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Insight: what does the crackdown on Airbnb involve?

On Monday, we looked at why landlords and investors were being warned off holidays lettings amid an Airbnb crackdown in Scotland and Bristol.

But what does that crackdown actually involve? Here, Property Investor Today takes a closer look.

Scotland

Last week the Scottish Government revealed that councils would be given new powers to crack down on Airbnb-style lets, which have experienced rapid growth in many parts of the country as the sharing economy has boomed.

While the growth of Airbnb and other short-term holiday let platforms have been welcomed by consumers as a flexible and more affordable alternative to traditional holiday accommodation, there have been issues with anti-social behaviour, a loss of much-needed rental supply and the unregulated nature of this market, which has led to a backlash across the globe.

With this in mind, councils in Scotland will be able to introduce licensing schemes for short-term lets from 2021, enabling local authorities to establish designated areas where planning permission is required before properties can be rented out. Additionally, the scheme will set safety requirements for all short-term lets and councils will be able to include further conditions to help tackle littering or overcrowding of properties.

The Scottish Government has also pledged to review how short-term lets should be taxed in the future to make sure they support local services and provide an appropriate contribution to local communities.  

The licensing scheme will work alongside the proposals to give councils the powers to introduce a so-called tourist tax in the future.

The action taken by the Scottish Government follows concerns from residents in some of the country’s most popular tourist destinations, in particular Edinburgh – which plays host to the Fringe every summer and Burns Night in January, as well as being a popular destination for New Year’s revelry thanks to Hogmanay.

They say that the rapid growth of short-lets is unsustainable, pushing up rents for other properties and leading to a rise in noise, anti-social behaviour and litter.

Insight: what does the crackdown on Airbnb involve?

How big is the short-lets market in Scotland?

Research commissioned last year by Holyrood revealed that there had been a three-fold rise in Scottish properties rented out for short-term use since 2016, with some 32,000 recorded in May 2019.

In Edinburgh alone over 2,700 listings were recorded, with the Scottish capital’s famous Old Town area shown to have 812 active Airbnb listings per square kilometre.

On the island of Skye - a popular tourist destination famed for its picturesque fishing villages and medieval castles - holiday lets accounted for almost 20% of all housing stock.

With the calls for a clampdown getting ever louder, the Scottish Government acted last year by running a consultation on the issue of short-term lets, where a majority of the over 1,000 respondents supported the idea of reforms, albeit remaining split over what should actually be enforced.

Kevin Stewart, the minister for local government, housing and planning, last week announced the plans to the Scottish Parliament, telling MSPs that while short-term lets can offer people a flexible travel option and have ‘contributed positively to Scotland's tourism industry and local economies across the country’, they have been known to cause issues in certain areas, especially tourist hotspots.

“High numbers of short-term lets are causing problems and often make it harder for people to find homes to live in,” he said. “That is why we are empowering local authorities to implement a system that works for their area."

While the announcement was warmly received by Adam McVey, leader of the City of Edinburgh Council, who insisted it would give the local authority the control it needs over short-term lets, and Scottish Greens MSP Andy Wightman, who has been campaigning for the rules around holiday lets to be altered, the Scottish Conservatives took a more sceptical stance. They agreed that regulation was needed to curb short-term lets, but said the government had offered ‘next to no details on how this might work’.

Responding to the Scottish announcement, Airbnb insisted it is good for cities despite opposition from some local residents. While it said it had yet to see the details of the Scottish government's announcement, it would be seeking clarity on areas including the financial cost of licensing and how taxation of short-term lets would operate alongside existing proposals for tourism taxation.

“We have long supported calls for fair regulations and a tourism tax in Scotland,” an Airbnb spokesman said. “Now we want to work with the Scottish government and local authorities on clear and simple guidance for hosts.”

He added: “Together we can help Scottish families share their homes and follow the rules, and avoid a system that excludes working families through fees, barriers and bureaucracy. Our platform is an economic lifeline for countless local families and travel on Airbnb boosts the Scottish economy by almost £2 million a day."

Bristol

Bristol is also taking the fight to the rapidly growing sharing economy, with Bristol City Council last week backing a crackdown on Airbnb, Deliveroo and Uber.

Cross-party councillors joined forces to prevent these new companies – all less than 12 years old - from having a ‘severe’ impact on Bristol.

