House of Commons Library

The growth in short-term lettings (England)

Published Thursday, September 6, 2018

This Commons Library briefing paper examines the growth in short-term lettings through online peer-to-peer platforms. It outlines the positive impacts of the accommodation sharing economy, and growing concerns about the adverse effects of high levels of short-term lettings in some areas. The paper discusses calls from some sectors for greater regulation of short-term lettings in England, and provides a brief overview of the regulatory approaches in other countries.

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There is evidence that the number of short-term lettings in England has increased significantly in recent years, in particular due to the development and growth of ‘sharing economy’ or ’peer-to-peer’ accommodation services. These online platforms essentially provide marketplaces which connect people who want to rent out their properties or spare rooms with people seeking short-term accommodation.

Proponents highlight the benefits associated with the accommodation sharing economy. However, the rapid growth in the number of properties being let through online platforms, and the concentration of short-term lettings in certain neighbourhoods, is a cause for concern in some areas.

Statistics on short-term lettings

There is no single, definitive source of data on short-term lettings in England. This is because of the diverse nature of the sector, which can range from commercial visitor accommodation, such as hotels and Bed and Breakfast accommodation, to individuals letting spare rooms through sharing economy platforms, and the fact that providers can offer accommodation across multiple platforms.

Airbnb is one of a number of online sharing economy platforms providing listings for short-term lettings. It is widely recognised as the market leader, consequently much of the available data on the growth of short-term lettings tends to focus on Airbnb. According to Airbnb, 168,000 active listing were posted between July 2016 and July 2017, 55% of which were for an entire property. London had more active listings (64,000) than other regions, but all regions saw substantial growth in the number of guests over the year to July 2017, with the largest increases in regions with smaller numbers of guests.

Analysis by external organisations, using data taken from Airbnb’s website, provides supporting evidence of the growth in short-term lettings. The Institute for Public Policy Research found that the number of entire homes listed in London on Airbnb in 2015 was 42 times higher than in 2011. Whilst data from the organisation Inside Airbnb shows that the number of listings in London grew by almost four times (292%) between April 2015 and July 2018.

Restrictions on short-term lettings

Outside London, there is no specific limit on the number of days a property can be let out on a short-term basis – it is up to the planning authority to make a judgement on the facts of the case as to whether a letting amounts to a material change of use, for which planning permission must be sought. However, different rules apply to London; home owners who wish to use residential premises for short-term accommodation for more than 90 nights in a calendar year must seek planning permission from their local authority. 

If it is determined that there has been an unlawful change of use – that is, a change of use where planning permission is required but has not been granted - then there are a number of planning enforcement options available to a local authority.

In addition to planning rules, in some cases tenancy, lease and mortgage agreements may prohibit or restrict short-term lettings.

Positive impacts of the accommodation sharing economy

The accommodation sharing economy provides positive benefits for consumers, providers and the economy as a whole. Consumers benefit from a choice of different types of accommodation in a range of locations, often at a cheaper rate than traditional accommodation options such as hotels. Property owners can benefit from earning additional income from their house, flat or spare room when they are not using them or in periods when demand for accommodation is high. A typical Airbnb host in the UK earned £3,000 in the year to July 2017.

The All Party Parliamentary Group (APPG) for Tourism, Leisure and the Hospitality Industry has recognised that the sharing economy “provides enormous opportunities for tourism growth in the UK”. According to Airbnb, 5.9 million inbound guests travelled to the UK on the platform in the year to July 2017. Furthermore, 32% of guests said they would not have come to the UK, or stayed as long, if they had not used Airbnb. This suggests that the tourist industry overall is positively impacted by Airbnb. It is also argued that the provision of peer-to-peer accommodation outside of traditional tourist areas spreads the benefits of additional tourist spending more widely. According to Airbnb, the average guest in the UK spends £147 a day, with 43% of that figure spent in the neighbourhood of the host’s home.

Concerns around the growth in short-term lettings

The exponential growth in the sharing economy has transformed the short-term rental market. However, a range of organisations and interested parties, including local authorities, conventional tourist accommodation providers, residents in tourism hotspots and law makers, have raised concerns about the negative impacts of this rapid growth.

Key concerns include: commercial operators using residential properties as letting businesses in breach of planning rules; the challenges local authorities face in taking planning enforcement action; impacts on local housing markets; negative impacts on neighbours and local communities, for example from noise disturbance and anti-social behaviour; taxation compliance; compliance with health and safety regulations; and the implications for traditional short-term accommodation businesses such as hotels and Bed and Breakfast accommodation.

Calls for greater regulation of short-term lettings

In light of the detrimental impacts associated with high levels and concentrations of short-term lettings, there have been calls from a range of organisations and commentators for greater regulation of the sector.

In December 2017, Karen Buck introduced a Private Members' Bill (under the Ten Minute Rule) Short and Holiday-let Accommodation (Notification of Local Authorities) Bill 2017-19 to require householders to notify local authorities of an intention to register accommodation for short-term or holiday lettings. The Bill aims to facilitate effective enforcement action, by letting local authorities know where such lettings are taking place. The Second Reading of the Bill is scheduled for 26 October 2018.

The All Party Parliamentary Group (APPG) for Tourism, Leisure and the Hospitality Industry report (July 2018) on its inquiry into the accommodation sharing economy made a number of recommendations intended to encourage sustainable tourism, in particular: the implementation of a low-cost statutory registration scheme for all tourism accommodation providers; and powers for local authorities to set rules regarding the use of residential properties for tourism accommodation in their local areas.

A report by Labour London Assembly Member Tom Copley (January 2018) proposed a range of regulatory measures to address the issue in London, including:

  • legislation to require home-sharing platforms to provide the details of property owners suspected of breaking the 90-night limit on short-term lettings in London;
  • powers for the Mayor of London to determine applications from individual London boroughs to ban the renting out of whole properties for short-term lettings; and
  • legislation to require short-term accommodation providers to register with their local authority.

The Government has made it clear that it has no plans to ban the use of residential properties for short-term letting. It considers that further legislation would be overly bureaucratic, and could act as a barrier to households letting out their properties on a short-term basis. Instead the Government prefers a non-regulatory approach by encouraging the Short Term Accommodation Association to improve standards and promote best practice in the industry.

Regulation of short-term lettings in other countries

Northern Ireland is currently the only part of the UK that regulates short-term accommodation providers. The Scottish Government has committed to explore whether local authorities have sufficient powers to address the challenges around short-term lettings, and consider any proposals that local authorities may have to pilot solutions.

Some other countries and European cities, for example Barcelona, Paris, Amsterdam and Berlin, have introduced, or are in the process of introducing, measures to regulate short-term lettings. Regulatory approaches vary and include:

  • requiring accommodation providers to register or obtain a permit or licence before letting their property;
  • restricting the number of days per year that accommodation can be let; and
  • prohibiting the listing of more than one property per individual.

 

Commons Briefing papers CBP-8395

Authors: Hannah Cromarty; Gabrielle Garton Grimwood; Georgina Hutton; Edward Potton; Chris Rhodes; Mark Sandford; Antony Seely

Topics: Housing, Internet and cybercrime, Tourism

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