Senator Elizabeth Warren joins call for Airbnb probe
thehill.com
thehill.com
This seems like a fishing expedition.
AirBNB seems intended to give homeowners flexibility to rent out some space, but when that model starts shifting to developers creating what are essentially unregulated and unzoned hotels it creates a situation that sucks for potential homeowners and neighborhoods alike. You can suddenly have a neighbor or a apartment in the same building become a revolving door for strangers who don't care about the community, who are giving money to landlords who simply aren't present.
I think in this case some light regulation can make a big difference and give more power back to smaller home/property owners.
Cities where people line up to make offers on houses sounds a lot like Venezuela where people are lining up for the grocery stores. The lines in Venezuela are due to price controls which reduce profits thus reducing supply.
If you restricted Airbnb, you'd be dampening the supply of hotels and the demand for real estate. When the demand for real estate goes down, its price will go down.
The price of hotels would be expected to go up, but I think we can live with that, as its a far more elastic good than housing.
I'd love to see people making this claim cite some numbers. Just how many residences are being "diverted" from your preferred use, and where did you get that number? Citing handwavey econ 101 principles is no more convincing when done here than it is, say, in the minimum wage debate.
That is the underlying problem though--you can't even build old school (but up to date code- and safety-wise) triple deckers anymore in large sections of the city and the surrounding towns, even though they are often the best compromise between retaining town character and providing a good supply of housing.
Given the constraints of the problem, cracking down on illegal short-term rentals is the only knob that can be tweaked.
To the point where it has priced-out the ability of anyone under the upper-middle class from visiting most major cities as tourists. How is a middle class family supposed to pay $400/night to rent a room in NY?
Being able to travel shouldn't be artificially priced at a point where hotels are a crushing expense; visiting NYC isn't just for the 1%. You're just playing along with the hotel cartel here.
The problem is when landlords terminate leases to convert to full-time AirBnB properties. That isn't efficient, it's adding another hotel to the 'cartel'.
I really don't think hotels are the ones truly at fault here. The way Airbnb competes on price is mostly due to not having to pay for things that hotels have to. The cities & states themselves are the ones who decide what sort of insurance hotels have to have, what sort of zoning rules apply, taxes to levy, rules that they have to follow.
Taxes are very high on hotel stays, generally. And this is usually because it's easier for someone to raise "other people's" taxes rather than their own (e.g. tax the out-of-towners).
People seem to claim things like how "hotels legislate a moat" all the time, but ultimately I really don't think it's the hotels, it's the town/city/state and the citizens thereof that have decided what they want to legislate. And that's inconvenient for a startup looking to "disrupt" things, but I find it quite scummy.
I just checked a perfectly decent hotel on Boradway I stayed at a few years ago, a week in August for $158.88 a night.
If you can afford to take your family to any of the major attractions people want to go to NY for, the additional cost of a NY hotel may be noticeable, but its not going to radically change the affordability of the trip.
If your goal is to keep housing affordable, you need more housing. Going after AirBNB (barring those running large hotel-like operations) isn't addressing the supply issue.
Not really.
If a community wants to ban Airbnb rentals and rewrites their zoning laws as such, the resulting line is clear.
It's only a gray area because the laws haven't caught up with the fact that Airbnb exists.
Then, consider who you're impacting - this is local so they're your constituents, after all.
Enforcement is a whole other matter.
Try this: Define your objective, then draft the statute.
EDIT: I'll add, I own exactly one home and have never rented it out by any means. I don't have a stake in this fight, but I am interested in the legal aspects.
Is it hard to stop people from occasionally renting their house on Airbnb? Sure, and you'd have a hard time writing that into law because it would be difficult to differentiate between someone who Airbnb's their house one week a year and someone who lets a friend stay at their place.
But it would be pretty easy to prove in court that the guy who owns the house next door doesn't actually live in it (this is probably key to enforcement), and has listed it on Airbnb a hundred times this year.
Maybe a lawyer or judge can chime in, but it seems like this would be provable in court.
Renting a house that you don't and never live in isn't illegal, and I think it would be very hard/impossible to do that. You'd be butting up against some very fundamental property rights. If a jurisdiction requires a license, that's fine to require, but you probably couldn't deny one on the basis of AirBNB.
