Airbnb examines the economic impact of proposed government regulation
While there has been a lot of publicity about the economic impact on Edinburgh of proposed government regulations on short-term vacation rentals, Scotland’s largest city could also suffer, according to an independent study.
Airbnb alone supports nearly 3,000 jobs in Glasgow and generates £ 58.8million in economic activity in the city per year in gross value added (GVA), according to a report by BiGGAR Economics. *
Of all Scottish local authorities, Glasgow is only behind Edinburgh and the Highlands in terms of the economic benefits associated with Airbnb.
Nationwide, Airbnb generates a total of £ 676.9million per year and supports more than 33,500 full-time jobs, according to the BiGGARr Economics report.
However, the company believes the regulations proposed by the Scottish Government are too costly and bureaucratic, which could put many short-term rental accommodation out of business.
According to the report, even a mere 10% reduction in Airbnb nights could result in a reduction in GVA of £ 67.7million per year in Scotland and 3,355 jobs. The impact on the unemployment rate could be + 0.1%. In Glasgow that would amount to a loss of £ 5.9million per year and the loss of 289 jobs.
Graeme Blackett of BiGGAR Economics agrees that there is no doubt that the housing shortage is a problem for the Scottish economy, but stressed that it is a problem for all advanced economies, even those where the tourism sector is not as large as in Scotland. .
“This suggests that tourism is not the main driver of the housing problem,” he said. “The consensus among most economists is that there is not enough supply – we are not building enough houses – so regulations are not going to solve the problem.”
Mr. Blackett said any regulation will come at a cost.
“They don’t exist yet, so it’s not possible to be certain of the effects, but we can look at how things like this affect the economy to give us some kind of guidance and if that raises the prices, this who is likely to do so, you would expect this to reduce demand.
“The other consequence you would expect if there is a throttling system is that it will turn off some hosts. ”
He said some would be likely to question whether the settlement was worth spending the money, while others might be put off by the “hassle” of going through the process.
“If there is a reduction in demand and a reduction in properties, there will be fewer visitors staying on Airbnb, which means there will be less money spent in the economy by guests and hosts. “said Mr. Blackett.
“If you do something that has an impact on prices, it will have an economic effect. The amount doesn’t really matter, as any kind of cost will increase the price. Any regulation will have a cost and it will reverberate and the question is whether people will think that cost is worth it.
“It might be that if a price goes up 1% it won’t make any difference for most people, but it will for some and they won’t come anymore, so you will see the effect in terms of lower demand. ”
Mr Blackett said people would either not come at all or have less money to spend at local stores, restaurants and businesses as they were spending more on accommodation as they would indirectly pay for the settlement.
“The key point of the report is that it provides evidence of the consequences of less activity,” he said. “It is then up to the people who propose and vote on the legislation to consider the downsides as well as the problem they hope to solve so that they can balance these things and decide if it is a sane thing to do.”
Under the new short-term rental proposals, hosts could have to pay almost £ 2,500 just to comply with the new regulations, making it Europe’s most expensive short-term rental scheme.
Hosts may also be faced with costly home modifications, such as replacing hardwood floors with linoleum.
“Contrary to popular myth, Airbnb is actually a strong advocate of reasonable proportional regulation and has entered into over 1,000 tax and regulatory deals around the world, so this is nothing new to us,” said Amanda Cupples, Managing Director of Airbnb for Northern Europe.
“However, these proposals are among the strictest in the world and incredibly expensive. The majority of hosts on Airbnb in Scotland actually share their own home and the average income per year is around £ 1,000. However, the regulations as written mean that if you share your spare bedroom for one night or your entire property, you need to apply for a license which could cost you up to £ 2,500. It is really disproportionate. In this post-pandemic phase, many hosts on Airbnb are relying on this extra income to make ends meet, so we want to do what’s right for them.
In addition to being check-in friendly for those who rent out their property, Airbnb has a neighborhood support hotline and a range of other tools available to local authorities and communities to help them with manage tourism.
* BiGGAR Economics Report “Assessing the Economic Impact of Scottish and Local Tourism”, October 2020, commissioned by Airbnb.
This article is offered to you in partnership with Airbnb.