
London’s rental market is being flooded by bargain Airbnb listings - rwmj
https://www.wired.co.uk/article/airbnb-coronavirus-london
======
clort
Well, since it says right there in the article that takings for a property
rented on AirBNB could be 3-5 times the basic rental rate there will be little
sympathy I fear. I mean, if that property has already been rented out since
the start of the year (2.5 months) then that should keep them out of the red
for the next 7.5-12.5 months, no? I am pretty sure that some of these
properties will have been on AirBNB for longer than that.. It says one
specific blood-sucker has lost £35,000 income already! I'm wondering at that
level of income, why he doesn't have any cash reserves to carry him through?

~~~
H8crilA
This crisis will uncover a lot of overleverage and insufficient reserves. A
lot.

Just to think how many of my friends have an incredibly high percentage of
their net worth in stocks ...

~~~
HenryKissinger
Stocks will recover. Of greater concern are workers who cannot afford to miss
a paycheck while being otherwise financially responsible, even more so if they
have children to provide for.

~~~
H8crilA
That's exactly my point with stocks and being overleveraged on them. You may
not be able to wait for them to recover if you lose your regular incone. Also
recovery can take decades, depending on how this plays out. May also be rather
quick.

~~~
rwmj
By "being overleveraged on [stocks]" do you specifically mean that people were
borrowing to invest in stocks?

~~~
hrpnk
Some Eastern European countries had investment products offered by insurance
companies, where you sign up for investing a fixed amount monthly for 10-15y
with huge exit fees if cancelled prematurely. The high fees are meant to cover
for the commissions for the sales people of those products.

I can imagine that other countries also have similar products where it's
difficult to pause the regular investments unless invested manually.

~~~
rwmj
I have one of these (called an endowment policy). It was a spectacularly
terrible investment. Luckily the amount I pay in (£10/month) isn't going to
make me go broke. Until the beginning of this year it looked as if I might
make slightly more than the nominal money I paid in - yes it really was that
bad. But with another dose of bad luck it matures this year so it'll likely be
worth 30-60% less. Oh well, it was a learning experience.

------
breitling
Same thing is happening in Toronto as well.

Airbnbs have destroyed the housing market here and recently the hosts have had
to switch to long term rentals... Bringing relief temporarily, but they will
be right back to their old ways as soon as this Pandemic is over.

Reddit threads of this discussion on Toronto:

[https://www.reddit.com/r/toronto/comments/fplfke/scumbag_air...](https://www.reddit.com/r/toronto/comments/fplfke/scumbag_airbnb_hosts_response_to_facebook_post_on/)

[https://www.reddit.com/r/toronto/comments/fpz6yj/update_scum...](https://www.reddit.com/r/toronto/comments/fpz6yj/update_scumbag_airbnb_host_from_yesterday_now/)

------
lordnacho
Choice quote for students of risk:

“I’ve always been a survivor, in life and in business. This coronavirus
epidemic is not going to put me or my companies down,” says one Airbnb
influencer on YouTube.

To be fair, it was pretty hard to fathom what might knock out the entire
tourism industry of a whole city, let alone the world. I mean it's been
written about by various people, but who really considers pandemic risk while
doing the rental arbitrage?

And likewise with risk in general, we tend to think of things that can
specifically happen to an investment, eg the tenants wreck your place, or the
mortgage rate changes. We tend not to think so much about this sort of thing,
even though infectious disease is a thing everyone has heard of.

~~~
papito
Tail risk - it's fresh...

------
personlurking
After how Airbnb dealt with my reservation in regards to their Coronavirus
policy, I have the feeling they're not only bleeding cash but that they'll be
losing tons of customers.

I had to wait two weeks to speak to someone, yet had been immediately notified
on the site, twice, that I qualified for a full refund (which I took
screenshots of). The wording in their policy also qualifies me. However,
they're reneging.

~~~
amiga_500
Perhaps they can take advantage of a legal loophole, just like you were happy
to by using airbnb to rent in an urban area with no real right to be there.

------
stephenmc
Dublin's is the same, I imagine this is pretty common in most major cities
[https://www.balls.ie/amp/the-rewind-news/something-
interesti...](https://www.balls.ie/amp/the-rewind-news/something-interesting-
happening-dublin-rental-market-428463)

~~~
dorchadas
Galway isn't much better either, even in 2016. I was looking for long-term
accommodation there for a masters program at NUIG and pretty much everything
was taken up by short-term for the summer. I could hop around place to place
until October, when they basically agreed to some winter long-term. It was
awful.

------
amiga_500
Not a bargain.

There is a pandemic.

You don't know who stayed there before you

The owner has zero safety/cleanliness standards to comply to

You are putting your trust in a company whose only innovation is a regulatory
loophole

The price reflects the good.

