Is Airbnb making the London housing crisis worse?

One by one, cities across the world have cast a regulatory net over holiday letting services such as Airbnb amid concerns they are increasingly being used by professional landlords chasing more lucrative returns, consequently worsening urban housing crises by reducing the rental supply.

London, a city grappling with an acute housing shortage, might be next. A narrative is taking dominance that Airbnb, an online market platform – the largest of its kind – that allows users to let spare rooms and whole homes on a short-term basis, is making things worse.

Executives from Airbnb and similar services have been invited to a meeting with politicians and officials at City Hall in London on 25 January, 2017, to thrash out the issue.

In Berlin, you can no longer let out more than half of a home for a short period of time without a permit. In Madrid, there is a mandatory minimum five-night stay in private homes let out for holidaymakers.

The prospect of similar regulation hangs over the London meeting. But is Airbnb, a multibillion-dollar American tech company operating in 34,000 cities, really making London's housing crisis worse? "I think it's being scapegoated," said Sam Dumitriu, head of projects at the Adam Smith Institute, a free market thinktank.

"It just seems ridiculous to say that it's contributing to the housing crisis in any meaningful way," he added, arguing that it is the strict and expensive planning system which is holding back much-needed supply in London by hindering construction work and driving up the price of land.

Analysis of October 2016 listings data from Inside Airbnb, an independent researcher which scrapes information from the official Airbnb website, suggests that just a fraction of the city's housing stock is impacted by the firm.

There are 14,608 entire homes with availability of 90 days or more during the year — a decent surrogate for those which may be owned by landlords — out of a total of 49,348 listings in London, some of which are duplicates (it is possible, for example, to list two bedrooms as available in a two-bedroom flat, as well as the entire property). Entire homes may also be listed as available for 90 days or more by a homeowner living elsewhere for an extended period of time, such as to travel or for work.

There are 3,341,000 dwellings in London, according to the English Housing Survey, meaning all of the city's listings on Airbnb is equivalent to just 1.5% of the total dwelling stock. There are 2,556,000 private sector dwellings, including rented and owner-occupied. Airbnb homes with an availability of 90 days or more account for only 0.6% of these.

And taking private rented dwellings alone, there are 950,000, so Airbnb homes with 90 days or more availability in a year account for 1.5%. Even taking the entirety of London listings on Airbnb, including rooms and whole homes, they account for just 2% of all private stock.

It is not obvious that there is a significant worsening of the housing crisis because of Airbnb, particularly when you consider the caveats within the data, such as duplicated listings. There are also agents who manage Airbnb listings on behalf of multiple property owners, giving the misleading impression that there is a single owner of them all, like a landlord.

So why is City Hall even bothered? Airbnb is, of course, not the only player in the market, though it is the biggest. Other services likely take up more of the housing stock. And there is motivation to get in ahead of it becoming a genuine problem because the potential is there.

"Partly it's pre-emptive, because there will be professional landlords looking at the bigger rents they can get for short-term lettings and potentially switching properties over, so we'd end up losing properties from long-term rentals, which I think would cause major problems," said Tom Copley, a Labour member of the London Assembly and the party's housing spokesperson for the city.

Copley, who brokered the January meeting, said he is "cautiously optimistic" that a resolution could be found without the need for new formal regulations, and that he has had positive meetings with the various companies in the past.

Planning law already states that homes intended to be available for holiday lets for more than 90 days in a year must secure permission from the council by converting the property's use class. "I want something very simple from Airbnb and the other short-term lettings sites," Copley said.

"What I want them to do is actively enforce the 90-day rule. At the moment, you can rent out a property on there, and it won't stop you if you go over 90 days. I think they should change that, so unless someone provides evidence of planning permission from the council to convert the property into a hotel-use class, it will automatically stop them after 90 days.

"And I think if Airbnb cooperated with that, it would go a long way to easing concerns, and actually it would back up what Airbnb say they are, which is for people to rent out their home, or a room in their home, while on holiday to make a bit of extra money. It's not meant to be for professional landlords."

A spokesman for Airbnb suggested the firm is willing to take on the professional landlords using its website. "London has clear home-sharing rules, and we are always investigating new ways to work with policymakers to make communities stronger and help tackle bad actors who have no place on Airbnb," he said. The spokesman also directed Airbnb users to the "responsible hosting in the United Kingdom" page on the website, which outlines some of the planning rules around short-term lets and urges hosts to "check the position carefully with your local authority".

In a previous interview with IBTimes UK, Parker Stanberry, CEO of Oasis, which operates a similar service to Airbnb, said he is not opposed to regulation of his industry in London. "I think there is a responsible, moderate way to regulate the industry," Stanberry said.

"And all industries, ultimately, should have some regulation. I just think it's a bit of a pendulum swing right now. At first is was like oh this is so cool, great, it's new. Now it's 'this is terrible'. The answer is always somewhere in the middle. So there's cities like Madrid, they've decided on a five-day minimum stay. That's reasonable to me. I wish I could service people for three or four night stays. But I get it."

He said licence agreements that allow for taxation are also good compromises between city authorities and service providers. But he says there shouldn't be aggressive regulation of the use of homes for holiday and short-term lets. "It's not free market," Stanberry said. "It's a little bit Big Brother to tell people what to do with their flats."

For Dumitriu, some of Airbnb's critics are using the housing crisis as a proxy for a different political war. He said the argument that Airbnb holiday lets means fewer potential homes isn't often taken further and applied to other sectors – for example, that London councils are not allowing enough office space to be converted into housing.

"We don't see the same sort of complaint, which makes me suggest that people who are waging this anti-Airbnb campaign aren't doing it out of real concern for the housing crisis, but a general sort of mistrust of new business models, mistrust of the sharing economy, and support for greater regulation," Dumitriu said.