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Foreign billionaires in London choosing to rent to avoid stamp duty

Number of lettings costing more than 3,000 a week increased by 28% in the last three months of 2016, research shows

Read more: https://www.theguardian.com/business/2017/feb/12/foreign-billionaires-london-choosing-rent-avoid-stamp-duty


Airbnb faces worldwide opposition. It plans a movement to rise up in its defence

The room-rental website, now worth $30bn, faces a critical year as city authorities clamp down

In the back room of a pub in Kentish Town, a group of middle-class Londoners are perched on velvet-covered stools, eating hummus and talking about property. On the wall, above a pile of empty beer kegs, a slide presentation is in progress. A video of Airbnbs recent advert shows smiling hosts opening their front doors and declaring their support for Sadiq Khans post-Brexit London is open campaign.

The audience of Airbnb hosts are there after receiving individual invitations from the company to a home sharers meet-up a concept largely unfamiliar to the slightly bemused crowd. Jonathan, an enthusiastic Californian Airbnb employee, who was recently seconded to London to set up the clubs, is happy to explain: Homesharing clubs are simply a way of organising this into something that has a unified voice then actually takes actions as a collective, he says, in a less than clear answer.

More simply, homesharing clubs are advocacy groups made up of Airbnb hosts loose, informal lobbying groups that push the companys agenda to politicians. The clubs are part of a what is fast becoming a concerted fightback by Airbnb, the website founded in 2008 when three college friends rented out air mattresses in their San Francisco flat as a way of making money, to become one of the biggest online travel brands in the world.

But its phenomenal growth is proving to be its greatest liability. Authorities in cities around the world fear the impact it is having on their communities and are now seeking to arrest Airbnbs near unfettered expansion.

The latest in a series of attempts around the world to curb its growth came earlier this month when New York governor Andrew Cuomo signed a bill that will fine tenants or landlords who let out unoccupied flatsfor less than 30 days.

Meanwhile, in Dublin, the owners of one flat have recently been prohibited from using it as an Airbnb let without planning permission, raising the prospect of copycat actions elsewhere.

In Berlin, people who let more than half of their flat short-term without obtaining permission from the city council now risk a fine of 100,000. And in London, a 90-day rule was introduced last year under which no property can be rented out on Airbnb, or any similar service, for more than three months a year without planning permission.

So how is Airbnb responding? In New York the company has filed a lawsuit in the US federal court. But at a wider level the company is now supporting efforts to prevent these types of actions from taking place in the first place. And the best way to do this, Airbnb thinks, is to get its millions of hosts to rise up on its behalf.

Last year the company announced plans for 2016 to create homesharing clubs in 100 cities around the world. The aim, it said, was to form a powerful people-to-people based political advocacy bloc.

The bulk of the clubs are in North America, with a couple in Australia, South America and Asia, and an increasing number in Europe. In Britain, however, the number of clubs is negligible, even though there are more than 40,000 listings on Airbnb. The company is concentrating its efforts on building this UK base. Meetings, such as the one at the Abbey Tavern in Kentish Town, have been happening all over London as Airbnb seeks to build a grassroots campaign to fight the threat of greater regulation and more restrictive policies.

The hosts at the Kentish Town meeting are told that, earlier this year in Berlin, Airbnb dropped the ball after the citys ruling on short-term lets the suggestion being that it did not want this to happen again elsewhere. As a result of that ruling, the Berlin Home Sharers Club was created and started lobbying to try to change what it saw to be an unfair policy. In London, the 90-day rule may itself not be onerous compared to other cities, but there are growing calls for further regulations .

Airbnbs Jonathan steers clear of telling the group that they should lobby for change. On the one hand, would Airbnb like to see homesharing groups set up all over Europe? Absolutely, he says. Would it share in their interests? Absolutely. But whether those sharing clubs decide that their only interest is to share electricians and plumbers or to take political action is completely up to them, he says.

The next slide focuses on Barcelona, a city where, in 2014, Airbnb was fined 30,000 for breaching tourism laws. Later, another slide listing write to your MP as a suggested activity is shown. Writing letters to local newspapers and selected officials is obviously something that we would want to see concerned hosts do, but only if it applies to them and if theyre motivated to do so, Jonathan says.