~~~
user_50123890
They're not being rented on AirBnB, they're being converted back to normal
rental apartments.

~~~
amiga_500
What I said applies to any airbnb rental, now and forever.

------
drpgq
So from reading the article, it seems that most hosts don't actually own the
apartments, but rent them from landlords and then AirBnb them? That seems more
different from North America where most of the hosts own (at least for whole
apartment rentals) although for condos at least in Toronto it often is against
the condo bylaws.

~~~
rwmj
Yes it seems as if the Airbnb hosts are arbitraging cheaper long-term rentals
into short-term, higher rate, Airbnb stays. Rather like WeWork, which is also
in big trouble:
[https://www.bloomberg.com/opinion/articles/2020-03-18/wework...](https://www.bloomberg.com/opinion/articles/2020-03-18/wework-
s-stock-went-down-some-more)

In London it's now apparently common for whole blocks of flats to be
arbitraged this way. There was an investigation in Wired recently:
[https://www.wired.co.uk/article/airbnb-scam-
london](https://www.wired.co.uk/article/airbnb-scam-london) There are bylaws
about this in the UK too, but enforcement is very weak to non-existant. In
fact the government recently refused to renew powers that some local councils
were using to enforce registration and minimum standards on landlords
([https://www.bbc.co.uk/news/uk-england-
merseyside-51076128](https://www.bbc.co.uk/news/uk-england-
merseyside-51076128)).

------
franze
Last year I did a gig as VP Growth at a Debit-Card-Company. The agreement was
3 weeks London and one week remote in Vienna (with my Family).

The company was pretty central in Camden, my fitness center, too. I found it
more cheaply and uncomplicated to just rent Airbnbs in the area for 3 weeks,
sometimes jumping apartment every second day, then go through the completely
hostile long term rental market with substandard flats far away which would
have cost me 1h+ in each direction each day.

So yeah, Airbnb was great for me but is prop. toxic for London as a whole.

------
chvid
I guessing it will be a while for AirBnB to IPO.

Also the massive bailouts, the drop in real GDP, may finally lead to inflation
and higher interest rates and an end to world wide booming property markets.

------
jankotek
I see something similar in Prague. Many new furnished (unusual) apartments in
center for long term rent.

But I think Airbnb is just a scapegoat for broken market. You can see similar
problems in commercial rental market.

~~~
durnygbur
I agree AirBnB is used as a scapegoat. The problem in fact is much more
complex - low interest rates, house flipping, short term rentals, influx of
foreign cash to the countries where real estate prices are only catching up
with rich countries, and to the countries where prices dropped significantly
after 2008, local oligarchs parking cash in real estate, and many more
reasons...

------
_curious_
As someone who lives in a (already expensive) US-based short term & seasonal
rental hotspot, I have been consistently subjected to 10-25% annual rental
increases for going at 7 years straight now.

Many peers and locals have emotionally or otherwise fought against the rise of
these short term real estate schemes. Something to the effect of
"Neighborhoods are for neighbors" as the slogan goes...constantly griping
about it one way or the other.

But it's a personal choice to putup, so I just shutup and carryon while
appreciating the city that much more. Yes, the trend has caused me financial
challenge and the inconvenience of having to relocate around town more often
that I'd like, creating stress and sacrifice, but I've always accepted and
adapted.

Now here we have the black swan of 2020 and the airbnb money tree has dried up
died in the scope of <2 weeks. Properties that typically gross 10-15-20k
monthly during peak seasons are suddenly at or approaching ZERO rental income.

The amount of these properties in my area is conservatively 50%, though would
some say 75-90%. Tough to know forsure given the 'rougue' players. If you add
up the volume, density, and exorbitant prices - this is going to be a massive
overdue fallout in residential rental rates.

So let the market correct itself and find a new low/equilibrium. May the
highly-leveraged, over-extended, get rich quick get lost quick ... and with
that put all these prime properties within reach again for those who do call
this city home and hold it down year round.

Clearly, I welcome the chaos ;)

------
durnygbur
This is so sweet and long awaited, happening for a reason so unexpected and
unstoppable.

------
sails
I wrote a blog post about this after coming across the threads in Reddit.
Fascinating stories coming out of the Airbnb market.

[https://rdrn.substack.com/p/20204-the-crash-of-rent-to-
let](https://rdrn.substack.com/p/20204-the-crash-of-rent-to-let)

------
TruffleLabs
From the end of the article “I think there will be a reduction in the number
of rogue operators that we see out there,”

I’m sure that will be a shorted lived occurrence. Opportunity for quick money
always brings out the rogues. :|

~~~
amiga_500
Banks in the UK got the government to freeze the regular housing market.

