In the span of just eight years, Airbnb has risen from San Francisco start-up to a global property phenomenon – now valued at $25 billion.
The premise is simple: hosts let out spare rooms or full properties that will be vacant for a short period of time, and those in search of short-term holiday accommodation can rent it out. For each successful booking, Airbnb charge a host service fee of 3 per cent, on which VAT is also payable. This ease of use coupled with the high rates of revenue generated has seen Airbnb spread to have users in more than 191 countries throughout 34,000 cities. London is of course one of the most popular tourist destinations in the world, and given the high cost of hotels here (averaging £136 a night) it’s perhaps no wonder that holidaymakers are in search of a more affordable option. For those living in London with room to spare then, there’s an opportunity to make a substantial amount of revenue straight away.
Not to mention, London is perfect to give Airbnb a try as a traveler – there are so many properties to choose from in London spread across all the best neighborhoods. This way of finding the ideal accommodations not only gives you the chance to have additional space for often a more affordable price, but it was also give you a feel of truly living in your new home away from home.
How Airbnb can help with London’s high property prices
According to Pastor Real Estate, residential property prices in London are set to rise by 27 per cent over the next two years.
For those wanting to buy and live in the city, generating any additional income to help with if not cover the mortgage payments is highly advantageous, especially given that the current average property price is £643,117. As such, an increasing number of people are turning to Airbnb, with more than 13,000 Airbnb properties listed in London. More than 6,600 users are letting out an entire property, such as a house or flat, with thousands more letting out spaces like a spare room. Reports show that the “typical” UK Airbnb host will let their property for 33 days, and earn £2,822 in doing so. However, for hosts in London, the prices could be higher still. Using the Airbnb Host Tool, users can input their location to find out how much they could expect to charge on average; at the time of writing, the average price for a full property through the site was £532 per week. Using that average figure and assuming a property was let at full occupancy all year round, a host could expect to generate upwards of £27,000 in revenue before taxes and fees.
Is Airbnb legal in London? (Yes!)
One of the key things that has rendered a concept such as Airbnb impossible before this point has been the legalities surrounded with letting out a property over the short term.
For more than 40 years in London, it was punishable to let out a home or flat for less than 90 days without having acquired special planning permission to do so. The penalty was a stiff £20,000 fine, but as of March 2015, this is no longer the case. This is when Airbnb was legalized in London, and the popularity of the platform has been rising ever since. It is thought that the positive economic impact of short-term lets contributed to the decision, as research shows that 41 per cent of visitor spending takes place in the host neighborhood. This can amount to a considerable sum when you think of how many popular locations in London are attracting those who are keen to rent for the short-term.
Although it is now legal, users should still be mindful of bylaws or changes to rules, and should be especially cautious if they expand and let a property outside of London. Generally speaking however, given the global success of Airbnb, the demand for short-term accommodation in London alongside the rising house prices, letting out a space through this property portal could pay off extremely well for savvy London dwellers.
Would you ever rent out your home as an Airbnb? Have you stayed in an Airbnb yourself?