Chris Lehane, Airbnbs head of global policy and communications, said the clubs act as a voice against the powerful.

These folks absolutely should have the capacity to go out there and represent themselves, and weve been clear that we want to provide that support and provide some of the infrastructure, he said. This can be an incredibly effective advocacy tool. I think weve been pretty transparent and open about that.

The networks of host groups, which in effect lobby on behalf of the company, are an illustration of how far Airbnb has grown since its inception in 2007. Back then, founders Brian Chesky and Joe Gebbia could not afford the rent on their San Francisco flat and so put three airbeds on the floor and charged $80 a piece for their first guests.

Even by the rapid standards of growth in the tech industry, the company has expanded very quickly. It is now valued at $30bn, and claims two million property listings in 191 countries. That valuation puts the worth of the Californian firm at more than Hilton Hotels.

Wouter Geerts, an analyst for Euromonitor International, says this rapid growth has led to the corporatisation of Airbnb, with more listings from other hospitality companies and people with multiple properties. That might be hotels or estate agents, serviced apartment providers. They all look at Airbnb and think actually what is stopping us putting these properties on Airbnb as well and making extra money?. And of course there are more and more stories about landlords that push out long-term tenants because they can make more money through Airbnb, he said.

One of the most frequent criticisms of Airbnb has come from the hospitality industry, which has complained of the differences in regulation that hoteliers have to operate under, compared to Airbnb. But the organisation that acts as the voice of this industry in the UK says it is not just about them. Many councils in London have expressed their concerns recently, says Ufi Ibrahim, chief executive of the British Hospitality Association. Much of that is because the sharing economy and in particular we are talking about the unlawful professional landlords, the pseudo-landlords operating illegally has put a huge strain on rental prices.

Increasing levels of hostility to Airbnb have also started to come from the neighbours of those who let their homes through the website. Last month a property court in London ruled that homeowners whose leases say that their homes can be used only as a private residence cannot rent out their properties as short-term lets. The case came after the neighbours of Slovakian interior designer Iveta Nemcova informed the freeholder of the building that she was listing her flat in north London on Airbnb. As a result, Airbnb hosts have been warned that they could be in breach of the terms of their mortgages and building insurance policies.

One homeowner who spoke to the Observer said that the ground-floor flat in her building had been rented out on Airbnb by a tenant without the knowledge of the owner. As a result, the house insurance of the whole building was potentially invalidated.

In London, Westminster City Council is investigating 1,200 properties alleged to be let in excess of the 90-night limit. Enforcement notices have so far only been issued against two. In practical terms it is a real challenge for us to gather evidence to prove that individuals are letting properties for over 90 nights, a council spokesman said.

The scrutiny that Airbnb faces from both users and policymakers around the world comes after the sites runaway growth. John ONeill, director of the Centre for Hospitality Real Estate Strategy at Pennsylvania State University, estimates that the number of hosts has doubled in the last year with revenue up 60%. With that growth has come an ecosystem of support companies, typically property management firms that submit the advert for the property onto the website and then may manage guests arriving and leaving, dropping off and collecting keys, for example.

The exact effects of this growth on the hotel industry are unclear. The British Hospitality Association said it would be unfair to say there had been an impact on the demand for its members services as a result of Airbnb and instead the association focuses its criticism on the effect on housing. Airbnb says that its growth has been a reflection of how people live, and describes the attacks from the hotel industry as disappointing but not surprising, rejecting claims that it has a negative effect on the housing market.

Homesharing puts money into the pockets of regular people and spreads guests and benefits to more communities and businesses, the company said in a statement. Countless cities around the world have introduced clear home-sharing rules, and we will continue to be good partners to policymakers and work together on progressive measures to promote responsible homesharing. The vast majority of hosts follow the rules, it said.

Where the Airbnb debate goes next, after such a period of rapid growth, is unclear. Some hotel companies, instead of continuing to fight Airbnb, have chosen to join it. The larger hotel chains are moving away from trying to combat Airbnb. Initially there were some kneejerk reactions of we have to lobby against this, we dont exactly know whats happening, they are not regulated well. Most of the companies have moved on from that now and they have started to realise certain potentials that it brings, said Geerts. There is this movement of looking at short-term rentals not as a negative, but more as a positive, and seeing the changing demands of consumers.

