It is not easy being a sharing website, when it comes to long-established businesses like hotels and taxis.
Airbnb.com has been challenged by major cities, claiming that the room sharing operation needs to be regulated and pay taxes just like hotels. Plus, landlords, condo associations and co-op boards are beginning to raise a stink.
At the same time, ridesharing websites like Uber and Lyft are under daily attack, it seems, from taxi and limousine commissions, airports and other governmental organizations bent on preserving the status quo.
Of course, when money is involved, the tax authorities can also smell the color of green cash changing hands. While letting your brother-in-law stay in your apartment might be OK and have some value to him, taking money from strangers in exchange for a space on your couch or in the empty guest room might raise questions with revenuers.
In order to stay in business and grow, these “sharing” websites, those providing services through these platforms have been fighting back against authorities. They have settled complaints in some cases and ignored the complaints in others.
This week, we take a look at some of the legal battles facing airbnb.com and their “hosts.” Next week, we will turn our attention to ride-sharing companies like Uber and Lyft that are disrupting the taxi and limousine world.
There is plenty going on in the airbnb world. There not only are state and local laws designed to protect consumers and maintain standards in the lodging industry making life difficult for airbnb.com, but micromanaging by co-op boards and condo association rules are making life tough for airbnb.com “hosts” — those sharing their apartments.
Plus, as airbnb.com grows, operators seeking to take advantage of the lack of regulation applied to airbnb.com have begun to rent out multiple properties, almost like vacation rental operators. According to one study, about 40 percent of airbnb.com’s business is based on these kinds of professional managers, not the “regular people” renting out an extra bedroom or their couch.
Part of the policy issues airbnb.com raises go straight to these kinds of statistics. Is the concept of individuals renting out rooms in homes being overtaken by apartment rental operations that resemble hotels more than they do the struggling apartment dweller or homeowner trying to make ends meet?
In this video, airbnb.com makes a pitch to “regular people.” They need more hosts who only rent out extra space rather than more multiple-dwelling operators who may run afoul of the law.
An airbnb.com case in New York City has pitted an artist who keeps an apartment in Manhattan, as well as a place out in the Hamptons, against her landlord. She was renting out her place in the Chelsea neighborhood. But, there is a problem. Her apartment in New York is rent stabilized — she is paying only about $1,500 a month while surrounding rents have soared.
Hickey-Hulme [a NY artist] rents the rent-stabilized apartment for $1,463.79, according to the suit. On airbnb, the landlord says the apartment was listed for $250 per night, $1,750 per week and $4,500 per month. Tribeca is one of the most expensive neighborhoods in New York City, with an average monthly rent of $7,130 for a two-bedroom apartment, according to the Manhattan Rental Market Report.
Others are facing similar situations.
The attorney general has now issued two subpoenas in an attempt to crack down on and gain information from hosts, arguing that by using the service we are operating as illegal hotels and should therefore be paying occupancy taxes. Also keep in mind that renting out one’s home likely violates one’s lease agreement, the majority of which in New York don’t allow for subleasing without permission from the landlord. While this facet of the equation is not necessarily a law-breaking concern and the one being argued in court, it’s surely an eviction concern — and no New Yorker wants that, myself included.
In order to stem a flurry of complaints from the New York State attorney general, airbnb.com has agreed to provide information. about its hosts in New York City, but will strip out personally identifiable information.
The attorney general will have a year to use the data to identify bad actors — hosts who are renting out large blocks of rooms in violation of local laws. If he sees suspicious activity, airbnb is required to identify the hosts.
Starting next month, a new host will get a pop-up window on airbnb’s site that will inform him or her that the New York State Multiple Dwelling Law prohibits apartment rentals of less than 30 days unless a permanent occupant of the apartment is present. The pop-up will also note that there are restrictions on renting out rent-stabilized and rent-controlled properties, and that prospective hosts must be mindful of tax considerations as well.
This, obviously, is a battle that has not ended. And, with so many stakeholders involved, airbnb.com hosts have plenty of legal hurdles to surmount from not only landlords, condo boards and co-op organizations, but from affordable housing advocates and the good old state, local and national income tax collections systems.
The recent New York agreement will allow this massive city to begin trying to figure out a way to regulate airbnb.com hosts and tax income generated from renting out rooms in one’s home. The current city rules will have to be modified. And, current condo, property association, co-op agreements and neighborhood group concerns and regulations will face some serious overhauls.
Expect the agreements that are forged in the Big Apple to be the beginnings of change that will be replicated across the country from San Francisco to Boston and Miami to Seattle. Smaller municipalities with fewer association rules and less-established hotel associations may see more limited changes. But, changes are coming.
The casual, unregulated approach to allowing someone to spend the night in your guest room or in your apartment in exchange for remuneration is coming to an end. Airbnb.com hosts can take that to the bank.