New York City’s crackdown on Airbnb, which was enforced earlier this month, has been described as a “de facto ban” by the company. The tough restrictions, designed to bring back thousands of rental properties to the housing market for city residents to live in, will be closely scrutinised by politicians in cities worldwide. Many argue that Airbnb’s exponential growth – it is now valued at close to $100bn – is a key factor behind the soaring inflation in property prices and rents that is fuelling a global housing crisis. They will be hoping that interventions like New York’s will show them a way to take back cities across mainland Europe and the UK for people who actually live in them.
With more than 6m properties in 100,000 cities rented out through Airbnb, many politicians are beginning to recognise that the huge number of homes lost to short-term lets booked on digital platforms is inextricably linked to the housing crisis. It is further pushing up already unaffordable rents for people living in cities and in tourist areas with large numbers of second homes that are rented out.
The popular perception of Airbnb is of individual hosts looking to rent out a room, or a property while they are away, offering cheap, fun and flexible accommodation in their homes in place of traditional hotels and B&Bs. Research by the US-based Economic Policy Institute (EPI), however, shows that image is wildly out of date, with bookings increasingly concentrated on a small number of professional landlords who act like “miniature hotel companies”. The data and advocacy site Inside Airbnb says: “Airbnb claims to be part of the ‘sharing economy’ and disrupting the hotel industry. However, data shows that the majority of Airbnb listings in most cities are entire homes, many of which are rented all year round – disrupting housing and communities.” It provides a breakdown of the top hosts with multiple listings in cities around the world, including property management companies such as Blueground, which hosts hundreds of homes in New York, Paris, London and Berlin.
Studies show that short-term lets through Airbnb do have a direct impact on rents, with a report from EPI finding that the introduction and expansion of Airbnb in New York may have raised average rents by nearly $400 annually for city residents. Anecdotal evidence about the negative impact on communities across the US and Europe is widespread, with residents complaining that their apartment buildings feel like hotels, with frequent comings and goings, noise, rubbish and poor security. A resident of south London’s new high-end apartment development Elephant Park told me: “There is a lot of Airbnb in our building, it’s hard to say how much but we see a lot of strangers coming in and out, although it’s against the terms of our leases as we’re not allowed to do short-term lets. There are security concerns and they make a lot of noise.”
Reflecting the increasingly professionalised nature of Airbnb, the majority of properties listed on the site are not spare rooms. In London, for example, of the 81,000 Airbnb properties available, more than 50,000 are entire properties, meaning at least one in every 74 homes in the UK capital is available for short-term let. New York’s law requires hosts to register with the mayor’s office and prove they will live in the home they are renting out for the duration of the stay. More than two guests at a time are not allowed – effectively banning families – and hosts in violation of the legislation can be fined up to $5,000.
The new law, known as Local Law 18, follows a court battle with Airbnb, which sued the city twice, echoing legal battles with other cities attempting to rein the company in. In Edinburgh, the second most-visited city by international tourists in the UK, the council was forced to amend its proposed licensing scheme. After a judicial review brought by holiday-let owners in June found that the presumption against renting out entire flats on a short-term basis (unless owners could show why they should be exempt) was unlawful, the licensing scheme was watered down, with rules that would have made it harder to rent out homes as holiday lets scrapped. In Berlin, renting out entire homes was made illegal in 2016, but the ruling was overturned in 2018, although significant restrictions do remain.
Across Europe a patchwork of different national laws and varying restrictions between cities reflect attempts to introduce different degrees of regulation. Cities like Barcelona and Madrid impose more severe restrictions, while London and Prague are among the least regulated. Many cities now place limits on the number of nights a year that hosts can rent out a property, with a 90-day limit in London and 120 days in Paris. But unless compliance is strictly monitored, landlords routinely break the rules. Property management companies such as Houst, which says it finds London’s 90-day limit “too restrictive”, list homes on multiple platforms, including Expedia and Booking.com, as well as Airbnb. In Barcelona, Ada Colau, a housing activist turned mayor of the city from 2015 to 2023, shut thousands of illegal holiday apartments and refused to renew licences in areas with the highest density of Airbnbs, while Portugal has stopped issuing new licences for Airbnbs and similar short-term lets, except in rural areas.
In England, the affordability crisis in tourist areas with a proliferation of second homes, combined with soaring rents in large parts of the country, is likely to lead to some change, with the government consulting on a possible registration scheme for short-term lets. In his response to the consultation, the London mayor, Sadiq Khan, called for the introduction of a licensing system, claiming that many property owners are renting out homes illegally and breaking the rules limiting Airbnb hosts to 90 days. For example, Camden council recorded more than 4,400 short-term lets last year, of which almost a quarter exceeded the 90-day limit.
But even if Airbnb’s dominance is successfully reined in, is it too little, too late? It is just one factor behind the soaring inflationary environment in cities around the world, forcing millions to pay unaffordable rents and excluding all but those on high incomes from getting on to the housing ladder. The main causes of the global housing crisis can be found not in Airbnb listings, but in the financialisation of housing, which means it is seen primarily as a financial asset rather than a social good. Combined with the consequences of monetary policy, from the inflationary impact of almost 15 years of quantitative easing to low interest rates facilitating a credit boom, followed by rising rates pushing rents up, controlling the growth of Airbnb can only be part of a much broader debate on how to solve the housing crisis.