Camden Council claims that holiday-let websites like Airbnb are pushing up rents in their area, making it difficult for local people to find somewhere to live.
Website “Inside Airbnb”, which claims to be an independent, non-commercial website that allows you to explore how Airbnb is really being used in cities around the world, has criticised Airbnb for having a similar impact on the New York housing market.
The authorities in Paris have also expressed concern about the drain on residential property caused by websites such as Airbnb. Ian Brossat, director of housing at City Hall in Paris, has said the repercussions on the French capital’s residential market are severe: “There is already a serious shortage of flats in Paris, especially studios and two-room apartments where couples might start a life together.”
Inside Airbnb has reported that there were more than 1,400 listings for Camden out of a total of 18,436 listings for London*.
Councillor Sarah Hayward, leader of Camden Council, has said that growing numbers of residents in Camden are complaining about noise or other anti-social behaviour linked to short-term lets, and that:
“With thousands of London families in need of a home, we need to strongly resist the growing market for short-stay lets of homes in areas like Camden, as we know these will reduce the options available for normal Londoners looking for somewhere affordable to live.
“Whilst in boroughs like Camden we’re doing what we can to alleviate the housing crisis, building 3,050 new homes over 15 years, more families than ever before are dependent on renting their home privately from a landlord.”
It is estimated that over a third of people in Camden are now relying on the private rented sector (PRS) for housing with private landlords housing increasing numbers of social tenants.
Under the government’s recently introduced Deregulation Act, sections 44 and 45 will now allow Londoners to avoid the restrictions under the Greater London Council Act 1973, which prevented lettings under three months (90 days) without planning permission, and at the risk of a £20,000 fine.
In fact so many Londoners were doing short-term lettings, using websites such as Airbnb, that it was becoming impossible to enforce the old rules – it is extremely difficult for local authorities to prove that an individual property has been let out short term. Under the Deregulation Act
Section 44 creates a new section 25A of the 1973 Act which provides that the use as temporary sleeping accommodation of any residential premises in Greater London does not constitute a change of use (for which planning permission would be required) if certain conditions are met (the ‘Exception’). The conditions are set out in subsections (2) and (3) of section 25A.
The first condition is that the sum of (a) the number of nights of use, and (b) the number of nights of any previous use of the same premises as temporary sleeping accommodation in the same calendar year, does not exceed ninety nights. The second condition is that, for each night counted under (a), the person who provided the sleeping accommodation must be liable to pay council tax (which would therefore include people who are liable to council tax but are in receipt of a discount).
But Camden Councillor Hayward has said:
“The government’s 90-day rule solution is inadequate as it can’t be properly enforced. We need tougher measures to help stabilise this growing problem. Let me be clear: This is not about private tenants and homeowners who rent out their spare rooms to bring in some extra cash to pay the mortgage or the rent, but we are seriously concerned at the expansion of this market through deregulation and the growth of sites such as Airbnb using London homes like hotels, which is reducing our badly-needed private rented sector supply.”
On the other side of the argument, Londoners are happy to be able to earn thousands of pounds by renting out their home short-term under a controversial “Airbnb” letting revolution. For up to three months a year they will be allowed to let out their house, flat or spare room on a short-term basis under these new rules. The regulatory reforms will also offer millions of tourists the chance to live like locals in London.
As concessions to residents, the Deregulation Act includes exceptions to the relaxation of the 1974 rules:
- That Homeowners would only be able to rent out their property as a short-term let for up to 90 days a year to stop such lettings being done on a commercial or permanent basis.
- In “exceptional circumstances”, town halls will be able to ask the Secretary of State to agree to small localised exemptions from the new flexibility, where there is a strong case to do so.
Properties must be liable for council tax so business premises will not be covered and councils will be able to exempt properties where the owner breaches the regulations.
Introducing the new rules Housing Minister Brandon Lewis said:
“London is one of the world’s top holiday destinations. Draconian rules dating back 40 years prevent the capital’s homeowners from renting their properties to tourists. That’s why I want to change the law, and free Londoners up to rent out their homes.”
There are thousands of properties in London being advertised for rent on websites such as Airbnb and many of these properties were let out by Londoners during the 2012 Olympics for a few weeks, and are during the Wimbledon tennis tournament. According to Airbnb, a typical UK host earns £2,822 a year by letting their property for 33 days.
Those London property owners considering this kind of activity will need to check their mortgage contracts, and long-leasehold tenants their leasehold or other agreements, to make sure they are permitted to rent out their property. They should also note that many insurers are reluctant to cover the owner’s contents in these circumstances.
In the case of short term (Assured Shorthold – AST) tenants, most tenancy agreements prevent sub-letting entirely.
On the subject of sub-letting by short-term tenants, there was a government proposal in a section of the spring 2015 budget titled: ‘Support for the sharing economy’, to quote:
- 1.193 The government wants to ensure that Britain is the global centre for the sharing economy, enabling individuals and businesses to make the most of their assets, resources, time and skills through a range of online platforms.
- This Budget therefore announces a comprehensive package of measures that will break down barriers, create opportunities for sharing, and unlock the potential of this dynamic and growing area. Building on the recommendations of the independent review of the sharing economy, the government will:
- make it easier for individuals to sub-let a room through its intention to legislate to prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis, and consider extending this prohibition to statutory periodic tenancies
- enable government employees to use sharing economy solutions to book accommodation and transport when travelling on official business, where this represents value for money
- encourage Local Authorities to use their business rates discretionary relief powers to support the sharing economy, including shared workspaces and makerspace.
This proposal has caused much consternation in the buy-to-let landlord community: they fear tenants will be subletting to undesirables, and given the tenancy laws as they stand with the length of time and money needed to evict, this proposal would take matters out of the landlord’s control.
It might be a different matter if the proposed changes restrict the sub-letting to the taking in of lodgers, when the tenant remains in residence, but even then this will introduce unwanted complications for landlords.
*See the full Inside Airbnb London Report here