Does Airbnb.com need regulating?

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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.

Should there be restrictions on renting out rooms in one’s apartment or house?

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  • Renee

    I hate the idea of more regulations in our lives, but some people just ruin it for others.

  • John Baker

    I actually like the idea where Airbnb started… renting out your spare bedroom or couch for the night. When it became the place for de facto hotels (using the “duck” standard), which is what quite a number of these places are, to setup shop is where the problem began. It’s one of the few times I agree with regulators. If you want to run a hotel, run a hotel and abide by hotelier laws.

  • http://www.awayishome.com Kari Astrid Haugeto

    Being a tenant in an apartment is different from owning. I would think she’d need to have approval prior to advertising her place as available. Would that be too much of an ask for AirBnB – to ask “owners” to prove they have the right to rent?

  • TonyA_says

    I voted NO. Less government is better. We need more sharing economy, not less.
    Rent Stabilization in NYC is a result of MORE gov’t. That’s the problem.

  • TonyA_says

    Perhaps you don’t get it :)
    Disruptors like Airbnb and uber believe on the fundamental right of people to share.
    And that is above any other man made law. Hence, they are disruptive.

  • Travelbug

    The problem with airbnb is not only a tax issue, but also a public safety issue. What do you think would happen if someone who rented a room from an airbnb listing injured themselves? Once the homeowners insurance company finds out they were taking money for the stay, the insurance company will refuse any kind of payment. What if they actually do feed you a breakfast and you get food poisoning because those eggs weren’t cooked all the way. It takes a lot of money, insurance, licensing, inspection, knowledge and hard work for legitimate b&bs to be in business. There is no longer a level playing field when some guy next door to a legitimate b&b rents a room for $50 illegally.

    Let them get licensed, insured and taxed like everyone else. None of us want to be taxed, or be regulated, but sometimes it’s for the better good.

  • TonyA_says

    If there are so many mishaps with airbnb and uber (or similar sharing platforms) then they would be destroyed in social media. Since most of their users are also deep into social media, then I assume they are making a personal decision to use or not use these venues. Why don’t we just leave them alone? No one is forcing you and me to use them.

  • bodega3

    Your comment:They need more hosts who only rent out extra space rather than more multiple-dwelling operators who may run afoul of the law.
    If you are renting you space via Airbnb, you may be running afoul of your local laws. We have someone down the road who is renting his place. We are not zoned for this. Why should he be able to rent by the night in a residential area? The lady in NY doesn’t own her apartment and is taking advantage of her rent control space and running a business from a residential building. It isn’t their right to break the law.

  • bodega3

    In SF, an Uber driver hit and killed a little girl. While companies like Airbnb and Uber have interesting business ideas, by skirting laws, they open themselves up for lawsuit. Uber is being sued by the parents of the dead child.

  • TonyA_says

    I guess they will pay up to keep their billion dollar valuations. Same as Amazon collecting sales tax.

  • TonyA_says

    You can’t believe how many people do not care for these laws.
    They will still use airbnb because the rooms are cheaper, use uber because they can get a ride faster (and maybe cheaper).
    IMO if people really cared for all these rules and regulations there wouldn’t be these sharing companies. But they are big, very big. So that means many people don’t care.

  • bodega3

    People pick and chose the laws they wish to obey. Consumers pick and chose based on price. Uber is having to pay bill bucks for the death of the little girl and has already made some changes to their business practice. That is how our laws have come into being, when something goes wrong and it always does. Those who rent the neighbors house for $900 a night don’t care, but the neighbors do. We pay taxes according to the zoning. We are residential, not commercial and that neighbor has already run afoul with the law and had to file for bankruptcy due to it. Now it is thumbing his nose again at our county laws and will have it come back and bite him…can’t wait!

  • TonyA_says

    I have seen many unregistered car services even before uber and lyft were conceived. Also so many illegal rentals.
    I would rather see an airbnb and uber style venue rather than this activity go completely underground. By the way, this phenomenon is global so good luck stopping them. It ain’t happening. Overall they are probably good for the travel industry.

  • bodega3

    I don’t think they are going away, and regulations will be put in place to regulate them. Just like Uber is finding out with the death of the young girl.

