The Sharing Economy’s Impact on London’s Housing Woes

Sharing economy company Airbnb is helping rich property owners become richer while housing shortages and the overall housing crisis in London is intensifying. In London, Airbnb is trying to operate in a city that has a highly speculative and financialized property market. According to Christian Fuchs (2017), “In 2016, the average home cost £500,000 in London” about $645,250 US (299). Many Londoners cannot get onto the property ladder and are forced to rent property because of these extreme costs which lead to them not being able to afford the necessary down payments to get mortgages.
In an interview with London native and NAU international student Claudia Fletcher, she says that most college grads entering the work force in London “spend over half their paycheck on rent.” She went on to say that “unless your parents could help you out, and even then they would have to be fairly wealthy, buying [a home] is just not viable for a young person.” Fletcher added that because places in London are so expensive, most people who work in London and are looking for a place to stay would have to look about an hour outside of the city where prices to rent and buy are more affordable. They would then have to take the train into London, which she said typically costs about £500–600 (~$645–775 US) a month. This option would still be cheaper than buying or renting in London.
Obviously in a housing market like this, Airbnb sounds like a great option — where Airbnb is significantly cheaper than living or staying in a hotel. Fletcher said that even low-end motels typically cost hundreds of pounds a night. Airbnbs are often nicer for the same price. She added that whenever her whole family stays in London they always look for Airbnbs instead of hotels simply because of the affordability.
So, what’s the problem? Sharing economy companies like Airbnb pretty much sound like a God send to the expensive housing in London — but who really wins in sharing economy situations like these?

It’s not the Fletchers and other middle-class Londoners, it’s the already rich property owners and landlords — the buy-to-let class that uses Airbnb as a medium of rent accumulation. Members of this class allocate a certain share of their property to Airbnb and actually make more money on these short-term rentals than on typical long-term rentals to regular tenants. According to Guardian contributors Ball, Arnett, and Franklin, “More than 1,500 people listing properties on the site have multiple listings, with 180 listing five or more properties or rooms across London. Some of the site’s super users have dozens of properties across the city at once; one, who went by the name of Petra, had 127 active listings on Thursday.”
The lack of regulation in the sharing economy accommodations sector is one of the reasons London’s housing market is ready to burst. State legislators need to ensure that sharing economy businesses, like Airbnb, are helping all citizens make the most of their opportunities by regulating these businesses to make sure they no longer abuse the regulations and tax compliances in place. Cities like London need to move away from unregulated sharing economy exploitation and move to build more affordable community-owned houses and flats. They need to have laws in place that regulate how much property owners are allowed to charge per square meter so further exploitation of people looking for a place to stay by the 1% can be avoided.

