Dave Raval decided to rent out the spare driveway of his home in Hackney, east London, not because it was lying idle, but because it was unexpectedly occupied.
“People would brazenly park their car on my drive all day. It was quite common. If you challenged them and asked them to move, they’d say: ‘No — I’m doing the shopping’.”
As well as renting out his driveway, Mr Raval has invited strangers to use the spare room in his house and handed others the keys to his Mini. For anyone who wishes to replenish the batteries of their electric car, he has even added a vehicle charging point. “The whole idea of owning assets just seems a bit 20th century,” says Mr Raval, who earns up to £2,000 a year from his activities.Piqued by this antisocial behaviour, he installed a barrier and signed up to a parking share scheme. “I think the sharing economy is definitely the way forward,” he says.
He is one of a growing band of serial sharers who are using technology to give others access to their untapped possessions or spare capacity, either for gain or simply to deepen their connection with a community. A number of trends have collided to trigger sharp growth in sharing services over the past five years: the growth of the internet, the proliferation of digital devices and the development of back-office payment systems that make it easier for people to exchange goods or services for money over the internet or by smartphone.
Many in the sharing economy insist there is good money to be made in these kinds of collaboration. But how much? And what are the new rules about giving others access to your assets? FT Money has taken a look at the benefits — and potential costs — of participating in the new commercial community.
The value of the sharing economy is predicted to expand dramatically, according to a study last year by consultancy PwC. It estimated that the global sharing economy, currently worth £9bn, would jump to £230bn by 2025 (in which PwC included areas such as music streaming and loan sharing). The UK portion of this market, it found, would rise from £500m to £9bn by 2025.
Sharing online is no longer an activity reserved for the cutting-edge digital user: a 2014 study by Nesta, the innovation foundation, found that a quarter of people had used the internet to take part in collaborative activities in the previous year.
Growth in registered users of sharing services has been striking: Just Park, which allows Mr Raval to rent out his driveway, was founded in 2011 and now has 700,000 users of 150,000 parking spaces provided by 25,000 owners, up from 15,000 last year.
If you are thinking of sharing your house, car or driveway, what considerations should guide your decision? Robert Vaughan, economist at PwC, says apps themselves can give people a sense of the opportunity cost of their assets: “The sharing trend is driven by the growth of technology and of apps which allow you to measure your spare capacity much more precisely.”
Aspiring sharers should therefore conduct an “audit” of the idling capacity in their life, starting with the highest-value items. A second home in Umbria, for instance, will have considerable scope for sharing, as any holiday home agent can tell you. But Alex Stephany, chief executive of Just Park, advises looking at a whole range of less tried-and-tested routes. Do you have power tools or antique jewellery you would be happy to loan out? Try RentMyItems.com. Don’t rule out intangible assets, either: if you lived in Spain for a few years, would you consider offering someone a few Spanish lessons? Take a look at Skillshare.com.
“The sharing economy is not promising to make millionaires out of nothing but it does promise to make more out of what we have,” Mr Stephany says.
Research to be published next week by ING, the bank, found the median average earned by people in Europe in the past 12 months through sharing something they owned was €300, though one-third said they would do more sharing next year.
For those prepared to combine modes of sharing, the income (or savings) can be considerable. Debbie Wosskow, chief executive of home exchange site Love Home Swap and author of a 2014 government report on the sharing economy, illustrates the potential of the trend through the concept of a “supersharer” — someone who maximises the potential of their idle assets.
To demonstrate the idea, she visited an ordinary family in Sydenham, south London, and after assessing their house and assets, concluded they could save or earn over £8,000 a year through a combination of half a dozen activities.
First, they could save the cost of a two-week summer holiday — typically priced at £2,000 for the accommodation — by arranging a swap via any of a number of internet sites. From this would be subtracted the fee or subscription charged by the home swap company: Ms Wosskow’s site, for instance, charges £144 a year for entry-level subscription.
The cost of car hire, averaging £300 for two weeks in high season, might also be recouped if the overseas property swapper is willing to allow guests to use the family vehicle — as many now are. Another saving comes from the £280 fee that would have been paid to put the family’s two pet cats into catteries for a fortnight. If the incoming family is willing, they can be kept at home and fed during the stay.
Taking on such responsibilities may sound far from the relaxed holiday that many will be accustomed to, and Ms Wosskow acknowledges that home-swapping takes more work than simply booking a hotel. But much of the heavy logistical lifting can be done ahead of time, she says, simply by talking things through in advance.
Other assets offer year-round earning potential for her Sydenham family. They had no driveway but owned two cars. By getting rid of one in favour of a car share scheme — eliminating the second car’s associated costs in tax, insurance, maintenance, parking and any repayments on its purchase — they could save as much as £3,600 a year, according to the car share scheme Zipcar.
With an annexe at the bottom of the garden fitted out as a bedroom, joining Airbnb to earn around £50 a visit would bring in £1,650 a year, assuming they rent it out for an average 33 days. Ample space in the attic can be let to those with little of their own: for an average £17 a week, a service such as Storemates can earn them £884 a year, Ms Wosskow found.
