FCA proposes extension of senior managers regime
As anyone who has recently booked a holiday knows, Airbnb has become a permanent fixture in the travelling landscape. Since its launch in 2008, Airbnb has experienced rapid growth, hopping from “sofa sharing” website to multibillion dollar international corporation. The company has gone on to be one of the defining figures in what has come to be known as the “sharing economy”. But with this increased presence and power, comes greater responsibility and Airbnb are under increasing pressure to uphold and also enforce current laws regulating the short-term rental market.
From 1 January 2017, to comply with UK current law, Airbnb have introduced a counter system to limit the listing of entire homes in the Greater London area to 90 nights per calendar year, unless the appropriate planning permission is obtained. According to the Airbnb website “once the 'host' receives 90 nights of bookings for the current calendar year, the system will automatically limit your listing from being booked for dates in the rest of the calendar year.”
What is the current law relating to the 90 night limit?
Sections 44 and 45 of the Deregulation Act 2015 (“Act”) which came into force on 26 May 2015, relaxed planning permission in the Greater London area on short terms lets. In short, s.44 of the Act allows homeowners in London to use their residential premises as temporary sleeping accommodation without having to obtain planning permission for this change of use. This exception is only valid, as long as:
If the property is let out for more than 90 nights per calendar year, planning permission for the change of use would be required.
Why are Airbnb doing this now?
Airbnb’s decision to take action now comes amid wider concerns that they are having an adverse impact on the long-term rental market. Landlords are increasingly attracted to Airbnb as a more lucrative source of income and therefore converting their properties to short-term rental units. Local authorities and communities alike are also worried that the allure of Airbnb will change the nature of not only individual homes and buildings but also whole streets and neighbourhoods. Airbnb has cautioned against such change, issuing a statement on their website, saying “we want to help ensure that home sharing grows responsibly and sustainably, and makes London’s communities stronger”.
What does this mean for “hosts” in Greater London using Airbnb?
If you are letting your entire property out for more than 90 nights per calendar year and you do not have the appropriate consents, you will be in breach of planning control and enforcement action by your local authority may be taken against you. Local authorities have a wide range of enforcement powers and in particular, failing to comply with a planning enforcement notice is a criminal offence, which carries the risk of a criminal conviction and a fine. Airbnb hosts must also be aware that the 90 night limit applies if you are using other home sharing services as well, not just Airbnb. If, however, you do have the required consents from the local authority, you will be able to notify Airbnb of this permission.
Be aware – more change is likely to come
If you are a host, or thinking about becoming a host, it is important to regularly check and keep up to date with the ever changing rules and regulations in this area that may be applicable to you. My colleague David Newnham also recently reported on the risk of breaching covenants in your lease when letting your property through Airbnb.
The runaway success and growth of Airbnb has left legislators playing catch up and while this new automatic delisting introduced by Airbnb tackles hosts abusing the 90 day limit, it is set to be just the beginning of regulation in this area. Sadiq Khan, the Mayor of London, stated in October 2016 that legislation in this area may need to be revisited in order to “ find a better way of balancing the benefits of the sharing economy with the protection of local residents and the retention of housing for long term use”.
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