This was illustrated in April when French hotels group Accor, said to be Europes largest hotelier by room numbers, paid 118m to acquire Onefinestay, which offers short-term lets on expensive homes.

ONeill estimates that there are 70 lobbyists working for Airbnb in the US, trying to get favourable legislation passed to benefit the company. Most hoteliers I speak with have accepted Airbnbs existence and growth. Their concerns have more to do with levelling the playing field between hotels and Airbnb operators, because Airbnb has so many unfair competitive advantages relative to hotels, he said.

Others have said that regulators need to be fair in how they set out the rules that Airbnb and other similar companies must adhere to. Robert Vaughan, an economist with accountancy firm PwC, said there was a huge variation in those affected from someone renting out their sofa, to landlords with multiple properties and there is a difficulty in applying the same rules to all of them.

ONeill says that while Airbnb may continue to grow, it will not have the free rein it had previously. I dont think there will be a free-for-all of unregulated growth as there has been in the past, he said.

Back at the meeting in Kentish Town, the night ends with a positive response to the homesharing clubs idea. We need to write a letter, suggests one host. We should meet every three months, suggests another. As the meeting draws to a close, nearly everyone agrees on the need for a club. Jonathan jumps in again: I do want to stress that there are other sorts of flavours to home-sharing clubs, he says, launching into a description of a collective bedsheet-washing initiative, but few are listening. As the meeting ends, the group are asked to put their hands up if they want a local club. Nearly every hand goes up.

The Observer reporter who attended the Kentish Town meeting is an Airbnb host

Growing concern around the world

BARCELONA

Authorities in the Catalan capital recently stepped up their campaign against homes illegally rented out to tourists using homesharing websites. Hundreds of listings were ordered to be removed, and Airbnb and another online rental firm, Homeaway, faced fines of 60,000 each.

Homeowners who want to rent out properties to tourists must apply for a licence, and a team of 20 inspectors has been set up to find those who do not adhere to the rules. The citys mayor, Ada Colau, who took office in 2015, stopped the granting of new tourist licences for homes and hotels. She has blamed the rise in Airbnb popularity for growing tensions between residents and rowdy tourists.

The number of people using Airbnb in Barcelona tripled to 900,000 in the three years to 2015.

REYKJAVIK

The 1,600 short-term property lets in Icelands capital have to operate under strict rules introduced in June. The legislation allows residents to let their property for 90 days a year before they must pay business tax. The move comes as Icelands population of 332,000 is set to welcome 1.6 million visitors this year a 29% increase on last year drawn by the glaciers, fjords, lava fields, hot springs, hiking trails and midnight sun.

The move is one of a series aimed at controlling the rapid rise in visitor numbers, including Game of Thrones fans travelling to the filming locations of the television drama. One report estimated there was a 124% increase in Airbnb rentals in one year as residents cashed in on the popularity of the country, with more than 100 flats available on the capitals main street alone.

MOSCOW

Airbnb said last year that the Russian capital was one of its fastest-growing markets, fuelled by high inflation and low incomes. Activity doubled in one year, driven by an increase of single rooms in apartments, which were being listed for short-terms lets in an attempt by many homeowners to make ends meet, given the countrys economic problems.

The growing interest in Moscow on Airbnb brought it into the top 10 most popular cities by bookings on the website at a time when there was no sign of legislative regulation to restrict use of the service. The sharp increase came at the same time as falling wages, which were down 8.8% in the first half of last year. The average price of a private room for a night in the city is 27, and 45 for an entire home, according to the site.

LISBON

The city has bucked the trend of some of its European neighbours, and instead worked to make it easier for short-term rentals to operate. Hosts are required to register their properties as short-term rentals but there is no limit on the number of nights per year that they can operate.

Mayor Fernando Medina has said people should not be scared of the new tourism dynamic and wants the city to be able to take in more tourists, in turn reducing the number of empty buildings in Lisbon. Tourism is seen as an important part of Portugals economic recovery. Airbnb listings in the greater Lisbon area have almost tripled in the past three years.

