Greed, fear and the curse of the Airbnb revolution
Its $2.6billion business has transformed tourism, offering 10,000 short lets in Edinburgh alone. But as property barons cash in, residents are paying a terrible price. Now the city, along with London, Paris and Barcelona, is fighting back
IT is the sound of the new arrivals’ suitcase wheels on the pavement that Rosemary Mann hears first; then the commotion as they try to find their way into the building at any hour of the day or night. Sometimes her buzzer will go and she will be asked to let in complete strangers. Next comes the clattering of travel bags on the tenement stairs and against the walls – often followed by the scraping of keys in her own door as the visitors fail to identify their correct lodgings.
Not so long ago Miss Mann knew all her neighbours in the eight-flat building in Edinburgh’s Old Town where she has lived for decades. Today she knows none. Most, after all, are only there for two or three nights.
‘I’m the last owner occupier on the stair,’ she says. ‘At least four, if not five, of the other flats are short-term holiday lets, so there’s a constant coming and going of people and suitcases – distraught Americans in the street saying “Where’s the elevator?”, like they put lifts in Old Town tenements.’
In less than five years Miss Mann has seen her once highly desirable apartment become a bolthole in a building which is, in effect, a hotel without a reception desk. She feels isolated, frustrated and beleaguered. Like thousands of others in Edinburgh, she has fallen victim to the Airbnb phenomenon.
The short-term letting boom presents a challenge for all major tourist cities. Paris responded with heavy regulation; Barcelona requires registration of all landlords; Berlin bans residents from letting out flats to tourists on Airbnb and New York prohibits rental periods of 30 days or fewer. In London, meanwhile, short-term rentals are allowed for a maximum of three months a year.
Edinburgh’s problem is its response remains unformulated – and many residents claim the industry is spiralling out of all control. A recent survey reveals the number of people staying in Airbnb accommodation in the capital has rocketed by 70 per cent in a year. And during last month’s Edinburgh Festival there were 10,000 listings for properties in the city on the Airbnb website alone.
The price being paid for the boom, warn residents, is the wholesale destruction of communities.
It is only ten years since San Francisco flatmates Brian Chesky and Joe Gebbia put an air mattress on the living room floor of their leased apartment and offered bed and breakfast to paying guests to help pay their rent. A website grew out of it, hooking up people looking for short-term accommodation with those who had spare rooms or whose homes were to be vacant while they were on holiday or working elsewhere.
AdECAdE on, Airbnb is a vast enterprise. It has a revenue of $2.6billion (£2billion), more than five million lodging listings in 191 countries and a business model that has changed beyond all recognition. Today it is less about ‘hosts’ renting out spare rooms to those struggling to find or afford hotels and more about property barons buying up multiple apartments to let out to Airbnb users who today do not even consider staying in hotels.
It is about making significantly more money than traditional property landlords while – in Britain at least – being bound by fewer regulations.
And, it is widely suspected, for many in the short-term holiday lets game it is also about creating a second income without telling HRMC.
‘I’m not saying my neighbours are doing it,’ says Miss Mann, ‘but, throughout the Old Town, I’m quite sure there will be people not declaring the income.’
It all adds up to a free-for-all some compare to the Wild West.
Professor Cliff Hague, chairman of Edinburgh heritage group the Cockburn Association, says: ‘If you are a formal or traditional landlord, there is a set of regulations that have been devised to protect the interests of all parties. They cover such issues as fire safety, for example. But one of the attractions of going for the Airbnb option is you sidestep that and there is no proper system of registration in Scotland other than with Airbnb themselves.’
As a business opportunity, there is little not to like. It has all the upsides of running a hotel with very few of the drawbacks, such as health and safety compliance, managing staff or running a kitchen. There is not even any need to meet the new arrivals and hand over keys. More often than not, these are stored in key safes fixed to the wall beside the main entrance to tenement buildings. Guests are emailed the combination for the safe when they book online.
Thus the proliferation of key safes outside apartment buildings in Airbnb hotspots has become a symbol of dying communities. Edinburgh’s Old Town, fear some, may be beyond saving. There are simply too few permanent residents left.
‘No one actually buys a flat in the Old Town to live in any more,’ says david Black, who sold his property there last year when he could tolerate the invasion of Airbnb and similar short-term letting enterprises no more. Other Edinburgh areas, such as the New Town and Leith, meanwhile, are seen as increasingly vulnerable.
Indeed, the problem is so chronic that some developers are now writing clauses into the missives of new properties which ban their letting.
Essentially, the strategy will rely on neighbours monitoring each other and, if they suspect a flat is being let out, alerting the property manager. Owners caught using platforms such as Airbnb will initially be issued with a warning but will be taken to court if they continue.
Colin Rae of developer Places for People, which is building flats on Leith Walk, said: ‘The feedback we got was people asking if there is anything we could do about this problem. People’s experience of place is fundamentally important and we can make a difference.
‘I think it will make other developers think again. Our core belief is that this is about quality of life.’
Indeed, at least four other property companies in the city are understood to be employing similar tactics.
For many, unfortunately, their quality of life in once highly prized homes disappeared some time ago. Mr Black sold his beloved flat in St Giles Street after finding himself ‘the last man standing’ in a building otherwise completely given over to short-term lets.
The final straw came when he realised the flat below him had been leased for the weekend by two women using it as a ‘knocking shop’.
He says: ‘I think there is a perfectly good Airbnb model which is people renting out rooms in their own properties. The problem is where people come in and literally mop up. I mean, they’re hoovering up housing in the Old Town and increasingly in the New Town and we are faced with a crisis. I assure you I’m far from the only person who was the last man standing.’
