They’re calling it the Airbnb Apocalypse. In forums and on Facebook groups, in YouTube videos and on subreddits, Airbnb hosts who have built vast but flimsy short-term rental empires are facing huge losses as the global tourism industry collapses due to the coronavirus pandemic. As Airbnb bookings vanish, scores of hosts are scrambling to find long-term tenants for their properties, flooding rental websites with cut-price furnished apartments right in the centre of some of the world’s most expensive cities.
In London, where an estimated 48,800 entire homes are listed on Airbnb, real estate website Rightmove saw a 45 per cent year-on-year increase in new rental listings on its platform for the week beginning March 16. Many of these listings are concentrated in and around London’s tourist hotspots, where a deluge of furnished apartments have been made available for rent in recent days, many for well below the market rate.
It’s a similar picture across the UK. In Bath, which has more than 1,700 Airbnb listings, Rightmove has seen a 78 per cent year-on-year increase in new rental listings for the same weekly period. In Edinburgh, new rental listings were up 62 per cent. In Brighton, that figure was 55 per cent. “There was a notable increase in new rental listings coming onto Rightmove in some of the most popular tourist areas like Bath, Edinburgh, Brighton and areas of Central London last week,” says Miles Shipside, a market analyst at Rightmove.
Across London, the property market is awash with listings that bear all the hallmarks of Airbnb rentals. These apartments are filled with identikit furniture, generic artwork, cheap fixtures and fittings and next to no signs that anyone has ever lived there. One listing near London Bridge appears to be an apartment previously listed on Airbnb by a company called CB Platinum, whose property empire was at the centre of a recent WIRED investigation into rogue Airbnb hosts. Shipside says the surge in new listings was likely being created by “landlords who normally rent out their properties as holiday homes” looking to find another source of income – albeit a far less lucrative one.
For the short-term rental industry, the collapse of Airbnb is a disaster. These property empires are almost always built on extremely wobbly foundations. Many operators, enticed by get-rich-quick guides, take out substantial bank loans, negotiate deals with landlords to guarantee market rent for up to three years, and then try to make as much money as possible by renting out the properties short-term on Airbnb. It’s estimated that short-term rentals on Airbnb can return between three and five times the rental rate compared to a long-term tenant. But the scheme only works if you can rent out the apartments.
In response to the coronavirus pandemic, Airbnb updated its policy to allow guests to cancel, without penalty, any booking made on the platform from March 14 to April 14. As a result, so-called Airbnb ghost hotels – large-scale, professionalised Airbnb operations that have become commonplace in cities like London – suddenly have no guests. This has exposed individuals and companies using the get-rich-quick Airbnb business model to huge financial liabilities. In short: they remain liable for huge rental bills on scores of properties, all of which will likely sit empty for many weeks or months while the world is under lockdown.
Alex Milburn, who has a number of properties listed on Airbnb and also featured in WIRED’s recent investigation into rogue Airbnb hosts, claims to have already lost £35,000 due to cancelled bookings. And it’s not just losses – it’s costs. Even with a fairly modest Airbnb empire of, say, 30 listings, a property manager could soon find themselves owing hundreds of thousands of pounds in unpaid rent with little to no income – and potentially little in the way of cash reserves – to pay it.
Read more: I stumbled across a huge Airbnb scam that’s taking over London
In YouTube videos, Airbnb hosts rile against the company’s cancellation policies and scramble to offer advice to fellow hosts about how they can ride out the pandemic. “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. “I’ve scaled this up now to a point where I have a large amount of money that I’m paying towards rent and paying towards expenses every single month,” says another Airbnb influencer on YouTube, who claims to have lost “thousands of dollars of Airbnb revenue” as a result of coronavirus-related cancellations.
For residents of cities where Airbnb has an outsized impact on the property market – it’s estimated that one in every 50 properties in London, for example, is listed on Airbnb — it could be a great time to move, if only there weren’t a nationwide lockdown in effect. Right now, you can easily find a two-bedroom apartment in Zone 1 for £1,600 per month if you don’t mind living in an Airbnb for two years. The coronavirus pandemic has also given a glimpse of the sheer number of properties that could be made available to long-term tenants were they not “systemised” short-term rental listings banned from the platform.
It’s not just the UK where the collapse of Airbnb rentals has created a sudden wave of long-term rental listings. In Barcelona, Spain, some properties are being listed at almost 30 per cent below the market rate, with hundreds of new rentals appearing in Madrid in recent days. In the US, machine learning engineer Shane Morris has been investigating the rental markets in a number of cities and has noticed sharp increases in listings, many of which appear to be former Airbnbs. A similar rental surge has been spotted in the Irish capital, Dublin.
At the other end of the market, the collapse of the short-term rental market is having a profound impact on legitimate providers of serviced accommodation used by business travellers. “Business travel has ceased,” says James Foice, chief executive of the Association of Serviced Apartment Providers (Asap), the trade body which represents accredited businesses operating in the short-term rental the industry. “A huge proportion of demand for serviced apartments has dried up,” he adds. Asap’s members operate more than 100,000 apartments in 16 countries, many of which now stand empty.
“Many in our industry can’t see much further ahead than next week, at the moment,” he says, adding that the coronavirus pandemic – and the liabilities it exposes property managers to, will have a “significant, detrimental impact on our serviced apartment industry, without question”. Part of that, he hopes, will wheedle out some of the bad actors – those that abuse Airbnb hosting policies and breach local planning laws to make a killing from short-term rentals, for example – from the industry. “I think there will be a reduction in the number of rogue operators that we see out there,” he says. “I hope that it does sort the wheat from the chaff.”
James Temperton is WIRED's digital editor. He tweets from @jtemperton
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This article was originally published by WIRED UK