SAN FRANCISCO

Although the city is home to Airbnbs HQ, it also operates strict rules for hosts, who have to register with authorities. If Airbnb advertises an unregistered property it can be fined $1,000 a day for each listing. One action group has posted wanted flyers. The crime? Airbnbing our community and destroying affordable housing for immigrant, minority, and low-income families. Resident groups have campaigned against Airbnb and there have been reports of tenants being evicted so landlords can list on the site. Last year Airbnb successfully campaigned against Proposition F, or the Airbnb initiative, planned legislation that would have reduced the number of days owners can rent their properties. Airbnbs victory was helped by its grassroots homesharing club, which voted in large numbers against the law.

Read more: https://www.theguardian.com/technology/2016/oct/29/airbnb-backlash-customers-fight-back-london


One month after the referendum, are predictions of Brexit blight coming true?

Though the Leave vote hit share values hard, many have recovered. But other sectors of the economy will be counting the cost for years

The overall impact of the historic referendum that saw the UK unexpectedly vote to leave the European Union has so far, in the space of a month, been less severe than some of the more apocalyptic warnings had suggested. But there have been winners and losers across the economy.

The pound

Sterling went on a rollercoaster ride on referendum night, ending up down 8% against the dollar as the results confirmed a victory for the Leave camp. Since then, its decline has continued and the pound is now at levels not seen since 1985, having lost about 12% against the US currency. Compared with the euro, the pound has fallen by 9% since the vote and is at a three-year low making holidays in euroland more expensive.

The decline comes as investors worry about weakness in the UK economy and the prospect of interest rate cuts to boost demand. This month the Bank of England left rates on hold but said most members of its monetary policy committee expected a cut in August if the economy did not improve.

The weak pound is a boon to exporters but will make imported goods more expensive. On Thursday, Unilever the business behind brands including Dove, Flora, Bertolli, Hellmans and Persil became the first major food and consumer goods company to warn that companies were likely to pass on increased costs to customers.

Stock markets

Markets were caught by surprise by the Leave result and a record $2tn was wiped off the value of global shares. But since then, there has been something of a recovery, particularly for the FTSE 100, which has regained all lost ground and more, and is currently at 11-month highs. However, the leading UK index is chock-full of companies with international operations, which are less exposed to any slump in the UK economy, and which earn in dollars, thus gaining from the new lower exchange rate.

The weak pound has also raised the prospect of UK-listed companies being snapped up by foreign rivals because suddenly they look cheap. Just last week chip designer ARM agreed to be taken over by Japans SoftBank for 24bn, while South African retailer Steinhoff has agreed to buy Poundland. Analysts believe more deals will follow.

Markets have also been lifted by bargain hunters who believed valuations had fallen too far, as well as by the quick resolution to the political crisis threatening to engulf the government following Theresa Mays appointment as prime minister.

However, the mid-cap FTSE 250, which is more exposed to the UK economy than the 100 index, has yet to reach the level it was sitting at before the referendum result, despite recovering more than 13% from its lows. It is now down 2% from its pre-Brexit level.

Housing market

There has been a spate of profit warnings from estate agents, and many are making gloomy forecasts for the rest of the year. Agents in some upmarket parts of London have reported a bounce in interest from overseas buyers keen to take advantage of weak sterling, but for the mainstream market there are signs both interest and price growth have cooled.

On Friday, LSL, Britains second-biggest estate agent group owner of Your Move and Marsh & Parsons among others said business had slowed since the vote and warned that its annual profits would be significantly lower than anticipated. London-focused Foxtons issued a similar warning in late June.

Forecasts for the rest of the year are for falling interest from buyers and price drops, particularly in the most expensive parts of the market. French bank Socit Gnrale said last week that a price correction of even 40-50% in the most expensive London boroughs could be possible.

The Royal Institution of Chartered Surveyors (Rics) says its members expect sales to slump over the summer, because buyer inquiries fell significantly in June. Ricss findings were cited by the Bank of England when it announced that it was revising down its forecast for price rises.

Housebuilders

Shares in housebuilders lost around 40% of their value in the immediate aftermath of the Brexit vote, with investors worried that an economic slowdown in the UK would hit their business, despite the country seeing record low interest rates.

There has been some recovery since then, but the companies have failed to regain all their losses. Barratt Developments, Britains biggest housebuilder, is still down around 28%, and it has said that it may build fewer homes because of the current uncertainty.

