The sharing economy is growing faster in Britain than anywhere else in Europe. As it has become more expensive to own cars, homes and even electrical equipment, more of us are seeing the advantages of monetising our idle assets. PwC estimates that transactions on platforms in the five biggest sharing economy sectors almost doubled in value last year to £7.4bn, and expects them to reach £140bn a year by 2025.
So what can you expect to earn?
Leverage your home
Holidaymakers can make back some of the money spent on going away by making their own property available for short-term let while they’re gone. Airbnb is by far the most popular platform for short-term lets, with 24,100 Londoners leasing their entire property or at least one bedroom through the site in the year to November 2015.
According to Airbnb’s calculator, an entire property which sleeps two people can make £640 a week on average in Clapham, £707 in Hampstead and £742 in Islington. But the price you can command will rise and fall depending on the season, quality of the accommodation, and events in the local area. During this year’s tennis tournament, the average per night listing in Wimbledon was £138.
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But the market isn’t restricted to the boroughs closest to the capital’s tourist attractions. The number of nights booked in London’s outer boroughs has risen faster than those in inner London, with Havering, Hillingdon and Barnet leading the charge.
When it comes to maximising your yield, consider dynamic pricing tools like Beyond Pricing. For a 1 per cent monthly commission, Beyond Pricing accesses the Airbnb platform to recommend different rates for your listing on any given night, and will vary your price automatically depending on demand to maximise occupancy and give you the best price.
According to Airbnb’s calculator, an entire property which sleeps two people can make £640 a week on average in Clapham, £707 in Hampstead and £742 in Islington
For a commission which starts at 12 per cent, SmartHost will go even further, managing the letting process for you, and providing professional cleaning, professional photography and search optimisation to ensure your listing stands out as much as possible.
It helps to make your washing machine, kitchen and other facilities available for guest use; 83 per cent of London’s Airbnb guests said they used the site because it offers access to amenities which are less commonly found in hotels.
Airbnb boasts of its “Host Guarantee”, which offers $1m of cover to hosts whose property has been damaged by guests. But this doesn’t include valuables, cash or damage caused to the common parts of a shared building, so be sure to notify your home insurer. Some may charge you a fee to extend existing policies or change your premium to reflect the additional risk.
Because the sharing economy has sprung up so quickly, insurance policies weren’t designed to include things like driveway rental
Like regulation, it may just be a matter of time before insurers catch up and begin to offer cover for short-term lets more specifically. Love Home Swap has developed a swap protection insurance policy which users can take out on the side, and Admiral now offers Airbnb cover as an optional extra. A number of disruptors are springing up to fill gaps in these markets. “Insurance Tailors adapts their insurance offering to a particular asset, like a bedroom or a power tool, for example,” says EY’s Des O’Connor.
It is certainly worth contacting your mortgage provider, or paying a mortgage broker to find you a more bespoke product. Many providers will offer cover for short-term lets on a case-by-case basis, but failing to notify them could lead to an increase in your mortgage interest rate, or you could incur charges.
Ultimately, it will be in the interest of insurance and mortgage companies, and even the platforms themselves, to keep pace with the demands of their customers. “There is pressure on companies like Airbnb to help consumers connect to the sharing economy, or that role will be filled by another disruptor,” says McGrath.