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Good afternoon, and welcome to this week’s Home Front. We’ll get to why Donald Trump’s global trade war may have long-term ramifications for house prices in Britain in a moment but first, I’d like to put my stake in the ground on (yet another) contentious issue: Airbnb!
The Easter holidays are upon us and I am enjoying a short break, as I’m sure many of you are too. But you won’t find me staying in an Airbnb.
My self-imposed Airbnb ban has annoyed friends and made booking group holidays harder, but I won’t budge.
My reasoning is simple: when Airbnb launched, the USP was you could “live like a local” while on holiday. However, in doing so, you might be depriving a local person of a home.
A group of four Cornwall MPs have joined a national chorus of discontent about the impact Airbnbs are having on tourism hot spots and calling for second-homeowners to require planning permission to change their property to a holiday let.
They are also calling for a loophole to be closed which allows the property’s use to be changed from residential to business to avoid increased council tax charges.
square ALLEGRA CHAPMAN
Living next to an Airbnb has ruined my life - they should be banned
Read MoreIt’s not difficult to understand why landlords are keen on running an Airbnb. They can be lucrative and, while housing long-term tenants requires adherence to rules and regulations, short-term lets carry fewer obligations or checks and balances.
However, studies show landlords’ deciding to convert private rentals into Airbnbs has taken homes out of the market and led to higher rents and a shortage of affordable homes in areas from Cornwall to Edinburgh, from the Lake District to Wales.
Added to this, local economies in tourism destinations don’t necessarily benefit from Airbnb in the same way as they might from a local hotel or holiday let.
Why? Consider how your experience of renting an Airbnb differs from staying in a hotel. In a hotel, you interact with the staff. Jobs have been created by your custom, for cleaners and reception staff, for chefs and hospitality workers.
However, when you stay in an Airbnb, you might do a food shop and cook at home, meaning you spend less in local shops and restaurants.
In the Lake District, I spoke to distressed locals – many of whom worked in hospitality or the tourism industry – who said they could no longer afford to rent in the area. One young man was commuting 35 miles from Heysham, near Morecombe. This was in spite of the fact that he grew up in the area and his parents still lived there.
Similarly, while on holiday in Cornwall recently, I spoke to concerned locals who told me they were being made homeless by rent increases that they could not afford.
In Wales, the situation got so bad that the Welsh Government took radical action last year and introduced the planning permission requirement for holiday lets.
So far, this move seems to have cooled local housing markets based on early data in Gwynedd, but it’s too soon to know what the long-term impact will be.
square SCOTLAND ExclusiveEdinburgh urged to copy Barcelona’s ban on Airbnb-style rentals
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Similar rules have been introduced in Edinburgh. The Tory government did bring in new powers as part of the Levelling Up Act 2023 which mean short-term lets must be registered. However, the Conservatives stopped short of planning permission reforms.
In London, you do have to apply for permission if you want to Airbnb a home for more than 90 nights per year. Whether that’s enforceable is another question entirely. Some London councils, including Wandsworth, are also bringing in a council tax premium for second homes which could be used as holiday lets.
I’ve seen the destruction caused by Airbnb to the beautiful places we’d all like to visit up close. I’ve spoken to the people who are being made homeless and priced out of their communities. Something has to give.
Until it does, you’ll find me in local hotels whenever I go away because I don’t want to visit somewhere where there’s no locals in the pubs, bars and restaurants because they can’t afford a home.
As you will no doubt be sick of hearing by now, Donald Trump has delivered on his election promise of imposing global trade tariffs. Despite repeated warnings from the President, this move has sent financial markets into a frenzy and seems to, somehow, still have come as a surprise.
Not only has Trump upended the existing global economic order, he has also increased the risk of recession for many countries, including his own by making it more expensive to buy and sell certain goods and starting trade wars with countries such as China.
Housing will be affected by all of this too, but not in the ways you might initially expect.
In the first instance, Trump’s tariffs may appear to be good news for mortgage rates. Swap rates – this is how mortgage lending is priced on global financial markets – have fallen. This means that major lenders are offering some slightly lower rates already.
Read Next
square MORTGAGESRead More
Sadly, this may well be bad news dressed up as good news.
As Neal Shearing, group chief economist at Capital Economics, explained to me: “Rates are falling because expectations of the outlook for the economy have soured.”
Trump’s decision to impose tariffs has caused economic instability and increased the risk of recession, not just here in the UK but around the world. As a result, markets are pricing the possibility of a major economic downturn into swap rates.
“Mortgages might get cheaper,” Shearing said, “but that’s only because the economy is weaker.”
A weaker economy could mean job losses and a fall in house prices in the long term. The cost of recession would be far greater than saving a few percentage points on mortgage rates.
I can’t count the number of times I’ve written that “uncertainty is the only thing that’s certain right now” in recent years. But, once again, it’s true.
Shearing says it’s possible that Britain’s economy won’t weaken, “perhaps because tariffs get rolled back and mortgage rates rebound” but, given the full-blown trade war between China and the US that’s unfolding as I type, it’s also possible that this goes on for some time.
Ask me anything
Yesterday, a worried reader sent me the link to an article in The Daily Telegraph which had the headline “Why Labour wants your house price to fall” and asked me if it was true?
In short, not really.
While it’s true the Labour Party is doing things which could stabilise house prices, it would be a stretch to say the intention is for house prices to fall significantly. In fact, they’ve said some things which imply they want the opposite.
Let me explain.
The Labour Government has tightened up regulations for landlords and holiday lets, as above, which will cool down housing markets in certain desirable parts of the country – like Welsh holiday hot spots, Cornwall or the Lakes – where demand has previously been very high.
square PROPERTY MappedThe areas where house prices have risen by more than 800% over 30 years, mapped
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However, Labour’s pledge to build 1.5 million new homes would significantly increase the supply of new housing. In theory, this would bring house prices down slightly because there would be more housing available to buy than there is currently.
The Office for Budget Responsibility (OBR) has said a 0.5 per cent increase in housing supply would bring house prices down by 0.8 per cent. However, when you put that figure in the context of overall house price rises year on year, it’s not enormously significant.
Added to that, Rachel Reeves has been clear that she wants to convince regulators to relax lending rules so that it’s easier for people, particularly first-time buyers, to get mortgages. If she achieves this, it will increase demand at the same time as building new homes increases supply and, if anything, could mean that house prices rise.
It was a good headline, but not quite a true story.
Send in your questions to: @Victoria_Spratt, on X, formerly Twitter, @vicky.spratt on Instagram or via email [email protected]
Vicky’s pick
On Sunday night, I went to the cinema to see the new Steven Soderbergh film Black Bag. There’s nothing quite like a good old-fashioned British spy drama to set you up for the week.
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Finally We wish PressBee provided you with enough information of ( I’ve stopped staying in Airbnbs – they’re ruining my favourite destinations )
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