Even before the vote, upmarket rival Berkeley had warned in June of a 20% drop in reservations of new homes.

Barratt
Barratts share price is down 28%. Photograph: Bloomberg via Getty Images

Commercial property

The commercial property market was already stalling in the months running up to the referendum as investors put plans on hold to await the result. The UKs decision to leave the EU has not encouraged them back.

Rics said last week that there had been a significant drop in confidence and demand among investors and tenants since the vote. Both rent and capital value expectations are now in negative territory, it reported, adding that office and retail properties have been hardest hit.

Funds invested in commercial property were forced to close their doors for a while, as panicked savers tried to withdraw their cash. Those barring withdrawals included funds run by Standard Life, M&G Investments and Aviva Investors. Last week, they started to reopen for business, but some investors who want to get their money out will take a hit. Aberdeen Asset Management, for example, is adjusting payments downwards by 7%.

Banks

The banking sector has been hard hit by the Brexit fallout, thanks to a combination of low interest rates, worries about future access to European financial markets and the prospect of a general downturn.

With expectations of another rate cut in August, the banks are braced for more strain on their stretched balance sheets, at the same time as the economy is slowing and the risk of bad debts is increasing.

Moreover, so-called passporting arrangements, under which banks can sell financial products throughout Europe even though the UK is not part of the single currency, could come under threat after Brexit.

Banks most exposed to the UK market have been hardest hit, with Lloyds Banking Group and Royal Bank of Scotland down 25% and challenger bank Virgin Money falling 35%.

Profit warnings

Estate agents have been the only businesses to issue profit warnings following the Brexit vote. However, British Airways owner International Airlines Group was quick off the mark to say the uncertainty would hit demand, closely following by easyJet. Last week, the budget airline added that the fall in the pound had cost it 40m.

Other travel companies are also suffering as, along with increased concerns about terror attacks, they face the prospect of UK holidaymakers ditching more expensive overseas trips and staying at home.

But executives at Heathrow airport said on Friday that the Leave vote had been good for business, with the falling pound encouraging international visitors to spend more in its shops, as well as making it easier to raise money from foreign investors.

FIRST SIGNS OF ECONOMIC IMPACT

The first real sign that Brexit is having an impact on the economy emerged last Friday, with a Markit survey showing business activity in services and manufacturing shrinking in July at its fastest rate since the global financial crisis in 2009. The data suggested that UK GDP could contract by 0.4% in the third quarter, according to Markit.

Until then, the data had been equivocal. The International Monetary Fund, which before the referendum had warned of possible recession if the Leave campaign won, cut its forecast for UK growth in 2017 by 0.9% points to 1.3% from its April estimate. But that is still similar to its forecasts for Germany and France.

A report from the Bank of Englands regional agents last week showed that a majority of firms were not planning to mothball investment or change their hiring plans.

The latest job figures looked upbeat: showing unemployment at its lowest level for more than a decade, with 31.7 million people in work in the three months to the end of May 176,000 more than for the three months to February 2016.

On the high street, however, the volume of retail sales fell by 0.9% between May and June. This compared to a rise of the same amount in the previous three months, and showed the effect of falling consumer confidence in the run-up to and immediate aftermath of the EU vote.

This was backed up by a survey from the British Retail Consortium and KPMG showing retail sales in the three months before the vote at their weakest for seven years, while market research group GfK recorded the biggest slide in consumer confidence for 21 years in a one-off poll following the referendum.

Inflation is on the rise, with official figures showing that dearer air fares and driving costs helped to push the consumer price index up by 0.5% in the year ending in June, up from 0.3% previously.

With higher prices on the way after the Brexit vote, inflation could breach its 2% target during 2017.

Read more: https://www.theguardian.com/business/2016/jul/23/brexit-one-month-after-referendum-blight-predictions


Clinton looks to pop Trump’s populist appeal

Commerce, California (CNN)Donald Trump has cast himself as a populist hero during the 2016 campaign: A champion of impoverished middle class Americans shunned by a corrupt political establishment.