Listing it on AirBNB in and of itself really can't be prohibited. I think you'd have a First Amendment issue. It'd be commercial speech, which has a little less protection, but I can't imagine that going smoothly if you tried to clamp down on how a homeowner (or landlord) advertises his or her property.
This is the reason that the attempts you see now to regulate are based on short term duration. So far, regulating the duration of a stay and saying less than that is a hotel seems to be okay.
Enforcing it would be brutal. To start, who enforces it? And since it's local, what amount of your limited resources should you devote?
If that's enforceable, how could a prohibition on short-term rentals not be? What am I missing here?
I think residential zoning regulations violate liberty more often than not - but it's obvious that there's precedent for all manner of loosely defined and overreaching - yet, enforceable - laws in this arena.
Couldn't you just set an extremely high penalty for breaking the law and then only enforce it against the most egregious offenders, as a deterrent?
Let's deal with the amount of the fine first. It'd need to be huge, enough to erase the economic benefit of the rental activity, and then some to deter the attempt because the odds are you still won't get caught. Let's say you do something ridiculous like $50k per occurrence, just to keep this moving.
Anyone serious about doing this is going to restructure such that the fine becomes difficult to collect. Make the city spend $100k to get $50k from you. Individual property owner X creates Property Management Company Y. X leases property to Y. Y does all of the business on AirBNB. Y gets fined, goes to court, judgment sticks, so Y declares BK and dissolves. X leases to company Z, rinse and repeat. Literally a shell game until the city gives up or something bigger comes down, who knows, but point is you can frustrate enforcement efforts in protest if you're so motivated.
Then there's the question of the fine. I really don't know if there's a constitutional argument on an excessive fine or not in this case, but I think the Supreme Court left the door open on that. Kelco might be the case.
Please keep in mind, I'm just being an armchair analyst here. I'd be pissed off if my neighbor's house suddenly became a revolving door of loud campers. I'm just not realistically sure what could legally be done about it beyond restricting short term rentals. But then I'd just have weekly campers instead of daily.
Somewhere there's a line regarding property rights and externalities, but I think we've gone way too far away from laissez faire in the US. Our towns are brittle and inflexible and the poorer because of it.
What is the definition of a large hotel-like operation exactly? I have a friend who lives at his parents house, rents 2 apartments and then re-rents them out exclusively on Airbnb. He lives off the difference between the rent he pays and what he earns from re-renting on Airbnb, basically arbitraging the difference between the long-term rental and short-term rental markets in his city. His small hustle is no Hilton, but it affects the property market in a small way by taking two properties off the market.
Airbnb takes a lot of the pain out of running things like this, and enables a lot more people to do it on a small-time scale. Taken together, it will affect the market as much, or more than a few large operations.
Left unchecked, I think such practices will, in the long term, push housing (both rental and purchase) prices up while pushing traditional hotel rental prices down, so I think the interests of home renters/buyers are actually aligned with those of the lodging industry.
Increasing housing supply is one tool we can use to control housing prices. Zoning laws, when enforced properly, are another tool. This investigation seeks to address that second tool.
No idea, but I'm thinking more of an absentee operator model with lots of rooms and properties. What your friend is doing is probably too small to impact the rental market, but in aggregate could be an issue if many were doing it. It's easy for me to say that I don't mind that sort of thing since I own a home and people like your friend would give me additional choices when I go on vacation, but the immediate community may think differently and I think that's where it needs to be decided. It's why I'm really questioning Federal regulation and involvement of a local issue.
Taking it to an extreme, look at a place like San Francisco. Someone there doing what your friend does would be impactful, yet the city itself won't permit enough new construction to solve the supply issue. Regulating AirBNB doesn't solve much there, and the city itself won't allow a solution to the supply issue. By regulating AirBNB, the city itself is actually taking additional adverse action on the supply issue rather than doing anything to mitigate - but that's their choice, their voters, their city. It's not my place to sit here in Maine and tell you that's wrong, but that is essentially what a Federal regulator does by proxy.
