Joining the ‘sharing economy’ is a little bit like a hotly anticipated first date. It could end in tears, a broken heart or that colossally irritating feeling of having wasted your time. But it’s also exciting — and if it goes well, could open up a whole new world.
The sharing economy is the term most people have settled on for the concept of monetising what you own by renting it out to others. It’s also called ‘the peer economy’ or ‘collaborative consumption’. Sharing and renting are hardly new concepts, but the fact that we now live in a hyper-connected mobile world means it’s easier than ever to earn money from your loft, Lamborghini or ladder — even your labrador.
PriceWaterhouseCoopers estimates the sharing economy in the UK is worth £500 million and that the figure could be £9 billion by 2025. The innovation charity Nesta reckons that 25 per cent of the UK population took part in some form of internet-enabled ‘sharing’ last year. In sectors such as car use and holiday homes, the sharing economy could grow to encompass half of all transactions over the next ten years.
How much could you make out of this revolution? EasyCar Club, a car-sharing website, estimates that British households could make an average of £7,803 a year by renting their assets to others. Londoners have the most to gain, with the estimated potential takings per household topping £9,500. In Scotland, at the bottom of the scale of potential earnings, an average household could still reap more than £6,500 a year.
The easiest place to start is by renting out your driveway through JustPark. At last count, 675,000 people are doing so and making an average of £465 a year (£810 in London). The figures rise dramatically for homes close to airports, railway stations and stadiums, where driveways can earn owners more than £3,000 a year.
Then there’s your car. How often do you actually use it? The typical British household owns a car that stands unused for 2.7 days each week. EasyCar Club owners monetise their cars to the tune of £1,800 a year. Do you have a second family car that doesn’t get used much at weekends, or that sits around while you go to work? This might well be an option for you. EasyCar provide the insurance, and sorts out the repairs if the car comes back dented.
The really big-ticket item is your home. California-based Airbnb is the pioneer in this sector, and a typical London home-owner using the website earns about £3,000 a year. Debbie Wosskow, founder of rival LoveHomeSwap and author of an independent review for the government on the sharing economy, says swapping homes through her site saves users in London around £3,300. Some clients are swapping their homes and enjoying an ‘adult gap year’ — saving up to £50,000 a year on the way. Some hosts use it to visit children and grandchildren in Australia or the US. ‘Lifesaver!’ said one user I spoke to. ‘My in-laws came for six weeks but stayed a Tube ride away, which meant they could come hold the baby during the day but I didn’t have to make them breakfast.’
The innovation that Wosskow brought to her site is the ability to do ‘three-way’ swaps with two other home-owners. You can also gift your credits to others — your children, for example.
But you don’t have to go on holiday to rent your space out. Vrumi, which launched at the end of last year, allows householders to let rooms for people to work in during the day — a small business that needs a kitchen table and a coffee pot, a psychiatrist who needs a couple of comfortable chairs and a window, or a freelance writer who needs a loft space with a view. It’s perhaps too soon to be sure about this one, but hosts are already earning an average of £50 a day. At that rate, one room rented one day a week generates income of £2,400 a year.
Once you’ve seen the power in unlocking underused personal assets, the sky’s the limit. Don’t want to buy a drill to put together the flat pack this weekend? Peerby and B&Q’s Streetclub let you hire your neighbour’s. Have a house in Cornwall with a surfboard? List the surfboard on Quiver. Own a field? Offer it on Fieldlover for wedding and fireworks parties, or when the Tour de France comes past. Going away and need your dog looked after? DogVacay or BorrowMyDoggy. Do you have skills worth sharing, like knitting or photography or command of French? Check out TaskRabbit, WoNoLo, Thumbtack, Etsy or PeoplePerHour. Spare nuclear reactor parts? Nuclear Connect (seriously!).
If this seems a little overwhelming, try conducting a ‘sharing audit’. I met April Rinne, an adviser on the sharing economy, who says there are three things that usually help people decide what to share. First is the purchase price. ‘Higher purchase price means higher trade-offs of owning the asset. That’s why boats are easily shared.’ The second is frequency of use. ‘You probably use your coffee pot all the time, so don’t share it. But how often do you use your waffle iron?’ And third? Sentimentality. ‘For many people, it’s more difficult to share things they’re emotionally attached to.’ This might well apply to your house, but you could overcome it by locking your treasured possessions in one room. Together with the £3,000 you’re earning, that might make you feel less sentimental.
Average rate for rooms rented to workers for the day on Vrumi
Average annual earnings of a parking space on JustPark
Average annual earnings from sharing your car via EasyCarClub
The next generation of sharing goes beyond earning straight cash. On sites like Yerdle you can earn credits for unwanted stuff that you would rather exchange for things you do want: send off your unwanted tent, earn credits for new boots. Fon allows you to share your WiFi, safely, with passers-by; in exchange, you get free WiFi access when you go out
By now you probably have a list of questions about regulation and tax as they apply to sharing. And you’d be right to ask. This is an emerging and shifting space. If your home is a sharing asset, you need to be sure of your insurance cover. The British Insurance Brokers’ Association publishes a guide listing 11 companies who will write policies for sharers. Airbnb finds itself in a legal grey area in some London boroughs, due to a 1973 law that requires owners to obtain planning permission to share their property. But if the Deregulation Bill, now in the House of Lords, is passed in full, these limitations will be removed. Income earned through the sharing economy is currently taxable above £4,250, but some pressure groups are calling for the threshhold to be raised to £10,000.
The good news is that the UK is poised to be one of the leaders of the sharing economy. According to Rinne, ‘No other country has done a review like Wosskow’s and it’s a great first step towards deeper understanding and engagement.’ A sharing economy has resonances with the Conservative theme of the Big Society, and a positive Downing Street response to the Wosskow review was anticipated as we went to press.
And there’s something else to be gained besides money in the sharing economy: the human connection that comes through the organised random encounters on which it depends. Car owners genuinely enjoy the buzz that comes from meeting someone they don’t know and letting them in — just a bit — to their life. People who use BlaBlaCar ride-sharing could take the train, but like meeting people they don’t know and sharing journeys. When you home-swap on Airbnb you’re essentially life-swapping — which has that frisson of the first date where we began. Debbie Wosskow quotes Harper Lee: ‘You never really understand a person… until you climb into his skin and walk around in it.’
Whether you’re after feelgood or hard cash, the sharing economy is the place to put your assets to work.