Westminster council calls for Airbnbs to be taxed and registered

21 September 2023 by
Westminster council calls for Airbnbs to be taxed and registered

Westminster City Council is seeking new powers to clamp down on short-term lets such as Airbnbs after warning they create "an uneven playing field" for hospitality businesses and fail to contribute to the upkeep of the borough.

More than 11,800 properties in the area were let on a short-term basis between January and July this year and one block of flats offered almost as many bedrooms to visitors as the Ritz London hotel.

However, the building contributed just £92,000 in council tax, compared to the £2.27m paid by the hotel on Piccadilly.

In a speech on Tuesday, council leader Cllr Adam Hug said: "Fundamentally, [the rise of short-term lets] has created an uneven playing field for many of Westminster's hospitality firms, where traditional providers pay business rates, corporation tax and comply with regulations… in stark contrast to the small business exemptions enjoyed by short-term lets."

He added: "There is minimal regulation overall, which has created an enforcement nightmare for our city, creating misery for our long-term residents who find their neighbours replaced by party flats."

The council has called for the introduction of a compulsory registration scheme for short-term let properties and powers to issue penalties to unregistered hosts and those whose guests dump waste or commit noise offences.

A government consultation on introducing a registration scheme for short-term lets in England closed for submissions in June and the findings have yet to be published.

Potential overnight tax

Westminster borough, which attracts more than 200 million visitors a year, has also asked for powers to introduce a tax on overnight stays that would apply across all types of accommodation.

Hug said: "As we continue to face tens of millions in cuts over the next few years, the time has come to consider whether London's local authorities might be able to decide for themselves if they want to charge a small levy, on short lets as well as hotels, as can be found in cities around the world.

"This could be invested in protecting and enhancing everything from keeping the streets clean to keeping people safe and, when you consider the impact of events like the King's Coronation, which drew millions to Westminster, this has to be seriously considered."

In 2017, a study estimated that an overnight levy could generate between £77m and £240m across all London boroughs.

Westminster City Council has called for the levy to take the form of a flat rate or percentage charge set at a level that is meaningful but would not impact demand.

It has said the tax should apply at the point of sale and be collected by intermediate partners or accommodation providers.

Introducing such a measure would require legislation from central government and the devolution of powers to local authorities.

The London authority also wants to set up a working group of councils to share insights and collaborate on the introduction of such schemes.

In July, the mayor of London Sadiq Khan called for greater regulation of Airbnb-style holiday lets to help ease the capital's housing crisis.

Khan said the growth in short-term lets was contributing to a shortage of homes in London and called on the government to introduce a licensing scheme around their use.

UKHospitality has long called for short-term lets to be held to the same safety standards as hotels.

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