'A hideous business': the risks of Airbnb
PUBLISHED: 18:00 03 August 2017 | UPDATED: 11:17 04 August 2017
Could Airbnb be causing your home to lose value or leave you vulnerable to theft? Your guide to the unintended perils of Airbnb
Have you ever rented on Airbnb? If so, you’ve probably noted the relative ease of the process, the in and out, easy breezy handover of keys from a lock box outside the property; swanky living in the heart of the city but without the impersonality of a stripped bare hotel room, with all the idiosyncrasies of a local home.
However, if you pitched up late at night on a cheap flight, or partied till dawn in your weekend residence, did you spare a moment for the neighbours you might be keeping awake at all hours? Did you think about who was renting out your property, and whether they were doing it legally? Did you consider your own personal safety?
Earlier this week, the Camden Federation of Private Tenants warned that Airbnb and similar short-lettings platforms were damaging the community and forcing pressure on the housing shortage, citing a recent report that revealed Camden was one of the top boroughs for short lets booked via the online rental platform.
There are currently 283 rentals listed on the website in Hampstead accommodating one guest, at an average of £84 per night. There are over 300 in Highgate, where the average price on the site is £66. In Primrose Hill, the average for a one bed is £94 from the 167 currently listed.
The CFPT are not alone in their worries. Marc von Grundherr, lettings director at Benham and Reeves Residential Lettings, is concerned that Airbnb and similar short-let platforms are damaging the market and leaving landlords and tenants vulnerable.
Is Airbnb affecting the price of your home?
The short-lets market has boomed in the last twenty years, with online rental platforms like Airbnb convincing more and more people to let out their homes short-term.
“Ten twenty years ago, people didn’t rent their apartments out short-term. People didn’t see their homes as a cash producing asset. If they went away on holiday for a month, they didn’t think ‘ooh lets whack somebody in there to give me some income’,” says Mr von Grundherr.
He warns that the market is being tested by these practices, and could even have an impact on the value of property. “If you’re in a building with four flats, and three of them are Airbnb, will you really want to live there? I don’t think I would,” says Mr von Grundherr. “I genuinely feel that there will be buildings where it will put off people to purchase, so it actually might adversely affect the value.”
Not only that, but for those already living in the property, Airbnb tenants could hike up the fees they pay to the freeholder. “You can always tell a building where there are short lets done, why? Because the common parts look like they’ve been bashed to hell because of cases going up and down the stairs. And then of course, who pays for that? Well, the other tenants have to pay a share of that to the freeholder to redo it,” he says.
What does the law say?
The Deregulation Act 2015 states that residential properties can be used as temporary accommodation in Greater London without a change in planning permissions as long as the property is not rented out for more than 90 days.
“It’s against the law, it’s against your lease and it’s against council regulations,” says Mr von Grundherr of ‘professional’ Airbnb landlords who continually rent out their properties.
Illegally subletting rooms without landlord consent is relatively easy, and the CFPT have warned that “rent-to-rent fiddles are becoming common as the unscrupulous realise that they can rent for themselves at one price and then sublet to others at a profit.”
What do the agents say?
Benham and Reeves Residential Lettings has a no-subletting policy. “We are very careful in our referencing to make sure that doesn’t happen, and if we find it, we go in to try and stop it,” says Mr von Grundherr.
The situation the letting agents are usually confronted with is one of two options. Either an Airbnb host is using the property effectively as a rent-to-rent business, or the tenant is letting out their flat whilst they are overseas for an extended period of time.
“The first one we have a policy completely against because often it’s banned under the head lease in any event. To be fair, if a tenant is renting from us and then they go back to Australia for a month and they let their flat through Airbnb, we say they shouldn’t do that, but we don’t have as much an issue,” answers Mr von Grundherr.
“What we don’t want to allow is a tenant, and there are quite a lot of them around, where they rent a property from us and then they permanently sublet it.”
There are a number of reasons for that, and it starts with the onus on the neighbouring tenants.
