AirBnB’s growth in London shows that slashing dated red tape can help the capital flourish
Do you remember when, in May of last year, the Deregulation Act 2015 consigned to history a law contained in the 1973 Greater London (General Powers) Act? The moment may have passed you by, but that should not diminish its significance.
The Deregulation Act simplified or scrapped hundreds of rules on everything from the sale of knitting yarn to the administration of child trust funds. Some of the changes were pretty cosmetic (relaxing the rules on the sale of chocolates containing alcohol) but others were much more significant.
Buried deep within the text is a revision to the 1973 Greater London (General Powers) Act which, for forty years, had made it an offence to rent out a room for fewer than 90 days without having first applied for planning consent. The rule was quite often ignored – particularly in recent years – but nevertheless prosecutions had arisen from it at recently as 2013.
According to ministers at the time, the law (which applied only to London) was amended to “allow Londoners to earn extra money, increase choice for visitors and bring the capital’s short-term rental market up to date with the internet age”. In other words, to make life easier for those who rent out rooms via AirBnB, and the government should be roundly congratulated for its efforts.
There are now an estimated 25,000 AirBnB hosts in the capital, renting out a room for an average of fifty nights a year and generating an average £3,500 of additional income. One fifth of hosts say the extra income has allowed them to start a business that would otherwise not have happened.
This is an immensely positive trend and demonstrates the knock-on benefits of sensible deregulation and liberalisation. Furthermore, according to new data released by the accommodation website today, it's London's outer boroughs that are gaining the most from AirBnB tourists. Indeed, the company says that “Hillingdon and Barnet are trending over Westminster and Kensington.”
Some councils, along with representatives of the hotel sector, warn that the platform allows “shadow landlords” to operate outside the rules, and while this should be looked into, the overall story is extremely positive, with economic benefits being spread right across the capital.