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Short-term ‘Airbnb’ lets: Ongoing issues for landlords and lenders

House shaped keyring in door Print publication

01/07/2019

Short-term lets: The story so far

Walker Morris has reported previously on legal and practical issues arising from the ‘Airbnb’-style short-term holiday lets model.  We have explained that such lets are often likely to involve breaches of residential lease covenants, mortgage conditions, insurance provisions and planning laws; and that they can give rise to noise and other nuisance for permanent residential occupiers in the locality, as well as repair/maintenance and security issues.  Back in June 2018 we noted that we were seeing an increase in complaints and cases of this nature and we offered some practical advice for landlords and lenders.  One year on it seems that the problems arising from the short-term let/sharing economy are proliferating and there is a wider recognition from those who are being affected.

Update: June 2019

Sky News recently reported [1] that, according to the last figures released by Airbnb, some 2 million guests stayed at 64,000 London listings between 1 July 2016 and 1 July 2017 – a staggering 49% increase on the previous year.  That does not include short-term lettings via other platforms such as Booking.com and TripAdvisor, so in reality the market is even greater.

Westminster Council has estimated that as many as 1 in 15 housing units in its borough are being let as short-term rentals. That equates to around 8,000 properties in that borough alone, which are consequently not available for long-term residents needing to work and live in the area.  Across London as a whole, there is roughly one Airbnb listing (again, not taking into account other providers) per 112 residents; and in Edinburgh, a much smaller city, there is an Airbnb (alone) listing for every 42 residents.

Increasingly, local authorities are noting the very significant strain that these volumes of short-term lets are having on the already-pressured housing market.

In addition to the pressure on numbers, the more lucrative rents that can be charged to short-term holiday or business tenants are resulting in rising rents, which many locals then struggle to afford.

In 2015 the UK Government sought to address this issue by the implementation of a 90-day per year per property limit for this type of rental. However it is becoming clear that this law is proving ineffective – both because it is incredibly difficult to enforce [2] and because it is possible for unscrupulous short-let property management firms and landlords [3] to get around the rules.

The issue is an international one. Many major cities across the world have introduced measures to try to address the ‘Airbnb’-style short-letting boom. As well as housing stock problems, the phenomenon is impacting on traditional hospitality trade and on social cohesion and the sense of community in many localities.

Looking ahead

Whilst the Mayor of London and representatives from cities and councils across the UK have asked the Government to introduce tighter measures to more effectively control the short-term letting market, we understand that the Government has no current plans to pursue any such proposals.

In the EU, the European Court of Justice recently reached a non-binding decision as to the status of Airbnb, finding that the company should be counted as a digital information provider, which therefore has the benefit of the freedom to provide services across the bloc, as laid down by the E-commerce Directive.  The likely impact is that businesses like Airbnb will be able to operate, across Europe, largely without having to comply with local planning and housing rules applicable to landlords and property businesses, which are intended to regulate short-term lets.  This has prompted 10 cities from across Europe to demand in a joint letter that the issue be addressed by incoming European Commissioners.

Certainly in the immediate term, however, short-term rentals – and the various legal, practical and social problems to which they give rise – are here to stay. Landlords and lenders should be alive to the fact that there are breaches of both long residential leases and assured shorthold tenancies, along with mortgage terms and conditions.  Unless and until new national/international action is taken to address the issue, those entities affected  should be ready rely on existing legal redress options, so as to help manage and protect their portfolios in the current climate.

Please do not hesitate to speak to any member of our specialist Housing Management & Litigation team for further information or expert advice.

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[1] Rowland Manthorpe, Sky News 30 May 2019
[2] because it is nigh-on impossible for resource-poor local authorities to undertake the levels of surveillance necessary to obtain the evidence needed in support of enforcement action
[3] Guy Lynn, BBC News 25 February 2019: https://www.bbc.co.uk/news/uk-england-london-47305575

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