Arthur takes a look at Airbnb short-term lets in London.
Airbnb is the online marketplace that has taken the holiday letting market by storm. It enables anyone and everyone to post listings, find and rent accommodation, the difference being that the properties are not “professionally” run apartments or hotels. Often the rooms cost much less than their hotel equivalents. The company was valued at over £22 million in 2016, and is actually booking more rooms than the world’s largest hotel chains.
Anyone can be a host. London currently has 43,000 listings and this figure is growing month on month. Short-term letting on Airbnb can prove to be extremely profitable if done right. The site is now so popular that Airbnb management services are on the rise too. Directed mainly at those with multiple listings, the biggest London names in this industry are currently Hostmaker and Airsorted. It’s likely that we’ll see many more of these Airbnb management agencies cropping up as Airbnb continues to expand in the capital.
Despite a few horror stories, Airbnb’s spokesperson, Nick Shapiro, ensures us that “more than 80 million people have had safe, positive experiences on Airbnb and negative incidents are extremely rare”. But just how much money can you make through these short-term lettings? The truth is that it totally depends on the amount of effort you’re willing to put in as a host. The website Inside Airbnb puts the average price per night in London at a reasonably high £97. Despite this, occupancy is a relatively low 22.2pc. This means that the average Airbnb income in the capital is estimated to be £583 per month. These figures are calculated by compiling data for shared rooms, private rooms and entire properties in London, so they may differ depending on what type of property is listed.
Even so, this data shows that if you want your Airbnb listing to be successful in such a saturated market, you need to make it stand out and guarantee good reviews. Running a short-term let involves a lot more effort than might be expected, but it certainly has the potential to generate a lot of extra income if you’re willing to become a chamber maid every few days. Even though negative incidents are far and few between, it is important to invest in a good insurance policy covering short-term rentals because Airbnb’s Host Guarantee isn’t very extensive and excludes many essentials.
Airbnb can be controversial…
London housing legislation introduced in February 2015 states that if a property is let out to short-stay guests for more than 90 days in a year, the property owner should seek planning permission from their local council for change of use to short-term lettings. This type of legislation exists in many of the other cities where Airbnb is popular. Unfortunately, it means that many hosts all over the world might be listing their properties illegally on the site. The problem is that these laws are near on impossible to enforce effectively. Whilst Airbnb management services aren’t directly breaking the law themselves, they seem to operating in a somewhat grey area.
Furthermore, there are claims that Airbnb is actually contributing to the housing crisis. In many cities with large numbers of listings, London included, over 50% are entire homes or apartments. This is said to divert rental property that could be rented out to local long-term tenants into the short-term letting market. Whether this actually lowers property vacancy rate and drives up rents is yet to be proven effectively, but as short-term lettings become a more lucrative option, some tenants have been driven out of their homes because landlords have decided to convert the properties into Airbnbs.
For those who do decide that becoming a host sounds like an attractive prospect, Arthur suggests that you carry out enough research and take all necessary precautions so as to ensure you protect your listing from potential damage and the money you generate is totally legal.