A motion brought forward by Labour cabinet member Nicola Beech - which sought greater local powers to regulate the ‘gig economy’, especially accommodation rentals by non-owner occupiers, and also argued for the ability to levy business rates from short-term lets - was passed with Green and Lib Dem support.

Cllr Beech, who has responsibility for spatial planning and city design, told a recent full council meeting: “We are proud of this youthful city, a playground for new ideas, and it is in this environment that new disruptive industries like Airbnb thrive.”

However, she argued that ‘local authority policy-making powers simply do not enable us to have sufficient regulation’.

“This springboards these new industries into life, as they are free to operate how they choose with so few controls in place, creating a completely uneven playing field,” she added.

With regards to the short-lets market, she said: “There are 2,000 registered properties for Airbnb (in Bristol) and this is rising year-on-year. Meanwhile, we have 12,000 people on our housing waiting list, hundreds in temporary accommodation and a generation of people renting. We are asking for support of full council to lobby for change and level the playing field.”

Cllr Estella Tincknell, also Labour, said Airbnb has an impact on housing, ‘including pricing ordinary families out’ and ‘leaving perfectly good premises empty for long periods’. But she also claimed that it’s directly affecting the hotel and hospitality business.

Insight: what does the crackdown on Airbnb involve?

“Its properties are not subject to planning regulations, they’re not registered as hotels, they’re not inspected for safety or pay business rates or VAT,” she said. “Small guesthouses are especially worried because they cannot afford cutting prices to compete.”

While the Tories abstained from voting for the motion’s ‘veritable smorgasbord of disparate ideas’ and argued that most workers liked zero-hours contracts, Tory councillor John Gouldandris did agree on the need to regulate Airbnb and student lets. “We agree with you on regulation of Airbnb and the student market which have taken off to an incredible extent and are having a serious market distortion, and at that point we must have regulation.”

He added: “We have to look at student accommodation providers like Bristol University and say to them ‘you ought to be paying business rates’. The university has 30,000-plus students here. It has become big business and it’s only appropriate that they pay a fair share towards the running of Bristol.”

Cllr Beech’s motion, passed by the full Bristol city council, said: “Full council resolves: to endorse and support efforts by the administration to lobby for greater powers and resources to regulate the gig economy, particularly accommodation rentals by non-owner occupiers; And to endorse and support efforts by the administration to secure the legislation and powers needed to levy business rates on short-term letters and student accommodation (not on students).”

The battle between the sharing economy and local authorities is set to be one of the biggest battles of the coming decade, as the balance needs to be got right between meeting consumer demand and boosting local economies, and protecting housing supply, local residents and cities from the possible downsides of short-lets.

  • icon

    Why isn’t s24 mentioned as one of the drivers it’s not rocket science scrap it and the supply of standard AST accomodation will come back these goverenments haven’t got a clue

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    I completely agree with NW Landlord. I've moved all my furnished flats to Airbnb style letting. Where I have my properties it is not a holiday hotspot, rather we do corporate lettings with guests staying usually Monday to Friday.

    It is not ideal, it requires a massive amount of work - particularly as cleaning and getting the flats ready happens over the weekend. Costs are much higher than on a normal AST as we need to provide Wifi, Sky, pay council tax and utility bills. Cleaning is also an issue as it is hard to come by good cleaning people particularly at a reasonable price and who are ready to work weekends. And the income is not that great as everyone but his mother is doing it.

    Why do we do it then? Due to taxation. As we cannot deduct the interest from the mortgage from our income on a regular AST but we can do it if it is a short let. Also, when the time comes to sell rather than pay 28% capital gain tax we will be taxed 10% entrepreneurs relief.

    The bottomline is that if government taxed landlords fairly the Airbnb issue will go away - I would be delighted to go back to do normal ASTs. But hey, that assumes politicians are smart and will make the an intelligent decision and if they were smart they wouldn't be politicians in the first place.

  • English Landlord

    Cllr Estella Thick - Tincknell of Labour, absolute rubbish from a Politician! What else would you expect? They know nothing about running a business and she even suggests that house prices are being affected as a direct result of Airbnb style letting. These people who call themselves Politicians are idiots and prepared to ruin any business or person at any cost. No wonder Labour failed miserably in the last UK General Election, a clueless lot! It is like saying we don't want a McDonald's in the High Street because it affects the business of Subway and KFC! Stupid or what?

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