Headlines such as ‘landlords evicting tenants for Airbnb’s’, ‘Cornwall has 10,000 Airbnbs but only 69 homes available to rent’ and ‘greedy holiday home owners’ have jumped out at me from many news articles over the past few weeks. So I thought I’d take a closer look to see if Airbnb’s are really the cause of the Cornish Housing Crisis.
Firstly, I can agree that from my perspective, its been impossible to walk down pretty much any street in Hayle, Penzance or St Ives without seeing the now all too familiar key lockbox and recycling boxes full of empty bottles. This means that unless the property is owned by someone who constantly loses their keys and has a drink problem, this is a sure sign that it’s a holiday home!
What is an Airbnb?
Known in the industry as an FHL (Furnished Holiday Let) but increasingly knowing throughout middle England as an Airbnb (why the recent change, I’ve yet to fathom!). For clarity, whether the property is a caravan on a holiday park, a bijou seaside apartment, or a luxury lodge overlooking the sea, they may be catering to different demographics but are offering the same thing – a holiday. Like them or loath them, they have always and will always be a vital part of the Cornish economy.
Why have Airbnb’s become such a problem?
The impact of the pandemic has meant that this has been a bumper year for the FHL or Airbnb owners. As is always the case when any industry appears too good to be true, many scramble to jump on the bandwagon.
The rest of us look at the glossy pictures and the eye watering peak week prices and its hard not to feel envious. This has made it relatively easy to single these business owners out as the cause of the current Cornish housing crisis. But is this really the case?
Have Airbnb owners taken all our residential property stock?
Sadly, they do appear to have added to the problem. Cornwall has 1 per cent of England’s population and 17 per cent of its second homes. I and many others will struggle with figures like this. However, we also need to be mindful that second homes are just one element fuelling our current housing crisis.
Its also easy to forget that second home owners are by and large, one-man-band business owners, just like your local pub and high street shop. Yet you don’t read in the press about a pub owner who’s invested their life savings into that business and works all the hours under the sun to give their guests a good experience, as being greedy. So why is it ok to vilify FHL owners because they’ve invested their hard earned savings in that particular industry? The same has been happening to residential landlords for the past few years. The rhetoric makes great click bait but is unfair on the individual business owner.
I certainly don’t see any sign of greed and second home owners cannot be blamed for bad government business policies.
Yes, owners of second homes, who have absolutely no intention of letting out their property, yet still claim 100% business rates relief, need to be hit with heavy fines. Then this loophole needs to be closed. Yes there needs to be a levelling up of the legislation foisted on residential landlords and that of FHL owners. But not to the point where hard working business owners, who’s businesses support the local community are driven out of either sector.
Don’t get me wrong, I’m not saying we should just allow this trend towards second homes in Cornwall to continue. There should not be second homes in an area where many struggle to secure their primary home. But as always it’s the symptom rather than the cause that’s getting all the press attention.
Holiday lets legislation changes
If we had an even-handed business taxation policy and sensible legislation that works for both landlords and FHL owners, these businesses would sit comfortably in our society. But the FHL sector has been under regulated and taxed for years. This has encouraged a disproportionate level of investment. Add to the mix, the massive underfunding in our social housing over the past 20 years and we now have a housing crisis that’s spiralling out of control. Predictably when situations get this bad, the powers that be panic and take a sledgehammer to crack a nut.
This is exactly what’s about to happen with the FHL industry. English, Welsh and Scottish governments are currently drafting plans to target all second home owners.
However, before anyone gets excited about this, lets stop to think about the impact of the legislation changes for a moment.
If, as is looking more likely by the day, all holiday let business owners will have to register (to name just one piece of legislation coming down the line). However, the Scottish government has proposed that all FHL owners will then have to re-apply every 3 years. This idea is also being considered by the Welsh and English governments. The business owners will also have to notify potential holidaymakers of this in advance. This addition to the legislation will meant that (a) their costs are going to increase and (b) it will add uncertainty for them and their guests. Uncertainty isn’t good in any industry.
I agree with the registration idea. But having to re-apply every 3 years doesn’t feel very well thought out. The sledgehammer approach to legislate an industry drove many residential landlords sell up and I fear the same will happen here. This will have a knock-on effect on the local economy. Pubs shops and restaurants will suffer too, as they all need one another to survive.
So all I’m saying here is that we should be careful what we wish for. Knee jerk legislation is never a good idea.
Surely, Airbnb’s are raking it in, so they can absorb additional costs?
In fact mostly this is not the case. The FHL industry is not the cash cow its been made out to be. Yes the peak week rental prices are high but these are for a maximum of 6 weeks a year. What about the other 46 weeks? Most FHL’s will be empty for 3-4 months and will earn a fraction of what they’d get in the summer during the remaining 6 months. For the majority, their net margin is on par with that of a residential landlord at around 5%.
This means that whilst an FHL is still a good investment (until the incoming legislation kicks in), it takes exceedingly hard graft to earn this. Its not easy money. If the hourly rates of the property owner is factored in, they’d be earning well below minimum wage in most cases. As with all industries, there are exceptions to this – such as the luxury end of the market, or the sleeps 10+ types of properties but these are in the minority.
The bottom line is that whilst Airbnb’s are a symptom of the Cornish housing crisis, they’re not the cause and the majority are just hard working local business who’ve spotted an earning opportunity.
If Airbnb’s aren’t the cause of the Cornish Housing Crisis, who or what is?
I agree that something urgently needs to be done to tackle the housing crisis. I’ve been banging on about this for months. And yes less ‘Airbnb’s would help. However, what Cornwall desperately needs are more affordable houses for only locals to buy, better mortgage packages to make this possible and then a decent stock of social housing for those that can’t buy.
The government also needs to backtrack on its decision to freeze Local Housing Allowance and cut Universal Credit. This risks pushing many households further into poverty, problem debt and potentially homelessness.
We as individuals however, need to remember that hospitality (of which holiday properties form a large part) is a tough and often thankless industry. This year more than ever, many of us have needed and benefited from it.
So lets direct our anger and energy away from small, local businesses. We need to challenge the housing and business policy decision makers who’ve allowed this crisis to happen: Our MP’s Cornwall Council and ultimately, the government.
Have your say
Do you think Airbnb’s are the Cause of the Cornish Housing Crisis, or like me do you think that whilst we need less they’re not the real problem? Please let me know your thoughts. You can comment below or by all means contact me directly by email.
About the Author
Hi, I’m Deborah from CAM Residential Lettings in Hayle. I love writing about the local property market – the good, the bad and the ugly! I also from time to time, write blogs about the local towns we cover. My most recent has been about Hayle but watch this space for future articles on Penzance, St Ives, Camborne and Carbis Bay too. There will always be a property connection in there somewhere.
Please feel free to suggest topics you’d like me to research.
If you’re a second home owner and are considering the pro’s and con’s of being a residential landlord, please contact myself or John for an informal and no obligation chat. here’s our office contact details:
20 Fore Street, Hayle, TR27 4DY