as Airbnb and their impact on the housing sector. Alison Watson, deputy director of Shelter Scotland, said: “Our concern would be if people were being displaced due to the lack of affordable housing caused by fewer homes or rooms for rent becoming available.”

Several cities have already taken action. Berlin has banned the short-term leasing of entire flats through Airbnb and other sites, under a new law named “Zweckentfremdungsverbot” that aims to protect property supply and controlling rents.

Airbnb has been at the centre of controversy in several North American cities too. It deleted some 1,500 commercial listings in New York after it was found that most of its listings potentially violated local short-term rental laws.

Hundreds of UK hosts were deleted from the site this year as well. No explanation was given by the company, but the move followed allegations that professional landlords were using the service to circumvent planning laws and taxes.

Edinburgh and other cities in Scotland need “workable policies” to address concerns about short-stay lets – but they first need to know more about the market so they can measure its impact. “The challenge is both understanding the full extent of short stay from more than a single player within the market and then formulating a policy that can actually be enforced,” said Cookson.

Any crackdown should focus on “professional” hosts with multiple homes let out, said Cox.

“In most cities that are concerned about housing and the illegal conversion of residential properties via short-term rental platforms like Airbnb and their hosts, multiple entire home listings are usually the first to be the subject of regulation and enforcement.”

Yet policies such as the cut in tax relief on mortgage interest for buy-to-let and new private rented sector rules in Scotland may make the holiday lets model more attractive.

“The new PRS tenancy in Scotland exposes landlords to greater risk of tenants leaving very shortly after signing a tenancy,” said Cookson. “In this context some landlords may be attracted by the short-stay rental market, which may mean a loss of long-term provision.”

The rise of Airbnb hasn’t escaped the attention of HM Revenue & Customs, however. It has warned anyone using the site to rent out a property to declare the income they receive from it or risk a heavy fine.

Mortgage lenders are becoming similarly vigilant and keeping a close watch on borrowers they suspect of breaching the terms of their mortgage by using their home for short-term lets.

“If a borrower has plans to occasionally let out their home for a short period, they should seek their lender’s consent,” said a spokesperson for the Council of Mortgage Lenders. “It is likely that the terms and conditions of their owner-occupier mortgage contract will make it clear that they are not permitted to let out the property on any basis, except with their lender’s consent.”