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What does Air BnB tell us about the value of home ownership?

Becky TunstallHSA, York, April 2014

Becky.tunstall@york.ac.uk01904 321 475

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Home ownership

Traditionally valued for offering residents:i) security and privacy, and ii) the opportunity to build an asset and to make capital gains. (refs)

Not traditionally valued for offering residents:iii) the opportunity for discretionary sharing, especially with strangers, and iv) the opportunity to make an income while in residence.

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AirBnB

“Find a place to stay. Rent from people in over 34,000 cities and 192 countries” (www.airbnb.co.uk)

Started 2008 in San Francisco

Householders place adverts on the site, describing the home in a set format. They are able to set the fee charges, to specify check-in and check-out times and ‘house rules’. They are also able to get an AirBnB rep to visit to take attractive photos. The site makes income from both householders and renters, charged at “6-12%” of the stated price to guests, and 3% to hosts (www.airbnb.co.uk). Users are encouraged to leave reviews of their stay, by a reminder email. Hosts are also encouraged to review guests, although few take up this option.

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The ‘sharing economy’

Air BnB is part of the internet ‘sharing economy’ - websites enable sharing of cars, bikes, tools, household goods and even clothing

Housing is an unusual ‘share’ as owner and renter may use the rented item simultaneously, and because of its high capital, rentable – and sentimental - value

However, the rapid growth of Airbnb and similar housing ‘sharing’ businesses (eg Couchsurfing and Home Away), seems to challenge the traditional understanding of home ownership.

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Aims

This paper aims to answer the following questions:

1. Which households participate in AirBnB?2. Which homes participate in AirBnB?3. Why do householders participate in Airbnb, and how important

financial motives are in relation to any other motives, and to costs of participation?

4. Is it of value to go beyond this very small pilot study?

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Methods

1. Review of literature on home ownership, and on motives for acting as a landlord to lodgers, and on AirBnB and similar services

2. Analysis of UK data on AirBnB website, with a focus on the case study area, York

3. Analysis of data on case study city’s housing and overnight stay market4. Interviews with a small number of AirBnB landlords in York.

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Air BnB UK: An idiosyncratic geographical spread

Offers March 2014 in England’s largest built-up areas (2011):1.Gtr London, 2.Gtr Manchester, 3.W Midlands, 4.W Yorkshire - all 1000+ offers • LBs Camden, Islington, Southwark etc – 1000+5.Bristol - 6416.Leicester - 1577.Liverpool – 1798.Nottingham - 1509.Sheffield - 15910.South Hampshire - (‘Southampton’) 30411.Tyneside (‘Newcastle’) - 130• Brighton – 721, Oxford – 365, Totnes – 264, York – 187

Places with tourist/travel market + somewhat bohemian culture + high housing costs?

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AirBnB in York

‘York’:187 bedspaces, rooms and whole homes offered (Feb 2014)

Number fluctuates daily

Only 48/187 in York LA areaOnly 30/48 AirBnB ‘archetype’

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Typology of offers

1.AirBnB ‘archetype’:

Resident host (owner occupier – or tenant)Guest has own bedroom (or space)

Guest and host share bathroom, living room, kitchen, circ spaceGuest and host share some non-functional time

Host doesn’t provide foodHost doesn’t ask for deposit

30 of this type in York LA area

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2.Holiday let (inc BT-holiday let):Non-resident host (owner occupier – or tenant)

‘Guest’ has whole homeNo sharing of space or time

Listings: ‘stunning apt’; ‘Serviced apartments’; ‘holiday home’; ‘Stylish city centre flat’

18 of this type in York

Variants:Host uses professional cleaners, managers; may ask for deposits

‘BTL’ type properties eg new build/conversions; 1 bath per bedroomProperty also advertised on holiday let sites

Temporary version of ‘archetype’ when host away from home

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3.Traditional BnB/small hotel:

Non-resident host (owner occupier – or tenant)Functional sharing of time

Host provides breakfastHost uses professional cleaners, managers; may ask for deposits

‘BnB’ type properties eg multi-bedroom housesProperty also advertised on BnB sites

0 of this type in York

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Q1 Which households participate?

UK – those in idiosyncratic places

YorkAge: • 1 in 20s; 8 in 30s; 14 in 40s; 4 in 60s (mostly estimated from photos)

(27/30 identified)Household type:• 10 singles, 16 couples, 3 mixed sharers (29/30 stated)Jobs: • ‘Professionals’ eg in NHS, midwife, professional, professional, uni

scientist, public sector, scientist, teacher, engineer in family business• Self-employed eg counsellor/mediator; web designer, photographer,

interior designer, organic gardener, + PhD student (21/30 stated)Tenure:• At least some tenants involved

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Q2 Which homes participate?

York:Majority in centre, some in suburbs (but lower rent charged)Majority 1 bathroom (requiring sharing)Some rented

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Q3 Why do householders participate and how important are financial motives?

