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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 tomslee.net 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 tomslee.net 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 tomslee.net Image credit: Airbnb  

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The social impact of the undersupply of housing
The appeal of owning a house remains strong. According to research more than three quarters of under-25s still aspire to own their own home. Yet there exists a massive shortage of houses for us young people to buy.  A shortage of houses means sky high house prices, and a generation of people who feel locked out of the market.The economic benefits of housebuilding are clear - for instance, NLP research demonstrated that the UK housebuilding industry employs over 600,000 people and generates at least £1.4bn in tax revenue. Yet less is made of the more subtle, harder-to-capture social benefits of owning your own home – something which seems increasingly out of reach for my generation.It almost seems too simple to explain the root cause of the housing crisis as simply a case of supply and demand – but in truth it really is. A mixture of increased demand has been combined with a lack of supply to mean that housebuilding has simply not kept pace with demographic and social trends. These forces have combined to drive house prices sky high (over just the ten years between 2001 and 2011 the average price of a home increased from 7.4 times the average salary to 11.1 times).  As a consequence, more and more young people have to enter into the private rental market, and for most owning their own house is an all too distant possibility. Research by the think tank IPPR shows that half of all those renting privately think it will be at least 10 years before they can even think of buying their own home.Some might ask why my generation should even want to buy their own house? Germany is often cited as an example of a well-functioning economy with low rates of home-ownership. Two main reasons exist - first is the economic one. By paying rent to a landlord instead of mortgage repayments, one is essentially losing out on owning a valuable asset. Yet the aspiration to own one’s own house is more than about money. Young people, just as their parents’ generation did, want somewhere that feels like home - a place that we can put our own stamp on, to feel safe and secure in, or a place to start a family. It should come as no surprise that home ownership has been associated with increased life satisfaction, whereas not owning a home has been found to make young people delay achieving major life ambitions – polling shows one in five of those who have never had children said they’re delayed starting a family because they didn’t own their own home.Homeowners are more likely to become more involved in neighborhood groups as a way to establish ties with others and integrate in a new community. Renters who move, however, are less likely to turn to civic participation as a way to build new social network ties. A locked-out generation of young people means an unsettled generation, and an unsettled generation will lead to unsettled communities. IPPR analysis finds that owning a home increases someone's sense of belonging to a neighbourhood as much as simply living there without owning for fourteen years. For example, when controlling for all other variables, an individual who has lived in the same home for 20 years yet does not own it is likely to feel only the same sense of neighbourhood belonging as someone who owns their home but has lived in it for just 6 years.Whilst renting may make sense for those in their early 20s, the UK rental sector is not as secure for those who want a long-term home (in Germany, leases are generally indefinite, and landlords can only evict for specified reasons, whereas in the UK, landlords are generally able to evict tenants with two months’ notice).  Many students, having graduated, are priced out of renting independently (especially in London) so have been forced to live with their parents in order to save even to be able to afford to rent – but this has been shown to arrest development and affect relationships (such as the ability to find a partner)One way the Government is trying to increase the number of young people entering the housing market is through the provision of ‘starter homes’ - sold at 80% of the full market value to first time buyers for the most part under the age of 40 (and as currently proposed, over 23).  Whilst the technical details are yet to be fixed, developers will be able to provide starter homes as part of meeting their overall affordable housing requirement - which some critics have suggested would lead to the continued decline in the overall number of affordable housing units being built.What makes this so frustrating is that the simplest solution to fix the housing crisis – building many more houses in as many tenures as possible – is severely restricted by the political hot potato of protecting the Green Belt. The Green Belt - whilst conjuring up images of pleasant English rolling hills and scenic landscapes - includes land which is covered by airports, quarries, railway embankments and sewage works (oh and golf courses – more land in Surrey is covered by golf courses than housing). It has been claimed that the release of just 3.7% of London’s Green Belt would provide land to build up to a million homes.This crisis will not be solved until politicians not only accept the scale of the crisis but the obvious solution lying under their noses.It should now be obvious that Britain needs to build many more homes. Housebuiliding provide a massive boost to Treasury coffers - housebuilding creates jobs and tax revenues not just directly through construction, but also indirectly through fitting them out them with kitchens, curtains and carpets. Yet even more importantly it is necessary for my generation, which has exactly the same aspirations that my parents had. Building enough houses which people can call home - a place they feel safe in and feel happy to raise a family in - will in turn be good for society as a whole.  

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