Financial Times Weekend 22-23Feb2020

6 ★ FT Weekend 22 February/23 February 2020

House Home

It has become the

soundtrack to

summer in Europe:

wheeled suitcases

being dragged

over cobbles

Why Londoners

are relaxed

about Airbnb

H

oliday lets in London are

rising at a rapid and

relentless pace. In the

past five years, the

number of listings on

Airbnb has increased nearly fivefold,

from about 14,000 in December 2014

to nearly 65,000 in December 2019,

according to AirDNA, which tracks

the short-term rental market.

Additional listings on HomeAway,

another short-term rental site, brings

the total to about 70,000 active

listings — the highest number

anywhere in the world. Nowhere else

comes close for sheer volume: New

York has about 40,000; Paris has

about 39,000.

Londoners are pretty relaxed about

it. Last year, a YouGov poll found that

43 per cent of residents thought short-

term letting was generally a good thing

for the city. Only 14 per cent thought it

was generally a bad thing. When it

came to the impact on the housing

market, people were less sanguine, but

still only one in three thought holiday

lets made property more expensive.

This makes London unusual. In

parts of Europe, residents concerned

about being pushed out are taking to

the streets. In cities such as

Barcelona and Florence, Airbnb

elicits a kind of visceral hatred.

I used Airbnb for the first time in

Florence about six years ago. The

night we arrived we went to a bar near

the Arno river, where, in a toilet

cubicle, I noticed that someone had

scratched “f*** Airbnb” into the door

with their keys.

The next day, I could see their

problem. I was woken by a low,

rumbling growl coming from the

street below. It has become the

soundtrack to summer in Europe’s

cultural capitals: wheeled suitcases

being dragged over cobbles. “The

Airbnb roar,” as my host called it.

The fact that Florence is overrun

with tourists — me among them — is

having a debilitating effect on the city.

According to the Florentine branch of

the Italian union of tenants, 1,000 local

residents are forced to leave the city

centre every year, either because they

are evicted by landlords looking to

cash in on short-term holiday lets or

because they are priced out as more

investors move in.

The case against Airbnb is two-fold:

it removes homes from the supply of

rental properties, which puts

inflationary pressure on prices, and it

increases the local economy’s reliance

on tourism — a seasonal sector offering

mostly low-paid employment.

So why is London not boiling over

with anti-Airbnb rage? Partly

because, despite its high headline

numbers, the UK capital is so much

bigger than most other European

cities. Even in those boroughs with

the highest concentration of holiday

lets, such as the City of Westminster

and Kensington and Chelsea, entire-

home listings only make up for

about 6.5 per cent of the housing

stock. In Prague’s Old Town, Deloitte

estimates that a quarter of homes are

listed on short-let websites. But it is

mostly because London does not

need Airbnb to kick-start a housing

crisis. It can manage that all by itself.

Central London has been hostile to

its own residents for years, as rising

prices have forced out all but the

wealthiest. Last year, a report by

consultancy ECA found that London

rents were the most expensive in

Europe — with the average cost of a

three-bedroom home in a prime area

a ridiculous £5,187 per month.

London also has a chronic shortage

of affordable homes, both for owner-

occupiers and renters. Since 2016,

supply in the private rental sector has

been decreasing — and by much more

than the increase in holiday lets.

Between August 2017 and August

2019, the number of whole-home

listings in London grew by about

10,000 to 50,300 — an all-time high,

according to AirDNA.

Meanwhile, the number of homes in

the private rental sector fell by nearly

71,000, from 1.035m in the year

2016-17, to 964,000 in the year 2018-19,

according to official data.

The drop in supply has been

blamed on the 3 per cent stamp duty

premium that was brought in on all

second homes in April 2016, and

the phased withdrawal of tax relief

for mortgaged landlords that began

in 2017. Whatever the reason, after

years of flat rental prices, the

average London rent started growing

again in 2019 — jumping 2.8 per cent

over the course of a single year,

according to Zoopla.

The rise of holiday lets has caused

many Londoners terrible stress, of

course. Most of us can rattle off one

of the usual horror stories: guests

rampaging through buildings,

throwing all-night parties and

generally degrading the last vestiges of

community spirit in a neighbourhood.

But Airbnb is not likely to make

Londoners irate. At least not before

they take on the countless other

indignities that renting in London

heaps on them: the nonsense admin

fees, the hidden charges, the

punishing cost of the rent, the

zero-deposit schemes that end up

costing you more in the long term.

Not to mention the lack of living

rooms, the mould, the mice and the

mildew. And certainly not while

holiday-letting sites make getting

away from London that little bit

more manageable.

Nathan Brooker is deputy editor of

House & Home

Onthe market

Nathan Brooker

B

uying in a Manhattan co-op

is one of New York’s more

nerve-racking property expe-

riences. Unlike modern condo

units, where buyers own the

apartment itself, residents in a co-op

own a share of the building and the right

to occupy their apartment. One result is

that prospective buyers must be vetted

by a resident-composed board.