> Boston is one of the most expensive cities in the US to live in right now
That's the real problem, and should be the focus. Short term renting is just a detail. Inventory is the solution.
Regulate for safety, and genuine nuisance (rather than OMG I saw a person I don't know!), by all means. Add taxes if needs be, but add more housing if there's a market for it!
It took 4 different calls/people to find out who the actual owner of the property was. I'm all for someone letting out their room/house but this put us in quite a scramble.
i currently live in an apartment with two full time airbnb units (out of 6); the two units are over-occupied (each advertising 16 guests in what should be a 2 or 3 person apartment). the airbnb host has an agreement with the landlord, where they pay the landlord an extra 30%/40% a month per unit and get to run their airbnb. none of the neighbors particularly like the airbnb units or the guests and our building is now known as the "airbnb building" on our block.
i've talked to the landlord (who is mostly absentee), the host (who runs 5 airbnbs) and to airbnb (through their official channels) and no one will budge (on lowering the number of guests) or concede that living next to a full time airbnb with 16 guests is terrible.
in the future, i will not live / rent a property that is being managed solely as an investment / way to earn money for the landlord and will pay special attention to any airbnbs nearby before moving in. aside from the noise and usual complaints you'd expect from having an airbnb as a neighbor, one particular side effect is that it reduces the neighborhood social-ness (compared to the previous places i've lived). our living space is actually more closed off because there is a steady stream of large groups of strangers in our building.
I'm less concerned about someone occasionally renting out their home and doing what they want with their own property, and more so interested in the impacts of investors purchasing residential property to use exclusively as part of a larger commercial short term operation.
It's eminently understandable why governments would want all providers of lodging to play by the same rules[1] so that people can't circumvent such "tourism taxes".
There are likewise considerations of zoning/deed restrictions/HOAs/condo boards to think about. You generally do not have the (legal, and usually moral) right to run arbitrary businesses in "your" unit. There are things that people expect out of their home unit's community, and which they all deliberately accepted as a condition, like "not having a major stream of randos going in and out".
Communities also generally have an interest in regulating the percentage and location of buildings for permanent residents vs visitors. Generally speaking, permanents take better care of the surroundings, albeit at a "cost" of paying less for the space per unit time, and there's a quick ramp-up in social ills and livability problems when you let the ratios go out whack, or concentrate the visitors in areas not prepared for them.
To the extent that Airbnb is breaking that whole model, it's reasononable to either throttle it or research ways that they can share in the burden they're bringing on without losing the upside.
[1] modulo scale, of course -- it's fair to expect some exemption for sporadic, one-off arrangements, and it's fair for Airbnb to facilitate that
[2] I say "relatively" because the economic incidence will never be fully on visitors, but will partially be shared by the lodging industry, in having to charge less to remain competitive with other destinations.
"Get to the point"? In many of the cities AirBnB operates, that was the legal status quo long before AirBnB existed (or, at least, short-term rentals had all kinds of regulations that people usually wouldn't meet renting out a home, and still don't when renting them out on AirBnB.)
Hawaii - a state which is basically owned by the Hawaiian Tourism Authority.
Feinstein - make your own judgement there.
I don't see this going in a great direction.
An FTC investigation into the effect of Airbnb on local economies is fine, but I hope it doesn't result in one-size-fits-all federal regulation.
Sure, there may be some of that.
However, we in the tech community need to recognize that doing something at scale creates a fundamental difference of kind, not merely of quantity. Of course, to a large degree, that is the point of much modern tech, to take something that was simply local word-of-mouth stuff ("oh, my friend's got an apartment empty next month, perhaps you two can work out house-sitting for your visit" or "oh, she needs a ride to town too") and turning it into an instant service, globally scaled. This is what creates $billions of value with minimal infrastructure.
However, it is nonsense to say that there are no negative externalities, or that they are all trivial and ignore-able, or merely old incumbents protecting their ill-gotten economic territory.
Consider another potential technology that could be easily scaled -- speeding tickets. Instead of relying on the local cop to manually measure your speed, chase you down, write a ticket and testify in court, they could simply get the data off your smartphone and ticket you ever time you sent over-speed. They could just argue that "this is just the same law as we've always had". But the result would be that instead of maybe one ticket every X+ years, most of us would get multiple tickets every time we drove outside of a traffic jam. It would fundamentally change everything about driving and the related economy.