The bitter irony is that as the deterioration in quality of life forces long-standing residents such as Mr Black out of neighbourhoods, so their vacated properties are snapped up by yet more short-term-let barons.
LIVING in a flat surrounded by others listed on Airbnb and other letting websites is stressful at best. Miss Mann is the only resident in her block worried about the bashes and scrapes on the stair walls as luggage goes up and down – and the only one there long enough to be ground down by the constant arrivals and departures, not just of tourists but of the cleaners who inevitably follow them.
She says: ‘There is an awful lot of movement on the stair, which is now advertised as unloved because of the proliferation of those horrible little key safes. I unfortunately have two on my building, but there are others which have many, many
more. It advertises that this stair does not have real people in it, that these flats are not lived in. It makes you feel less secure.’
Being an owner occupier in a building over-run by raucous holidaymakers can be a living hell.
‘Last month was horrific,’ says Tanya Ivackovic, who lives with her two sons in a beautiful threebedroom flat in Edinburgh’s New Town. ‘An Australian couple were staying for a couple of days and created havoc everywhere.
‘I heard a stampede of their friends running up the stairs and, when I asked them to keep it down, they got in my face and started bellowing at me.
‘I am a single mother with two kids and I had this tall, aggressive drunk screaming in my face.’ Things went from bad to worse.
‘A week later I found a pile of human excrement sitting in my stairwell. The stink was overwhelming and it was I who had to put on rubber gloves and clean it away with bleach.’
Mrs Ivackovic says her housebound neighbour, who is in poor health, recently moved out because he found the noisy comings and goings too stressful.
Her children – aged 12 and 16 – are suffering, too. ‘My two sons are terrified. The eldest is autistic and he is struggling with the noise. Teachers have spotted a difference in him, saying he is tired and distracted.
‘My health has also suffered. I feel tired and miserable all the time and the constant vigilance has left me weary. The whole experience often leaves me utterly depressed. Sleepless nights are common. We lie there listening to strangers clatter on hardwood floors or whoop and holler as they come up and down the stairs.’
An Airbnb spokesman said the listing in Mrs Ivackovic’s block was no longer active on Airbnb.
Across town in the Holyrood area, pensioner Bruce Borthwick, 73, tells how he and his wife Marjorie retired to Edinburgh from Somerset 15 years ago, thinking their apartment could hardly be better situated.
‘One of the most beautiful things about this city was that, even in the 21st century, you had a capital which had real families living in the city centre,’ he says. ‘But I have seen families cleansed from the centre of the town in the last 15 years and holiday lets have played a huge part in it.’
He adds: ‘Edinburgh is turning from a beautiful city to Disneyworld – a soulless tourist trap with no real life inside.’
Enraged by the disruption caused by the Airbnb-let flat in his close, Mr Borthwick says he went to the length of hiring a private detective to sit in his flat for a week to monitor the noise and comings and goings. He said: ‘We had a rugby team in the Airbnb once who would get pre-loaded on alcohol before heading out. They stripped naked and ran in the grounds, causing absolute mayhem.
‘We have had two families in our close driven out. They were surrounded by intolerable behaviour and the destruction of their way of life. One mother could no longer let her daughter into the yard to play. Nor could I with my grandson.’
There may be some reassurance for battle-weary householders in the fact that City of Edinburgh Council now appears increasingly engaged with the problem.
This week it emerged the council had used existing planning laws to ban landlord Sanjay Khosla from renting out his luxury flat in Edinburgh’s Ratcliffe Terrace after a string of complaints about it being used for hen and stag parties.
Mr Khosla appealed to the Scottish Government but it upheld the ban.
Another property owner, Nicola Golden, 49, has launched a legal challenge to a council ban on her running an Airbnb in Edinburgh, which followed complaints about noise.
But government regulation, many argue, is urgently required to tame a rampant market skewed in favour of short-term-letting landlords.
While two-bedroom flats in Edinburgh can comfortably fetch rents of £1,000 a month, Airbnb hosts can make almost that much in a week and, during festival time, substantially more.
Their properties are operating as businesses while being classed as residential and that, say owner occupiers such as Miss Mann, must change. ‘Anyone who advertises a property should be registered centrally and they should be able to prove they have the certificates and that the place is safe and properly insured,’ she says.
‘It’s only going to take one fire in a flat that didn’t have the necessary checks, but I don’t want that to happen in the Old Town.’
City of Edinburgh Council says the working group it set up to explore the issue had recommended the Scottish Government introduce a licensing system for short-term lets. In the meantime, existing powers in areas such as planning, trading standards and anti-social behaviour will be used to tackle the problem.
Local Government, Housing and Planning Minister Kevin Stewart said: ‘We understand the calls for new controls over short-term letting of residential properties and the potential negative impact of short-term lets on communities.’
HE said the Scottish Government was prepared to legislate ‘if that is what is needed’. A Holyrood-appointed Short Term Lets Delivery Group is examining local authority powers.
And even Airbnb agrees proper regulation is required. ‘We want to be regulated and already lead talks on clear home-sharing rules in Scotland,’ said a spokesman.
He added: ‘While guests using Airbnb account for just 5 per cent of visitors to Scotland, they boost the Scottish economy by almost £1.5million a day and put around £240million into the pockets of Edinburgh families last year alone.’
The company itself has proposed a 90-day-a-year limit on Edinburgh lets similar to that already in operation in London.
A reckoning, clearly, is coming for the letting barons. The question is, can these ravaged communities hold on until it bites?