“You have to disclose personal and

financial information at the co-op board

interview,” says Jonathan Gerst, 35, who

works in finance and bought in a co-op

on 79th Street in the Upper West Side in

2015. Many boards impose tough limits
      on the size of mortgages that residents
      can take, to ensure that they are finan-
      cially secure, he says; other restrictions
      cover anything from sub-rental to pet
      ownership. “It’s not for everyone.”
      Judging by recent price data, Gerst —
      who recently sold his apartment to
      move to the Connecticut suburbs —
      should be grateful he endured the
      board’s prying eyes. Analysis by Core
      shows that since Manhattan median
      prices peaked in 2016, those in the
      Upper West Side, where there is a high
      concentration of co-op buildings, have
      grown a further 4 per cent, to $1.148m.
      In downtown, the heart of the new con-
      do-building boom, median prices have
      fallen 10 per cent in that time to $1.55m.

In the Dakota building, one of the

most famous co-ops on the Upper

West Side — and the former home of

John Lennon and Yoko Ono, among

others — Brown Harris Stevens is sell-

ing a three-bedroom, park-facing

duplex for $6.75m. The apartment

carries a service charge of $8,950 a

month, and co-op requirements mean

mortgages cannot exceed 50 per cent

LTV. On West 72nd Street, Compass is

selling a four-bedroom co-op apart-

ment with a service charge of $3,400 a

month and maximum 75 per cent LTV

for $3.45m. The same agent is selling a

four-bedroom co-op apartment on

Riverside Drive for $5.25m, with a

service charge of $4,520 a month and

maximum 75 per cent LTV.

Widespread limits on the size of resi-

dents’ mortgages ensure there are few

forced sellers to drag down prices when

markets hit hard times. And most co-

ops bar investors, preventing owners

from letting their homes for more than

two out of every five years, excepting

rare cases such as owners having to

move for work or facing financial hard-

ship, says Brian Lewis, a local agent with

Compass. He has lived in the same co-op

on the Upper West Side since 2004 —

now he shares it with his husband and

the couple’s two daughters.

“We New Yorkers who happen to live

in co-ops love them during recessions

and uneasy times when they have pro-

tected and shielded us from yahoo

investors,” he says.

However, co-ops have plenty of

drawbacks, he notes. When prices are

rising, the building’s tight rules —

such as limiting LTV ratios — may

limit owners’ financial gains. And

many co-op sellers incur a “flip tax”, a

transfer fee levied by the building,

typically between 1 and 3 per cent.

Some co-ops also have a reputation

for being tired and poorly maintained

compared to the exacting standards of

new condo buildings. “In some cases

there is greater tolerance for these

imperfections because some co-op resi-

dents are more reluctant to renovate,”

says Lewis.

Critics claim the selection process can

allow discrimination. Ian Brandt, of

Manhattan lawyers Wagner, Berkow &

Brandt, is currently in court represent-

ing a seller of a Tribeca co-op apartment

in her seventies whose two prospective

buyers — “one Mexican-American, one

Russian-American” — were turned

down by her co-op board. Once he has

proved the buyers met the board’s

financial qualifications, the onus is on

the board to demonstrate they were not

rejected because of where they were

from, he says.

Arduous personal and financial

checks are one of several reasons that

Manhattan co-ops are a dying breed:

just six of 297 apartment buildings built

in Manhattan since 2010 have been co-

ops, according to Core. “Condos are

Perks of the park

US property| Prices are rising

for period co-op buildings in the

Upper West Side — but buyers

beware, there is an arduous

vetting process. ByHugo Cox

West

nd

Street

American Museum

of Natural History

West

th

Street

Lincoln Center

Central Park

Hudson River

Riverside

Drive

Columbus Circle

Columbus

Avenue

The Dakota

UPPER WEST SIDE

NEW YORK

mapsnews.com/©HERE  km

i/BU Y I N G G U I D E

Medianco-op sale prices in 2019 on

the Upper West Side increased 2 per cent

on 2018

The subway connects 79th St station with

Wall St station in 22 minutes

What you can buy for...

$500,000A studio apartment in a co-op

buildingon West 82nd Street

$1mA two-bedroom apartment in a co-op

buildingon West End Avenue

$5mA four-bedroom apartment in a co-

opon Riverside Drive

More at propertylistings.ft.com

(Left) Two-

bedroom

apartment next

to Central Park,

$3.495m,

through Brown

Harris Stevens;

(right) view of

New York from

this apartment

(Clockwise from

top) Central

Park; a three-

bedroom co-op,

Dakota building,

$6.75m; the

Dakota exteror

Alamy; Shutterstock/OSTILL

Franck Camhi

‘Co-ops are fighting hard

to stay relevant in this

golden age of the new

development condo’

much more popular with modern buy-

ers, thanks to the lack of restrictions

around mortgage borrowing, renting

and selling,” says Garrett Derderian of

Core, adding that condos also allow buy-

ers to purchase through a company.

“[Co-op] buildings are fighting hard to

stay relevant in this golden age of the

new development condo,” says Lewis.

Gerst concedes that co-ops need to up

their game. “Our building just did a gut

renovation of communal spaces for

example — not exactly ‘condo’ features

but everyone is trying to improve the

building,” he says. But he and his wife

welcomed the fussiness of the co-op

rules. “In Manhattan you don’t always

know your neighbours — they could be

anybody. To know that they have been

approved is comforting.”

Despite their drawbacks, the period

co-op buildings that line the wide ave-

nues of the Upper West Side are sure to

be among New York’s most appealing

homes for years to come.

Universal Images Group via Getty

FEBRUARY 22 2020 Section:Weekend Time: 19/2/2020 - 17: 58 User: rosalind.sykes Page Name: RES6, Part,Page,Edition: RES, 6, 1