Touristy cities have long complained that too much property is reserved for visitors.
Being a ‘touristy’ city can be both a blessing and a curse, economically-speaking. Visitors are big spenders and create lots of jobs. But they also take up local resources and therefore push up prices, including for housing. This problem has been heightened by the creation of platforms like AirBnB which has seen more and more properties made into holiday lets rather than affordable homes for locals. Popular European cities like Lisbon, Barcelona and Venice have been trying to push back against this trend for years. But many AirBnB owners have resisted. Tourists are simply much more profitable.
The coronavirus pandemic, however, has completely upended this dynamic. Tourist numbers have hit the floor as people grow worried about getting infected and governments impose either outright bans or challenging conditions on travelling. Lots of AirBnB properties are now standing empty and their owners have seen their rental income collapse. This is unlikely to be a short-term situation. Indeed, some pundits are predicting that travel and AirBnB in particular will never recover. Some governments, however, spy an opportunity to improve their city’s housing.
For example, in Lisbon, Portugal, the government is now renting out AirBnBs itself, in order to pass them on to local residents looking for a home. AirBnB owners who sign up to this program are bound by both rent caps and lease lengths (of about 5 years). That has disadvantages: it means that many of them are earning less than they were from tourists, and they won’t be able to turn their property back into a holiday home should tourism suddenly recover. But the flip side is that they are guaranteed a steady income from the government during turbulent times and they don’t have to take on any of the admin of finding tenants.
Read our explainer on: housing affordability.