All told, the savings and income from sharing amount to £8,520 a year, a sum that may not be life-changing but for an average-earning family can materially improve their quality of life. “People are starting to think differently about the assets they own and the skills they have,” says Ms Wosskow.
Another question is how much owners should charge for use of their assets. Airbnb and Just Park allow renters to set their own prices. A tool on Just Park’s website offers price recommendations to owners but the final decision is theirs. For obvious reasons, location is critical: a driveway in the countryside could be worth nothing, whereas an owner in the centre of a city might be able to charge £50 a day.
Sites suggest owners look at equivalent shares before deciding. Some are happy to take a small sum on the grounds that any income is helpful; others bid for a higher price or insist on a minimum number of days’ stay or usage. Mr Raval chose to make a moderate £7 a day, on the grounds that more frequent usage was worth more to him than an occasional high-spending user.
The aggravation factor
There is plenty of potential for hassle and risk in making one’s property or goods available to others. Sharing is not “free money” and participants should be aware that when signing up they take on certain legal responsibilities and may expose themselves to risks, typically around the reputation of the person approaching the sharer. Paying close attention to the online record of that person is therefore an essential first step.
“On these peer-to-peer platforms the experience will only be as good as the person on the other side. Inevitably there are bad actors,” Mr Stephany says. The advantage of internet-based sharing schemes over their paper-based forebears, though, is that most will have review systems which allow a figurative “black mark” to be placed against bad behaviour. Regular users tend to be keen to keep the slate clean of anything that threatens their future use of the system in this way.
Mr Stephany adds that people are in any case less likely to inconvenience others in the sharing economy because they know they are dealing with a human being. “People behave much better to other people than they do to companies.”
Mr Raval’s parking and car sharing schemes have been smooth. Airbnb was a more mixed experience. Hosting a room at weekends for £60 a night, he found it fun, as he and his partner could meet people from around the world, and in one case inadvertently provided a venue for an estranged Italian couple to become temporarily reunited.
But as the sector matured, he said, his guests’ attitude changed. “People would treat it like a cheap hotel, coming in at 1am and making noise. They’d book the cheapest flight to Stansted and expect to arrive in the middle of the night.”
After he further restricted its availability, the room slipped down the rankings of available properties, before eventually he decided to stop listing.
In spite of Mr Raval’s Airbnb experience, it is the room-sharing site that is widely acknowledged to have turbocharged the growth of the sharing economy, with 40m guests around the world and 1.5m listings.
The growth of sharing has also been accompanied by a change in mood among the millennial generation: people are less likely to seek status through material possessions than through their beliefs and achievements as expressed in social media.
“There’s a shift in attitude,” says Mr Vaughan. “Previously the way you might have gained social status is by showing people what you owned. Social media allows you to show yourself through your experiences — pictures of a sold-out gig or the sunset over a tropical island.”
For Ms Wosskow, the change became apparent as she sought investment for her Love Home Swap site. “Just over three years ago we were still pitching to venture capitalists who said ‘Why would anyone have a stranger in their home?’ No one asks those questions any more.”
‘Virtually everyone has been nice’
Mairiona Cotter opened her home in Bath to paying guests 18 months ago.
At the encouragement of friends, she hosted touring actors in her spare bedroom for the duration of their plays’ runs at the city’s Theatre Royal. Her first guest was actress Diana Quick.
After hosting more friends of friends, she decided to create a profile on Airbnb, despite her initial misgivings. “I was a bit nervous at the thought of who would walk through the door.”
The first enquiry arrived in her inbox after only ten minutes. “I was astonished at the volume of enquiries, and from all over the world.”
The room-sharing site founded in 2008 is the best-known exponent of the so-called “sharing economy”, with 1.5m listings across 34,000 cities.
Despite high demand, Ms Cotter says she tends to only host once a week, and is very selective in screening requests. Applicants should include a “friendly” note about their trip, and are preferably not Airbnb first-timers.
Out of more than 80 stays, only one has caused her trouble to date. After being kept awake by an hour-long quarrel in the early hours, she asked her guests to leave after the first of two nights they had booked. Airbnb has a system in place for awarding refunds where stays are cut short. “I like the fact that Airbnb takes care of the money,” she says.
The company releases funds, paid in advance by guests, after their arrival at the property. Hosts can choose to be paid via PayPal — the quicker option — or via bank transfer, which can take a week or so. A brokering fee of 3 per cent is paid to Airbnb.
For guests paying £135 for a minimum stay of two nights, a £20 fee is due to Airbnb on top. “There tend to be a lot of professionals staying; people who you think could afford to stay at the Royal Crescent [hotel].”
Ms Cotter said despite emails from Airbnb encouraging her to up her prices, she is reluctant to do so, not least because money is not her main motivation.
A key part of the experience is interaction with her guests, some of whom she has shared dinner with and shown around the city. “Virtually everyone has been nice.”