What do tenants say?
For those living in apartment blocks where flats are rented out online, new tenants can be intrusive. Mr von Grundherr asks: “What about other people in the building with random guests coming and going? From a security point of view, you don’t know who’s there from one minute to the next minute.”
One local renter who wished to remain anonymoussays: “Airbnb is a great way to make some money or cover your rent whilst you’re away, but even when you use it properly i.e. not renting a house out as a holiday home but letting people stay in a room, it has major drawbacks.
“I’ve had a situation where a housemate has rented their room out and left a key under the mat and not told me, and I’ve had a shock when strange men have let themselves in to my house at night when I’m home alone. It’s partly down to house share politics but as a system I think it’s quite risky letting people you don’t know have your keys.”
Law trainee Catherine McLaughlin rented a property in Camden Town with three bedrooms, one of which was being sub-letted as an Airbnb short-let. She said: My bedroom was next door to the guest’s and we shared the main bathroom. It was quite strange living in such proximity to a person when I knew nothing about their identity. Had there not been a lock on my door I would have felt unsettled at night, and did worry about leaving valuables in the room during the day.”
Ms McLaughlin believes that landlords should take their other tenants’ views into consideration when letting out spare rooms. “When considering using Airbnb, landlords should remember that people privately letting rooms view them as their home and a safe, private space. Letting out spare rooms on Airbnb should only be done with the tenant’s consent,” she argues.
The risks for landlords
In addition to being an agent, Mr von Grundherr is also a landlord. “In my own properties I’ve been tempted many, many times to do short lets, but the wear and tear on the flat, the lack of security; I’d much rather take a long term tenant,” he says.
Landlords have been squeezed by new regulations in recent years, such as the 3 per cent levy on second homes added to stamp duty in April of last year, adversely affecting buy-to-let landlords. “Landlords are squeezed,and you know what if you can let through Airbnb, and take more rent, and maybe do a deal with the tenants that they give you cash as opposed to doing it properly, then landlords don’t declare it at all.”
“I think a lot of landlords do get drawn into a situation unwittingly where they let to a tenant, and he or she short lets it. And that business is a hideous business. Ive seen it many times,” Mr von Grundherr adds.
He warns that letters who treat short-let properties as hotels, or party venues, are oblivious to the damage they could be doing to the property they are renting. “They tend to treat apartments like a hotel. What if they splash water all over the bathroom? They might not realise that actually you have to be careful because water seeps down the side into the flat underneath, they don’t have that kind of care and attention that a normal tenant would have.”
“It’s really bad from a security perspective,” cautions Mr von Grundherr. “You have no idea who’s living in your flat from week to week. And most landlords, if they sublet the property themselves through Airbnb, they honestly don’t change the keys every time they rent it, do they? No. Do they change the code for the alarm? No.”
“Once you’ve given your keys to somebody, they can get them cut and they’ve got your alarm code. You’re effectively leaving yourself up for being robbed.” Once insurance providers know that, you’ll leave yourself open to being refused cover in future, warns the agent.
With property such an expensive asset, it’s imperative that landlords protect themselves, Mr von Grundherr urges. “If you are a landlord, and you want to Airbnb, you need to make sure you think of all these things to protect yourself because if you don’t you will come an absolute cropper.”
What could be done?
Mr von Grundherr is reticent when it comes to suggesting policy ideas because of the unintentional impacts on the wider market. “I’m loathe to suggest further regulation because actually they run the length of your arm as it is and I believe the market should self regulate,” he says, adding that councils have few teeth which which to enforce those regulations already in place.
However, he suggests that more responsibility should be placed on the freeholder to enforce their leases more stringently when it comes to implications for bad practice. “At the moment the freeholder just doesn’t really care, but actually if there was more onus on the freeholder, I believe that they would be able to police it a bit more.”
Although Mr von Grundherr argues that Airbnb itself should take more responsibility, the burden ultimately lies on those renting out their properties on the site. “If people realised the risks that they run, then I think they might think twice.”