Banks will only lend at greater than 40% deposit, because that's how much they
feel the market might fall.

Not a strong recovery signal in that sector.

------
CPLX
If true this is pretty strong further evidence that Airbnb has had a really
significant negative effect on affordable housing in these cities.

~~~
jankotek
Last time a was in London on six month contract, Airbnb was more affordable
option. Normal landlord wanted an arm and leg.

~~~
nervousvarun
Right and that's essentially the point.

It's fantastic for "tourists" (even though you were there 6 months you were
essentially a tourist) at the expense of residents.

Unfortunately see it every day as I'm based in New Orleans which is a tourism-
dependent city and ABNB has just been devastating for locals who can't afford
to buy property.

~~~
jankotek
I was a resident, I payed taxes and everything. This local versus tourists
stuff is just xenopfobia.

Why you don't blame city hall that refuses to build new housing, and d milks
tourism for everything at expenses of locals?

~~~
mytherin
The distinction is short term vs long term, that has nothing to do with
xenophobia. AirBnB reduces the price of short term stays (six months is short
term - long term rental contracts typically start at 1 year), but has a
significant negative effect on people that stay in the city long term. AirBnB
converts homes intended for long term residents and repurposes them as housing
for short term stays. This significantly reduces the supply of houses in a
market that already has a low supply, causing an immense spike of housing cost
for those staying in the city long term. The fact that something else exists
that also contributes to this problem does not take away the immense negative
effects that AirBnB has, that's just whataboutism.

~~~
jankotek
City hall is 100% responsible for housing shortage. High rise build would fix
low supply problem pretty quickly (see Tokio).

How many apartments are on Airbnb? 10%? And probably only in centre.

And some people like me actually stay in airbnbs long term. It is easy to
negotiate reasonable price outside of tourist season. Normal landlord is way
too expensive and does not bother with basic maintenance.

It is xenophobia, because many cities are blaming their problems on
'tourists'. But those are often foreign workers and students.

------
orbifold
Something related is happening with commercial real estate in Germany: Big
retail chains like H&M, adidas, Deichmann have stated they won't be paying
rent beginning in April (they were forced to close their stores). Ironically
democratic socialists have complained about that. My guess is that this will
be a rude awakening for the rent seeking individuals that profited from record
low credit to finance and then rent out properties at record rental rates.

~~~
cycomanic
Well the reason why people are complaining about this is that these companies
are sitting on huge cash reserves but are abusing the system meant to give
short term relief to small businesses and individuals.

It might even that they are planning to put those owners that they are renting
from into so much financial trouble that they could buy up properties at a
discount.

I don't have much sympathy for property speculators etc., however I have even
less sympathy for big corporations abusing systems not meant for the to
concentrate even more wealth onto themselves

~~~
Slartie
They don't really need to "abuse" these relief regulations (I'm not sure they
are even doing it, because I'm not sure if the protective regulations actually
cover commercial rentals, which are generally much less protected by law than
private rentals).

The landlords of these shops don't have any incentive to throw these merchants
out because of a few months of missing rent during a time in which most
retailers are forced to close. Where should they find any alternative tenants
for these properties? Nobody could even move in right now, much less sell
anything there. The first time at which they could potentially find someone to
market these properties to is when the restrictions on the already-existing
tenants are most likely being lifted as well, which means they will start
paying rent again.

The only risk for the merchants is that the landlords might take them to court
in order to make them pay the missing rent. But that is a rather calculable
risk, these big merchants all have legal departments able to handle this risk,
and even in the worst case (they are made to pay the full sum) these court
decisions will take months until they come into effect, so the primary goal of
conserving liquidity during the forced business shutdown time has already been
achieved.