Similarly, it's one thing when a few people casually rent out a room for a few days a year, or get a house-sitter when they go on vacation. But, it is altogether different when the information exchange infrastructure becomes sufficiently reliable and networked that it makes sense for people to run lodging as a business, even buying houses just for that purpose.
This substantially distorts the real estate market, and dumps a lot of externalities on neighbors. It is one thing to buy a house or condo on the assumption that the neighbors are all residents with investment in the neighborhood/building -- quite another to expect that all of the people around you are completely transient. And, of course, even worse when the situation changes after you've moved in.
So, please think a bit before jumping on the "they're all ignorant Luddites" bandwagon...
(edit - grammar/clarity)
> So, think before jumping on the "they're all ignorant Luddites" bandwagon...
The immediate reaction being to protect entrenched interests has nothing to do with the "ignorant Luddites" as far as I'm concerned. I'm thinking more, when was the last time a Federal regulator probed something in order to actually benefit the little guy?
AirBNB by its nature creates very local issues. I think the appropriate place to look and regulate is at the local level. Towns and residents can take it upon themselves to restrict unwanted activities or they can choose not to, based on the impacts to their communities. Going bigger than that with anything more than light regulation would promote a one size fits all approach, which wouldn't work considering towns and cities are very different from one another.
Is it a good idea to expect that a global service be forced to deal with a crazy-quilt patchwork of likely conflicting local regs? Obviously the service wants no reg, but if they're smart, they should want single fed regs, vs potentially unlimited local versions.
And of course, are there federal concerns vs local concerns, e.g., taxation, undeclared income, effects on the capital gain on the buildings (someone renting out a house regularly shouldn't get the same cap gains exception as on a building used fully as a primary residence), etc., which make it pretty reasonable to look at it from that level.
Federal taxation is a wholly separate issue. It arises out of the commercial gains, not the use of the land. Put another way, we don't intermingle Federal tax and permissible activities, the tax code doesn't tell you that you can't use your boat a certain way to generate income. It just speaks to what taxes you pay on the income (sometimes the income generated in that manner).
Well, we need to be fair here. Simply because something is different, it's not automatically "progress" nor "innovation".
The lodging industry has quite a lot of regulations, put into place to protect the consumer. Airbnb kind of currently operates all on their own. You have no guarantee that you're sleeping in clean sheets, you have no guarantee that carbon monoxide detectors are working, etc.
Of course simply because regulations exist doesn't mean every lodging provider adheres to them the same - but it does provide recourse if caught. Applying the same regulations to Airbnb seems to be a net win for everyone involved (except Airbnb themselves).
And the sellers on AirBnB who don't want to deal with the complicated mess that will cause.
And the buyers on AirBnB who don't want to pay the prices that dealing with that mess will cause.
If you cannot guarantee clean sheets, working smoke detectors, potable water... then you really should not be offering your house as a place to stay.
Imagine a world where you fly halfway around the country, land, drive to your hotel, and discover body sweat stains on the sheets, the water is undrinkable, oh and sometimes the light switch sparks when you flip it.
The hotel says you will need to pay to "upgrade" those room features.
You complain to the hotel owner - who doesn't care... he has your money already and isn't interested in refunding it. He states you accepted the room's condition when you booked the room.
This is the equivalent of what you are advocating. This is flatly _not_ progress of any kind. It's a gigantic step backwards in safety and living conditions.
None of this even considers the other side of the token - the lodging owner. What happens if the rentee trashes the place and Airbnb refuses to reimburse you? Your home owners insurance won't cover anything if they realize you are renting to others for profit. You have no recourse.
Airbnb has refused to regulate themselves. There is no reasonable guarantee of anything for either side of the transaction. So now, the government is going to step in and do it for them.
No, this is certainly not equivalent. If you accepted shitty terms that's on you for failing to read, plain and simple.
> So now, the government is going to step in and do it for them.
This isn't even the sort of thing they're talking about regulating though - they're talking about doing ridiculous stuff like zoning, booking discrimination, accessibility, etc laws on these, nothing to do with the quality of the rooms at all but which certainly do increase the costs to the sellers.