According to the company:, earnings are primary motive:“Host: Renting out your unused space could pay your bills or fund your next holiday” (airbnb.co.uk).In info on registration: “You're so close to a payday you can almost taste it!” (airbnb.co.uk).

Absence of interview material - direct info on motives a research gap

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Indirect info: How much income can people make?

York: charges per person per night:

Costs:Opportunity costs of being at home to let guests in; time hosting, cleaningLaundry, cleaning, new equipment, breakages (insurance?)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27£0

£20

£40

£60

£80

£100

£120

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Estimated total earnings

Estimated earnings: Guest reviews (as proxy of total stays) x min nights stay x price?Real earnings may be x2 or more

York: £32,996 total estimated earnings by 30 ‘archetype’ hostsAve c£1,000 each4 above £4,250 annual lodger tax free limitSome have no reviews – possibly no guests!

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Other potential motives for participating in discretionary temporary sharing

1. Opportunities for (superficial, structured) sociability2. Opportunities for display of hosting skills3. Opportunities for display of homemaking skills

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Indirect info on motives for discretionary temporary sharing – opportunities for sociability

Host profiles:“I… love to travel and meet new people”“We enjoy travel and meeting new people” “Pop in and say hi, or keep yourselves to yourselves, I don’t mind” “I am happy and easy going and love having people to stay. I have just returned from my holiday and stayed at an airbanb and loved it too” “I like cooking”

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…Display – and appreciation - of hosting skills

Starring systemReviews by guests (ave 22/host):“They are a lovely couple that were friendly and so nice” “We were brilliantly looked after” “We were welcomed before we even rang the bell by X, who had seen us from the window. We were offered coffee and cake and sat at the kitchen table while X marked on our map the best restaurants and the important sites”“X opens her beautiful home to her guests, and is always happy to impart her local knowledge” “X and Y symbolized a lifestyle to me, a lifestyle that combines tranquility and sparkles, a lifestyle that i am striving to” “the cat was amazing”

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(How much sharing and socialising?

Varies – in some cases/times quite limited; remains discretionary:

Guests:“We only met X and her husband on our last day right before we left and it was nice to actually meet them” “I stay at X's house for one night. I did not meet X, but X arranged everything well” “Although we shared the large, modern bath with the owners and at least one other guest, we never encountered anyone going or coming” )

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…Display of homemaking skills

Professional photography provided

Listings:‘Artist's stylist city centre apartment’ ‘Cool contemporary room central York’ ‘Renovated eco chapel York’

Further host comments:“College of Art graduates X and Y have created the perfect, dreamy get-away… lovingly restored and styled by its artist owners… features their original artworks… ‘We have been renovating our house for years and years -something of an obsession- and thought we would put it to good use by doing this airbnb!’”

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Conclusion: The value of home ownership

AirBnB and this tiny study provides some evidence that at least some owners challenge the traditional values of home ownership, by valuing:i) Opportunities for discretionary temporary sharing with strangers, and ii) The opportunity to make an income while in residence.

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Q4 Implications for research

Worth continuing beyond pilot stage?

Meaning of home ownership and earnings from it may deserve more research

All/other forms of shared housing – motives, modes, consequences – may deserve more research inc types where money changes hands

Potential for much more ‘arm chair’ research via publically available data available on housing-linked sites – as at least part of method

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Other ‘shared’ housing – with some money changing hands

England 2011:• 69.8% ‘households’ have more than one person (Household: people

(not necessarily related) living at the same private address who share cooking facilities and share a living room/sitting room/dining area) (ONS 2014a)

• 1.8% households contain a concealed ‘family’ (a couple or lone parent) (England and Wales) (ONS 2014b)

• 0.3% dwellings have more than one household• 3.0% (single) households have multiple adults (not just couples)• 0.6% households are multi-student • ?lodgers

- These types are longer-term discretionary sharing , generally with chosen sharers; money may change hands

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Implications for policy

A minority of hosts may be liable for tax on earnings

Some hosts may be infringing mortgage, tenancy and insurance agreements

In most cities, as yet presents very limited competition to conventional BnB, hotelsEg York:• AirBnB = 30 ‘archetype’ hosts with 54 bedspaces, min 785 stays to date• 20 Hotel with c1000 bedspaces and 20 BnBs with c100 bedspaces, min

c700 stays per night (BnB occupancy 49%; hotel 67% (Visit England 2013))

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ReferencesONS (2014a) Families and households in England and Wales 2011 Correction 30th January 2013 London: ONSONS (2014b) What does the 2011 Census tell us about concealed families living in multi-family households in England and Wales? 6th February London: ONSVisit England (2013) England Occupancy survey – November 2012 http://www.visitengland.org/Images/November%20EOS%20Newsletter_tcm30-40468.pdfQa Research (2011) Yorkshire Visitor Regional survey 2010/11: Key findings for Welcome to Yorkshire and the 6 offices York: Yorkshire Forward