The Centre for London think tank’s annual housing summit has regularly chronicled the capital’s housing crisis: unaffordable homes and escalating homelessness as the supply of new housing slumps. Wednesday’s event maintained the pattern, with a grim warning: “In the capital, the housing crisis is spiralling out of control.”
It’s a complex picture, with homelessness at an all-time high and council budgets teetering on the brink as they grapple with costs of the £4 million a day keeping families in temporary accommodation, including the equivalent of one child in every London classroom, while new home building costs in the city are an extraordinary 43 times higher than in the West Midlands.
The session highlighted a new and growing concern too – that one in 32 London homes are now used as short-term lets on Airbnb and other platforms, according to a new report from the Central London Forward grouping of 12 inner London boroughs. That’s 117,000 properties, up from 30,000 in 2015, with 67 per cent of the total concentrated in inner London. Westminster is the “epicentre” of the market, with more than 16,000 short-lets, mainly in the West End, Bayswater and Lancaster Gate, followed by Tower Hamlets and Kensington & Chelsea with more than 9,000 each.
Short lets are limited by law to 90 days a year, but around half are let for longer, with more than 9,000 in Westminster breaching the limit. And Westminster Council leader Adam Hug told the meeting that what began as a way to make some extra money by letting a spare room or your flat when you were away has increasingly become a professionalised and commercial operation, with larger landlords owning almost 25 per cent of total listings.
With no arrangements in place to collect data from the letting platforms and no national registration scheme, town halls were unable to effectively identify short let properties and their owners, Hug said, while the neighbourhoods most affected were increasingly at risk of being “hollowed out”.
“Boroughs cannot enforce the regulatory regime in practice,” added City Hall Deputy Mayor for Housing, Tom Copley. With short lets more profitable than longer lettings, he said, the result was the steady loss of affordable rental homes for permanent residents. “That is a major concern.”
The explosion in short-term letting – also affecting holiday hotspots in coastal areas and popular cities across Europe – highlighted a tension with the tourist trade, the meeting heard. London, one of the top three most popular tourist destinations in the world, attracted 21.7 million international visitors in 2024, with the industry contributing more than 10 per cent to the capital’s economy.
But the capital also needed to work for Londoners, the Central London Forward report said: “An under-regulated short-term let market puts pressure on local housing availability and affordability.” London wanted tourism, “but we have to balance that against the long-term housing needs of people in the city,” said Copley. “London can remain a top tourist destination without pushing out the people who make the city what it is,” added Hug, suggesting that more affordable hotel rooms would be part of a solution.
There were concerns as well about tighter regulations forcing more private landlords out of the market, with London’s boroughs reliant on the capital’s private rented sector to provide temporary accommodation for the increasing numbers of homeless families that councils were statutorily obliged to support. Short-term letting was “one of the key factors reducing supply in the private rented sector,” Hug said.
Effective regulation remained the way forward, the meeting heard. That should include mandatory national data-sharing and registration for short-term lets plus possible changes to taxation making short lets less attractive, as well as new powers for the boroughs to set up their own local licensing schemes, which could restrict short-term lets in designated areas or zones where housing affordability and availability were particularly under threat.
But in this area, as with the capital’s housing crisis overall, Hug said, the long-term solution remained “more social housing”. As Centre for London chief executive Antonia Jennings concluded: “We urgently need ambitious solutions. The government must get behind London’s leaders and invest in the capital to finally turn the corner on the housing crisis.”
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