We have zoning laws for a reason[1][2]. We didn't always...
We already know too many rentals in an area bring down property values (or stagnate them at best).[2] Rentals are rarely cared for with the same degree as an owner-occupied property. Adding transients to the mix is likely to exacerbate this phenomenon.
There are other reasons for zoning laws, as well. We cannot just throw all this out (forgetting the reasons they exist) simply because some company wants to make a profit.
[1] http://www.importanceofphilosophy.com/Bloody_ZoningLaws.html
[2] http://realestate.findlaw.com/land-use-laws/land-use-and-zon...
[3] https://www.washingtonpost.com/news/where-we-live/wp/2015/10...
You seem to disagree with zoning laws. However I'd bet dollars to donuts you'd start to agree when your neighbors sell their house and it's converted into a liquor store, bringing all the normal types that tend to hang around such places.
Airbnb is not a liquor store - but it's not a owner-occupied property either. It's a person trying to run a commercial property in a residentially zoned area. Your neighbors have the right to not have to put up with commercial buildings and all the things that come along with it.
Seems like there's a better solution available here.
I'm saying that existing residential zoning laws are only effective when you can apply them to actual residents.
They fall flat if you have to chase people down (what, across state lines?) or if the fines aren't high enough to eat into an Airbnb revenue stream.
Which, is one reason why we have zoning laws in the first place - because the penalties and proxies in a commercial zone are different than they are in a residential one.
> but they're going to solve it with different, shittier laws that make less sense
Not sure how residents voting to ban short-term residential rentals in their community is shitty or senseless.
The zoning laws seem to be used only because cities are not even trying to properly police the already in place nuisance laws.
It depends on the laws. Some municipalities could have laws that are able to handle short-term rentals while others could not.
In a jurisdiction where the existing law doesn't address a problem caused by short-term rentals, a new law would not be arbitrary - in fact, it would be the exact opposite.
> The zoning laws seem to be used only because cities are not even trying to properly police the already in place nuisance laws.
If zoning laws are easier to enforce than nuisance laws, this could be an appropriate response.
If you're not affecting your neighbors, it's nobody's business what you do on your property, including letting other people live there. If you want to regulate, add some additional regulations about behavior that affects neighboring properties but isn't currently covered.
You say that, but there are currently many, many cities trying to get Airbnb to deal with their illegal apartments, and yet Airbnb is stalling on that (presumably because if you shut down their illegal apartments, their valuation would implode).
To your point, "affecting your neighbors" is a pretty tough thing to track down. Even if things seem to be going well, there's a difference between having stable neighbors who take care of the neighborhood and an unknown rolling of the dice every few days. If you have kids, it's an even bigger risk. It's very difficult to accurately judge just how much of an impact it has, which is why cities have set up zoning regulations.
Why should AirBnB want to help jurisdictions that are trying to shut it down completely under the guise of "illegal apartments/hotels"? It's an entirely different matter to help keep the residents of AirBnB rentals behaving well and not disturbing their neighbors, which seems completely reasonable.
> there's a difference between having stable neighbors who take care of the neighborhood
There's no guarantee that "stable" neighbors care either, and "take care of the neighborhood" would need to be a lot more precise to be either enforceable or appropriate. There's a reason we specifically looked for a house without a "neighborhood association", and several people I know who currently have such associations would like to get out from under them. Banning AirBnB does sound consistent with neighborhood-association-style politics, though.
Saying you want to regulate tenancy duration rather than behavior seems a lot like choosing to reject browsers based on User-Agent rather than doing feature detection. All tenants should behave well regardless of tenancy duration; any well-behaved neighbor should be equivalently fine regardless of tenancy duration.
> If you have kids, it's an even bigger risk.
"Think of the children!" does not increase the weight of your argument. You're talking very nebulously about risk. The previous comments were specifically complaining about things like noise and late-night parties.
How is this a bad thing? Isn't gathering more data better than not having this data?
Where ever there is money made, the government wants a cut.
If it creates too much overhead because of too many small fish where it's hard to track them it will usually be outlawed.