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How London could become the next city to crack down on sharing economy companies like Airbnb

Written by Eric Johansson on Friday, 16 September 2016. Posted in Regulation, Legal

Labour MP Iain Wright has asked London mayor Sadiq Khan to look into whether sharing economy companies are pushing up property prices in the capital

How London could become the next city to crack down on sharing economy companies like Airbnb

Companies like Airbnb have revolutionised the home-letting industry and turned it into a multi-billion dollar business. However, sharing economy startups may be in for some hard times. Iain Wright, a Labour MP chairing the business, innovation, and skills select committee, has written a letter to London mayor Sadiq Khan highlighting how professional landlords who rent out their properties through temporary letting companies like Airbnb are driving property prices up.

In the letter, he said that “while companies such as Airbnb can enable homeowners to unlock economic value by temporarily letting spare rooms, extensive use of Airbnb by professional landlords, contrary to the current law, can help to drive up property prices, compounding issues of affordability in the capital."

Wright also wrote: “You will be aware that a number of investigations into temporary property letting companies such as Airbnb have found that many landlords appear to be operating illegally by letting properties out for more than 90 days per year. Several of these report that the current law is unenforceable.”

Wright ended the letter by asking Khan for his personal assessment of these kinds of companies and whether or not the current law should be amended. The legislation was deregulated by the government last year. Under the new rules, home owners can rent out their house without asking for permission as long as they rent out for fewer than 90 days.

Responding to the letter, an Airbnb spokesperson said that it's not true that all hosts who share their space for more than 90 days are breaking the rules. “London has clear and simple home sharing rules; we regularly remind hosts to follow them and we are working closely with London boroughs to promote responsible home sharing and help tackle bad actors,” the spokesperson said. "The vast majority of Airbnb hosts are regular Londoners who share their homes to boost their income and afford living costs in one of the world's most expensive cities – they are not typically businesses or professionals.”

The British capital is not the only city looking into cracking down on companies such as Airbnb. In the US, Los Angeles, New York and San Francisco have also been exploring ways to regulate temporary lettings companies. Closer to home, Barcelona, Paris and Berlin have lead similar charges.

The growing role of the sharing economy, while infinitely convenient for consumers, is also prompting industry leaders in the UK to develop new rules to make it fair for everyone. In July, Sharing Economy UK, the trade body for the sharing economy, unveiled a new kitemark to ensure good practise. Its hope is that the UK becomes the industry's new home outside San Francisco.

It remains to be seen how Wright’s call for the 90-day rule to be more strongly enforced will affect that goal.

About the Author

Eric Johansson

As feature writer and resident Viking, Eric ensures EB is filled with engaging and eclectic entrepreneurial stories. While one of our freshest faces, he has sharpened his editorial teeth by writing about business, entertainment and fitness.

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