Is Airbnb ruining our cities?

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Marine Fleury

Marine Fleury analyses the negative effects of Airbnb on the availability of housing

From using air mattresses for an informal bed and breakfast to becoming the preferred short-term rent platform worldwide, Airbnb has grown incredibly fast in the 13 years since it was founded. Such growth seems set to continue, evidenced by their recent purchase of the last-minute booking app and marketplace HotelTonight and Urbandoor, just before holding an initial public offering (IPO) to raise money for further expansion. 

The original idea behind Airbnb was to give money to local businesses by facilitating affordable tourism. Airbnb claims to be worth hundreds of millions to governments across the world, thanks to host earnings and guest expenses. However, a worldwide trend has recently emerged, as local governments and officials express discontent in light of the exponential growth of Airbnb listings. Indeed, numerous publications — such as the Irish Times, Observer, and WIRED — highlighted a rising number of anxieties centring around Airbnb’s threat to cities’ prosperity and sense of community. The Parisian mayor, Anne Hidalgo, raised these concerns in the newspaper Journal du Dimanche: “The problem is those who own multiple properties who rent apartments all-year-round to tourists without declaring them, and the online platforms, which are accomplices, welcoming them.”

Such worries have been acted upon all around the world, through the implementation of short-term renting regulations in London, Dublin, Paris, Barcelona, Amsterdam, Boston, New York, Toronto, and more. Indeed, most local governments have limited the number of authorised days per year for hosting short-term stays. For instance, Paris decided upon 120 nights per year, London established a 90-day legal limit, and Amsterdam recently reduced the permitted time from 60 to 30 days per year. Moreover, most of the new regulations allow only main residential property owners to be the host for property, entire-home renting being strongly limited within a year. Indeed, in most cases, you need to own the property listed on short-term marketplaces, and you must be occupying it for most of the year, as required in Dublin and Toronto. 

Furthermore, forms of regulation are being employed, for instance by creating compulsory registration systems which collect the details of the hosts and listed properties, failing which either them or Airbnb would receive a fine. In 2019, several thousands of illegal short-term rentals were delisted by Airbnb in cities all around the world. Despite this, a great number of illegal hosts remain. It’s difficult for law enforcement to ensure that landlords uphold the legal terms of short-term lets. In London, for instance, 23% of Airbnb listings are in breach of the 90-day limit. Scammers may use workarounds such as advertising the properties on multiple platforms, each offering an availability of a 90-day period at different times.  

But why is this so worrying? Data from a WIRED investigation may help to explain. In 2019, London counted 80,770 Airbnb listings, a number which has increased four-fold in the city centre and 15-fold in outer London between 2015 and 2019. In Camden, 7% of the total housing stock pertains to short-term rentals, 48% of which exceed the 90-day limit, since most of them are open to short-term rent all year round. Meanwhile, 6,000 families are on Camden Council’s housing waitlist. In light of the critical shortage of residential housing stock, London officials such as Heather Acton have decried the rise of short-term letting and appealed to the government and ministers for better control. This is not only a problem in London. In Ireland, areas of Dublin, Cork, Galway, and Limerick are now described as “rent pressure zones”. Due to this housing crisis, city councils do not permit short-term lets in these rent pressure zones. However, only a handful of property owners are legally registered or ask for a permit. The related housing issues are therefore still ongoing. 

On top of the shortage of residential accommodation, short-term renting platforms like Airbnb strongly influence rent prices, due to the conversion of rental stocks from long-term to touristic lets. Indeed, the Reserve Bank in Australia demonstrated a strong correlation between Airbnb uptake and the reduction of vacancy rates, that is, available accommodation. Vacancy rates are the strongest predictor of rent, with a reduction of vacancy driving rental prices up. Based on this vacancy-predictor, investors’ speculate an increase in house prices as large as 30%, following a 3-5% increase in capital appreciation.

In conclusion, the lack of control of illegal short-term lets along with the reduction of residential houses available result in unaffordable housing, the consequences of which should greatly concern local governments. There seems to be a strong need to balance the pros and cons brought by short-term let platforms, such as Airbnb and, to determine whether such worries are justified and should be more strongly legally backed-up.


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