Over in the USA, a head of steam is building up under Airbnb.
To be clear, renting out spare rooms, attics, basements, and backyards in owner-occupied properties isn’t the problem. It’s when an investor outbids a family for a second property and turns it into a full-time Airbnb. Or worse, when a holiday rental company does so. Or worse, when a highly-leveraged hedge fund buys a swath of holiday rental companies. Or worse, when a sovereign wealth fund buys a portfolio of hedge funds. It’s why the average house will cost $10+ million within 50 years.
Of course, the last sentence is alarmist nonsense, but the problem is a real one. It's the same problem as the "second home" problem in the more scenic parts of the UK: the incomers have more money to spend and so push the prices up.
In the UK, there is an easy solution which is already being applied in the case of full-time holiday lets, but being applied backwards, as one comes to expect with anything to do with land in this country. If you have a property that is a full-time holiday let, you have to pay business rates on it. However, this is welcomed by most FHL owners, because business rates are much lower than Council Tax, often zero as they fall under small business rate relief.
If second homes were a different use class to main residences, the additional buying power of the second home owner or the FHL owner could be reflected in a higher rate of LVT, levelling up the playing field for local residents, whose buying power is set by local wages.
Even without LVT, the same technique could be used to impose higher business rates or council tax on houses owned by non-residents. Unfortunately, where there isn't a will, there is seldom a way.