~~~
durnygbur
Interestingly in Germany I'd encountered analogical but reversed situation.
Landlords coming up with made up fees and deducting them from the deposit,
incorporating the unlikely risk that tenant will fight for their money in the
court. In no other place in EU where I have been living in, the relationship
between tenant and landlord has been so tense and stressful.

~~~
Slartie
Yes, this happens, mostly between private landlords (of which Germany has a
lot) and tenants of (seemingly or actually) limited legal competence (because
private tenants are in fact relatively well-protected by law except for some
gaping loopholes ("Eigenbedarf" being the most-exploited one), but of course
accessing that protection often means they have to go to court first, which is
a considerable financial and cognitive bar not everyone is able to jump over).
I am not sure if it's more often than in other European countries, because I
refuse to believe it doesn't happen there as well. You have a large difference
in power, it gets exploited, one way or the other way round.

~~~
durnygbur
> I am not sure if it's more often than in other European countries, because I
> refuse to believe it doesn't happen there as well. You have a large
> difference in power, it gets exploited, one way or the other way round.

Imagine that in places in Czechia and Poland where I was renting long term,
the landlords were returning the full deposit in cash, in exchange for the
apartment keys.

------
wdb
I am getting kicked out of my rental by my landlord and looking for a new
place is really depressing at the moment.

------
chvid
I wonder if we will see a government bail-out for all these airbnb hosts ...

~~~
thulecitizen
Imagine that, tax money going to the propertied and elite rentier
class.[1][2][3]

[1] [https://www.resilience.org/stories/2017-08-03/book-day-
corru...](https://www.resilience.org/stories/2017-08-03/book-day-corruption-
capitalism-guy-standing/)

[2] [https://www.theguardian.com/artanddesign/2019/sep/10/push-
fi...](https://www.theguardian.com/artanddesign/2019/sep/10/push-film-review-
leilani-farha-global-housing-crisis)

[3] [https://www.theguardian.com/money/2019/apr/17/who-owns-
engla...](https://www.theguardian.com/money/2019/apr/17/who-owns-england-
thousand-secret-landowners-author)

~~~
chvid
It might just happen. The government paying to have rental properties siting
empty. I guess some new chapters in the economics textbooks need to be written
on what comes after negative interest rates ...

------
3327
God bless the end of airbnb. Airbnb is a toxic parasitic leach that needs to
die.

It has ruined housing for the neady, and broken the diversity within cities.

Someone please tell me one benefit of Airbnb for society? Not the individual,
and I will eat my words.

Thanks.

~~~
gambiting
It enabled whole masses of people to rent their properties out, something they
maybe haven't even considered before, be it due to social stigma or technical
difficulties, with relatively strong protections of a major corporation behind
it. Previously if you wanted to rent an apartment out in a small rural town in
Poland, you could.....print some fliers? Buy an ad in a newspaper? Massive
pain in the ass basically. But thanks to AirBnb lots of people were able to do
it with relative ease, at a benefit to them and those staying in the area. If
that isn't benefit to a society then it's only because of a definition of
either benefit or society that you picked.

~~~
rwmj
People rented out holiday cottages long before Airbnb existed, even long
before the internet. There were sections in classified listings in newspapers,
and later specialised websites.

~~~
gambiting
Yes. This has nothing to do with holidays though. I'm thinking a mid-size town
where the only attraction is a local coal mine - the only hotel option was an
old post-soviet hotel where you'd only stay if you absolutely had to. But even
if it's not a holiday destination people still have to stay short term
occasionally - be it for work or for things like weddings, funerals etc. Not
that long ago finding a place to stay that wasn't the mentioned dingy hotel
was very hard to do, nowadays there's always at least a few listings on AirBnB
so you can stay somewhere that it's a dump.

~~~
rwmj
I always think it's amusing that people assume that before the internet
nothing like this could possibly have been done.

Here's how it worked before the internet: You the property owner would engage
a local estate agent [realtor] and they would find tenants for your property.
There were both short and long term rentals. Most of the time it would be
rented out to someone local. But if someone from another country wanted to do
a short term rental, they would contract a company who would have a presence
in the foreign country and would in turn be able to contact local estate
agents by telephone, get particulars sent through the mail or fax (or if it
was really urgent, read out on the phone), and these would find their way back
to the prospective tenant.

Sure it's not as smooth as clicking on a website, but it was still a thing
that was done.

(In fact these intermediary companies still exist and are still used
especially by businesses that want a full service and don't want to deal with
the randomness of Airbnb. I knew someone who worked in a Japan-England company
back in the 90s
[http://www.redacstrattons.com/](http://www.redacstrattons.com/))