Hillary Clinton is launching a concerted effort to pull that image apart, beginning with highlighting quotes from 2006 and 2007 where the real estate mogul speculated he could cash in on a housing market crash. The message is simple: Trump is pretending to be a defender of middle class Americans when in fact, he has sought to personally benefit from their losses.
    In an audiobook produced for Trump University 10 years ago, Trump, asked about predictions of a forthcoming housing market crash, responded: “I sort of hope that happens because then, people like me would go in and buy.”
    Trump added: “If there is a bubble burst, as they call it, you know you can make a lot of money.”
    At a campaign rally Tuesday, Clinton accused Trump of wishing for a financial crash so that he could “make some money for himself.”
    “He said ‘I sort of hope that happens.’ He actually said that,” Clinton said. “And now he says he wants to roll back the financial regulations that we have imposed on Wall Street to let them run wild again. Well I will tell you what — you and I together, we’re not going to let him.”
    The attacks recall the 2012 election, where President Barack Obama and Democrats relentlessly went after GOP nominee Mitt Romney’s work in private equity. Obama and his surrogates sought to paint Romney as a wealthy and out-of-touch businessman who struck profitable business deals even at the expense of middle class jobs.
    Trump defended his business record in a statement Tuesday.
    “I am a businessman and I have made a lot of money in down markets, in some cases as much as I’ve made when markets are good,” he said. “Frankly, this is the kind of thinking our country needs — understanding how to get a good result out of a very bad and sad situation. Politicians have no idea how to do this — they don’t have a clue. I will create jobs, bring back companies and not make it easy for companies to leave. If they do, they will fully understand that there will be consequences. Our jobs market will flourish.”
    The housing market crashed in 2008, setting off a devastating financial crisis that wrecked the livelihoods of millions of Americans. Years later, plenty of voters across the country feel that they never fully recovered, and have flocked to anti-establishment, populist candidates like Trump and Sanders this year.
    With the general election still more than five months away, the Clinton campaign is testing out a range of political attacks against Trump including on his controversial rhetoric and his foreign policy views. Last week, Clinton questioned Trump’s eligibility to be president, telling CNN’s Chris Cuomo: “He is not qualified to be president of the United States.”

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    Trump managed to maintain his popularity throughout the campaign despite making public statements that would have seriously damaged most other politicians. Trump has referred to some Mexicans coming into the United States as criminals and rapists; mocked Sen. John McCain’s captivity in the Vietnam War, saying: “I like people that weren’t captured”; and made questionable comments about women including then-presidential candidate Carly Fiorina and Fox News anchor Megyn Kelly.
    The housing crisis quotes are an attack Clinton’s campaign hopes can work in swing states such as Florida, Ohio and Nevada. Multiple members unleashed their criticism on the House floor on Tuesday.
    Nevada Rep. Dina Titus lamented the devastation in Las Vegas after the housing crash, and had this to say to the presumptive GOP nominee: “Keep your short fingers out of the Nevada housing market.”
    Ohio Rep. Tim Ryan also weighed in, saying, “Shame on you, Mr. Trump. You are supposed to be rooting for the American people not rooting against them.”
    Clinton’s surrogates will continue going after Trump on the issue in six battleground states through a series of press calls, statements and events, according to campaign aides. The campaign also highlighted a 2007 interview in which Trump said he was “excited” at the prospect of soft real estate markets. “People have been talking about the end of the cycle for 12 years, and I’m excited if it is,” he told the Toronto Globe and Mail. “I’ve always made more money in bad markets than in good markets.”
    In a call with reporters Tuesday, Tampa, Florida, Mayor Bob Buckhorn said Trump’s comments were “shameful” and “disqualifying.”
    “I don’t know how you make America great again when you root for it to fail so you can make a quick buck,” Buckhorn said.
    The Democratic National Committee also jumped on the newly surfaced remarks from Trump on the housing market. In a press release accusing Trump of having “cheered on” the collapse of the housing market, the DNC noted that the crash was devastating to minorities like Hispanics and African-Americans.
    “Donald Trump’s lack of concern for the economic well-being of hard-working families shows that he doesn’t have the judgment and temperament to occupy the Oval Office,” wrote DNC spokesperson Luis Miranda.

    Read more: http://www.cnn.com/2016/05/24/politics/hillary-clinton-donald-trump-populist-housing-crisis/index.html


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