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Planning enforcement at the time of Airbnb

Planning enforcement at the time of Airbnb

Francesco Mellino 02 May 2017
Airbnb, a business that enables people to rent out their homes (or a room within them), has enjoyed global success since it was founded in San Francisco in 2008. With over three million listings worldwide across more than 65,000 cities, the company is among the giants of the sharing economy and one of the fastest-growing actors in the hospitality sector. The legal background for short-term accommodation in London is, briefly, as follows. Until 25 May 2015, the use of property for temporary sleeping accommodation for fewer than 90 days per year without planning permission was prohibited[1]. From May 26 2015, the restrictions on short-term accommodation in London were relaxed[2], allowing Londoners to rent out their properties, which must be liable to pay Council Tax, for temporary sleeping accommodation for fewer than 90 nights per calendar year without requiring planning permission. The criticism that Airbnb has received, mostly in larger cities in Europe and the US, focuses on whether allowing dwellings to be rented out for short-term accommodation encourages an efficient use of the housing stock or has an unsustainable impact on the availability of properties for long-term rent. This tension is clear in how new policy was designed to regulate, not prohibit, this activity. However, no details were set out regarding how local authorities were expected to enforce the 90-nights-limit. Analysis of data of Airbnb listings[3]  suggests that the change in legislation in May 2015 had a negligible impact on existing trends in London. There were just almost 54,000 listings in London in January 2017, up from 13,000 as of December 2013, but the rate of this increase has been constant since May 2014 (Figure 1). Interestingly, the average nominal price per night of a listing in London has decreased from £190 in May 2014 to £121 in January 2017, hinting that the growth in the number of listings has increased competition and driven down prices rather than meeting pent-up demand for short-term accommodation. Figure 1: Number of Airbnb listings and average price per night in London (selected dates, Dec 13 – Jan 2017) Source: Lichfields analysis of data The most controversial type of Airbnb listings are those for entire homes, as they involve properties that critics argue should be available for long-term rent. The analysis shows that, as the number of listings increased over time, the proportion of entire homes being rented out has remained largely stable at around 51% of all listings, once again apparently unfettered by the change in legislation in May 2015 (Figure 2). The proportion of shared rooms available for rent on Airbnb stood at 1% across the period of analysis. Figure 2: Proportion of Airbnb listings by type (selected dates, Dec 13 – Jan 2017) Source: Lichfields analysis of data Are times a-changing? Enabling emerging sectors, such as short-term accommodation, to grow sustainably within the urban fabric is a crucial aspect of city planning. When this requires a regulatory framework, its introduction should be accompanied by the capacity of adequately-resourced local authorities to enforce it. The fact that trends in the analysis have remained unchanged following changes to legislation suggests that enforcement may not have been as timely. From January 2017, Airbnb has announced that it would only allow its hosts in Greater London to rent out their homes for up to 90 days (unless they confirm that they have planning permission to do otherwise and agree that some of their data would be shared with the relevant local authority). This proactive move would partially ease the enforcement process for local authorities, but may not be enough in itself – a host could simply list a property on a different short-term accommodation platform once the 90-night limit on Airbnb has been reached. A sector-wide approach is needed to avoid this possibility. Ultimately, it will be necessary to monitor whether Airbnb’s co-operation and the reduction in price over time will have an impact on listing numbers as well as on the proportion of entire homes being rented out in London before assessing whether this solution could be rolled out to the entire sector.   This article was originally published on the April-June 2017 issue of Planning in London.   [1] Section 25 of the Greater London Council (General Powers) Act 1973 (as amended) deems the change of use from residential premises to temporary sleeping accommodation as a material change of use, therefore requiring planning permission. [2] Deregulation Act 2015: Sections 44 and 45: Short-term use of London accommodation: relaxation of restrictions and power to relax restrictions. [3] Data publicly available at Image credit: Airbnb