In the heart of London, a bold proposal has emerged that could change the landscape of property investments and short-term rentals. Let’s delve into Westminster’s call for an “overnight levy” and its implications for property owners, investors, and tourists alike.
1. The Catalyst: The Rising Popularity of Airbnb in Westminster
Westminster City Council’s Concerns with Airbnb Surge
Westminster, London’s historical and political epicentre, has observed a staggering upswing in Airbnb room listings. The district boasts more Airbnb properties than any other borough in London, a fact that hasn’t gone unnoticed by the local authorities.
Concerned about the rapid expansion and its potential drawbacks, the Westminster City Council is keen to ensure that everyone benefits from the city’s touristic appeal, including its long-term residents.
2. The Proposed Solution: Introducing the Overnight Levy
How the Levy Aims to Benefit Westminster’s Upkeep
Adam Hug, the leader of Westminster Council, recently revealed plans to introduce an “overnight levy” for tourists. The goal? To make sure that those who enjoy the city’s beauty, heritage, and amenities overnight contribute to its maintenance.
Both Airbnb hosts and hotels would be responsible for collecting this levy, adding it as an extra charge on the bills of their guests. Once collected, these funds would be remitted to the council, mirroring the collection process of the council tax.
It’s noteworthy that Westminster isn’t pioneering this approach. Many bustling European capitals have already embraced similar levies to support their cities.
3. Airbnb: A Game Changer or a Challenge?
The Impact on Local Hospitality and the Call for Leveling the Playing Field
The exponential rise of Airbnb has ushered in numerous benefits, including increased tourism and more options for travellers. However, Mr. Hug points out a significant concern. He argues that Airbnb has inadvertently created disparities within the local hospitality sector. While hotels like the Ritz contribute significantly via business rates (to the tune of £2.27 million annually), some Airbnb properties, despite their number, pay comparatively negligible amounts in council taxes.
Highlighting this discrepancy, Mr. Hug cited an example where a city block of apartments, almost rivalling the Ritz in the number of rooms available for short-term letting, only incurred a combined council tax bill of £92k. This stark contrast emphasises the perceived imbalances in the current system.
4. Government Intervention: Beyond Westminster
Efforts to Regulate and Maintain Harmony in the Sector
Earlier in the year, Prime Minister Rishi Sunak vocalised concerns over Airbnb, emphasising the need to manage potential anti-social behaviours linked to some listings.
In response, the Government announced plans to introduce a register through the Levelling Up and Regeneration Bill. This register’s aim is to assist councils in identifying and addressing issues with problematic landlords or disruptive holidaymakers. This legislation aims to provide local authorities with the tools needed to better manage the boom in short-term lets.
A spokesperson from the Department for Levelling Up, Housing and Communities reaffirmed the government’s commitment, stating that the new registration scheme for short-term lets in England is designed to help local authorities navigate and oversee these rentals in their jurisdictions.
Notably, Airbnb chose to remain silent on the topic, refraining from issuing any comments on the proposal.
5. Conclusion: What’s Next for Property Investors and Hosts?
The introduction of an overnight levy in Westminster could set a precedent for other boroughs and cities across the UK. For potential property investors and current hosts, it’s crucial to stay informed, understand the evolving regulatory landscape, and adapt accordingly. As the debate continues, a balanced approach that benefits all stakeholders – from local residents to eager tourists – remains the ideal outcome.