The Strategist

London luxury mansions conquer Airbnb

03/27/2017 - 15:56

Experts say that owners of London "premium" class real estate started to actively offer their own housing through such sites as Airbnb. This phenomenon can be explained by decline in prices for such kind of property and cost of long-term lease in expensive areas of London.

Kathleen Tyler Conklin via flickr
Kathleen Tyler Conklin via flickr
Bloomberg reported that owners of London luxury real estate are increasingly putting their apartments and houses for sale and rent on the Airbnb website. The agency refers to housing, price for which starts at £ 1 thousand per night, sometimes its cost reaches £ 2-3 thousand. Prices for such real estate are declining. Earlier British research agency Rightmove reported that in February, prices for London property fell for the first time in the last six years - by 0.4%, the average price was £ 641.1 thousand ($ 797 thousand).

Airbnb becomes an attractive option partly because of the fact that cost of long-term lease in the most expensive areas of London fell in February by 5.1%. According consulting company Arcadis, over 35 thousand premium-segment homes will be rent out in the next decade in London, which, like raising taxes, helps reduce prices for such housing. "In recent years, housing prices and rental prices in Central London have been rather low, and this puts pressure on income of developers and investors. With a large number of houses that are due for commissioning this year, prices for both sales and rentals may be subject to further pressure due to the growth in supply", said real estate market researcher Neil Hudson.

According to brokerage firm Jones Lang LaSalle, number of apartments and other real estate objects exhibited on Airbnb has doubled over the year, and reached 50 thousand by the end of 2016. Recently, mayor of London, Sadiq Aman Khan, has already expressed an opinion that such a trend could make housing less affordable for permanent residents. In London, there is a rule that owners are not allowed to rent their homes through Airbnb and other similar services for longer than 90 days a year.

According to Tom Bill, an analyst at Knight Frank, some owners of expensive housing lease it in anticipation of a new surge in prices. Over the past six months, number of properties offered for rent has grown in London by 20%.

According to specialized agency LonRes, demand for premium-class rental accommodation at a price of £ 3,000 per week (or £ 156,000 per year) climbed up 28% in the last quarter of 2016. Market experts explained this by saying that wealthy foreigners thus are trying to avoid paying taxes. Recall that in April last year, the country's authorities imposed an additional tax on real estate bought in the UK through foreign trusts or off-shores.