  • TonyA_says

    uber was just valued at $18.2B. Yes Billion.
    You don’t think money will solve that problem? :-)

    Besides …

    In a statement immediately after the San Francisco crash, Uber said the tragedy did not involve a vehicle “doing a trip on the Uber system.

    Apparently the driver was logged on to the Uber X smartphone app and was available to provide rides alleges the lawsuit.

  • Travelbug

    Good for the travel industry? You think unregulated room rentals helps that legit b&b in the same community lose revenue and has huge insurance and operating bills? There are thousands of legit b&bs run by people trying to make a living, giving great hospitality that are terribly hurt by airbnb. Sure, it probably doesn’t hurt the large corporation with thousands of rooms, but you can sure believe it’s hurting the small guy who can’t compete with a room rate 1/2 or more than what they need to make a living.

  • TonyA_says

    I think airbnb anb uber are good for the travel industry as a whole.
    People spend money when they travel.
    It just not might be in the places you care.

  • bodega3

    The court will decide on if the driver was ‘working’ or not. But Uber has made changes already based on this sad incident. That is how laws often get made.

  • bodega3

    I agree with you. Not to mention the safety issue.

  • BKMatthew

    I voted yes. I live in NYC, nothing irks me more than the system of rent regulation – and Ms. Hickey-Hulme is a text book wealthy NYer taking advantage of a system allegedly designed to help middle income families live in the city (it is a fundamentally flawed system that attempts to deny basic economic theory and fails woefully). Hating the system of rent regulation, I still think that it is essential to enforce it, and Ms. Hickey-Hulme will likely end up losing that lawsuit. In a city that is mostly multiple-dwellings, with a fairly recent history of violent crime, most people don’t like a constant parade of strangers wandering into their apartment/condo/coop building and most buildings don’t allow short-term rentals for that very reason. That said, if someone owns a brownstone and leases out their garden apartment on a short-term basis, I couldn’t care less as long as the guests don’t turn out to be heavy metal listening dipsomaniac drug addicts partying 24/7 while they’re in NY, which unfortunately turns out to be the case with monotonous regularity.

    Airbnb hosts need to check their insurance policies. My condo insurance does not permit me to run a business in my apartment, I would need a commercial policy for that. If you lie on your insurance application, you don’t have insurance. If you have a homeowner’s policy and your Airbnb guest is injured and sues, you don’t have insurance and will likely lose your house to pay the attorney’s fees to defend yourself in court.

  • LFH0

    The question posed by Chris Elliot was not limited to government-imposed restrictions. While I agree that government restrictions should be viewed with skepticism, cooperatives, condominiums, and rentals are all subject to private restrictions. The government generally does not have an interest in the occupancy of premises by any particular people (other than for fire and health code reasons), but in the case of cooperatives, condominiums, and rentals, there are significant interests of persons other than the legal occupant of premises. The owner of the building should be entitled to determine who may reside in his or her building, and condominium owners should be entitled to collectively determine who may use the common area in their building (including the use of common areas to access a condominium unit).

  • TonyA_says

    A NYC judge just ruled on one of this airbnb cases.

    Judge nixes Airbnb subletter’s eviction

    A court ruling this week could open the floodgates for Big ­Apple
    apartment dwellers to sublet via the controversial home-share website
    Airbnb.

    The potentially precedent-setting ruling by a Manhattan Housing Court
    judge nixed the eviction of a Financial District resident who had been
    subletting her apartment through the San Francisco-based accommodations
    site — even though she admitted breaking New York City law.

    Justice Jack Stoller’s Monday ruling means that Kimberly Freeman can
    stay in her rental apartment at 33 Gold St. because the city law that
    prohibits short-term sublets applies only to landlords.

    The Multiple Dwelling Law is “generally aimed at the conduct of owners of property, not tenants,” Stoller wrote.

  • LFH0

    That’s the government restricting the right of a property owner as to his private relationship with his tenants. Wrong policy, but in the world of New York City where landlords are regularly denied to ability to control their property, it is not surprising that the tenant can get with it. Excepting health and safety, the government should stand out of the way of the rights of property owners. If a property does not want to be part of Airbnb, then the property owner should not be dragged into Airbnb against his will.