Legalize Airbnb

http://www.slate.com/articles/business/moneybox/2012/06/is_airbnb_illegal_why_hotels_are_so_upset_about_you_renting_a_bedroom_to_a_stranger_.html

by impendia • 14 years ago

49 76 14 years ago

slate.com

mibbitier2• 14 years ago

> "But letting people stay temporarily in unoccupied rooms or houses is the opposite of harmful"

Until some of those guests get murdered, raped, videocammed in the shower, have their possessions stolen, etc etc etc.

We have regulation on this type of thing for a reason. Allowing anyone to just suddenly decide they are now a hotel, is a recipe for disaster.

replicatorblog• 14 years ago

I think that is the first response most people have, but they've booked something like 5MM nights with no adverse events like you've described. Also, VBRO and Homeaway are both older companies with similar business models and neither has had a huge PR disaster like you describe.

unimpressive• 14 years ago

While I'm not aware of anything happening to the guests, I think that people should be wary before they open their home to Internet strangers.

See: http://ejroundtheworld.blogspot.com/2011/06/violated-travele...

ceejayoz• 14 years ago

> I think that is the first response most people have, but they've booked something like 5MM nights with no adverse events like you've described.

You apparently missed last year's PR debacle after someone had folks demolish her apartment to build a meth lab. Airbnb initially refused to pay up. http://www.csmonitor.com/Business/2011/0803/Airbnb-apologize...

mustpax2• 14 years ago

I've first hand experienced bait and switch scams, thieving cleaning staff, and made up fees in cheap hotels from around the world. NYC hotels are particularly bad offenders even though they are thoroughly regulated.

If anything an AirBnB host infinitely more trackable and accountable than a hotel you book directly or through an oblivious intermediary (travel agent). Not to mention the countless minimum wage staff working for these hotels that are also much harder to thoroughly vet and trust individually than a single host.

Just because something is more familiar (hotels) doesn't mean it's safer.

mibbitier2• 14 years ago

I'm more likely to buy a new iPod from a reputable, regulated shop, from a random guy on eBay/craigslist.

You're talking about small individual regulated hotels, which obviously would be a bit hit and miss with regard to quality/safety, just like buying an iPod from a small shop called the "eyeStore" is going to entail more risk than buying it from Apple or BestBuy etc.

adgar• 14 years ago

Ah, the "Republican" argument: If regulation is so great, why hasn't it been perfect? Clearly the solution is less regulation.

ed209• 14 years ago

People get murdered in hotels [1] and raped in hotels [2] and no doubt have things stolen.

We should really judge this on the data and see if the incidence of crime is higher in Airbnb cases.

[1] http://www.bbc.co.uk/news/uk-northern-ireland-18333584 [2] http://portsmouth-nh.patch.com/articles/woman-raped-in-hotel...

chollida1• 14 years ago

Another issue is fire/damage and house insurance in general.

In my old house we had a legal rental suite. OUr home insurance went way up when we told them we had a tenant.

We thought about not mentioning this, until it was pointed out that if a fire was started by the tenant and the insurance company found out there was a tenant then we'd get nothing.

And insurance companies are very good about finding out things like this.

mapleoin• 14 years ago

One thing that has always puzzled me about AirBNB is that there's no mention anywhere about taxes. All this money changing hands without being taxed sure seems weird. Renters usually pay taxes for the rent they get, shouldn't people doing this on AirBNB do the same?

thatjoshguy• 14 years ago

When it comes tax time, isn't it the individuals responsibility to report all their income?

pcopley• 14 years ago

This is no different. The onus is on the person renting out their property/room to declare rental income and remit the appropriate taxes.

On a side note, it breaks my heart to read "all this money changing hands without being taxed sure seems weird."

untog• 14 years ago

On a side note, it breaks my heart to read "all this money changing hands without being taxed sure seems weird."

Why? Because you don't like taxes on money changing hands? That debate aside, it doesn't matter- taxes are due, they should be paid.

_delirium5• 14 years ago

What's a bit gray-area about it is that unlike someone like Craigslist, AirBnB isn't just a matchmaker, but has inserted themselves directly into the commercial transaction as the point of sale: they, not the property owner, are the ones who not only advertise the property, but complete the booking and charge the credit card. Whether that means they're responsible for filing the taxes is murky, and probably depends on which taxes and which jurisdiction.

gatlin• 14 years ago

May I ask what is heart-breaking about paying taxes?

patrickgzill• 14 years ago

You've been indoctrinated. Get help!

patio11• 14 years ago

In the US, you have an obligation to pay taxes on income, regardless of whether you get it in a traditional fashion or from a new economy web 2.0 social networking service, regardless of whether it is in cash or electronic, and regardless of whether the government is aware of it or not. Compliance with this is... mixed.

Airbnb follows its legal obligations to report monies which it disburses to hosts, which will in almost all cases constitute income, via a 1099 (or similar) form delivered to both the host and the IRS.

see: http://www.airbnb.com/help/question/122 , conveniently located near the top of the search results for [airbnb 1099] (if you knew the probable way they were going to report) or [airbnb taxes] if you didn't.

jpeg_hero• 14 years ago

Great, allow my neighbors in my shared hallway apartment to rent out their rooms to strangers on the Internet. Glad I am not a single female.

yen223• 14 years ago

I'm pretty sure your neighbours can already rent out their rooms to strangers on the Internet.

jasonlotito• 14 years ago

Actually, more likely they cannot. Most renters contracts I've seen explicitly forbid this.

tomjen3• 14 years ago

Yeah course renters are only renting in the hope that they can go rape the neighbor.

Seriously, stop with the sexism already.

seiji2• 14 years ago

What if we continue this trend of just doing technically illegal things on a massive scale?

New sites we can make: food2u - browse local bored people with kitchens and have them make then deliver food to you; movr - rent (unlicensed, uninsured) people with large vehicles to transport your stuff; qwikcut - find people who cut hair at home; friendzzzz (four Z's) - substitute someone bored instead of a licensed home care nurse; bugoot - find people with excess bugspray to treat your residence; talkerr - find a non-licensed person to share your problems with instead of a school'd therapist.

I wouldn't be surprised if half of those are billion dollar companies waiting to happen.

roc3• 14 years ago

> "What if we continue this trend of just doing technically illegal things on a massive scale?"

Judging from history: the wronged-customer stories will pile up until the public demands some form of regulation.

Keep in mind that the laws that make airbnb illegal, are the ones that were created as a reaction to business operating in the prior regulation-free environments. Building codes and fire safety regulations exist as a result of a history of preventably-tragic fires and building failures. Food safety regulations exist as a result of a litany of preventable food-borne illnesses, ingredient fraud, etc.

seiji2• 14 years ago

Key words: massive scale

Regulations/rules/laws require oversight. You can fine a giant hotel. You can verify conditions in restaurants. You can ticket illegal food trucks. Can you stop a guy from making experimental taco flavored cereal at home then delivering it to people who ordered it online? That's a horrible example.

The new rule of startups seems to be: We'll do what we want. You can't stop us.

darkarmani2• 14 years ago

Food safety is more about barriers to entry than safety these days. The regulators have been captured by the industry and used to keep out competition.

windsurfer• 14 years ago

Are these really companies? You could easily take one technology platform and re-skin it to fit all these ideas. They are all merely "find people who are X". Making these websites wouldn't be too challenging either. Maybe I'm just jaded though.

ntoshev• 14 years ago

Resources that have been distributed among people in small quantities now can be aggregated and it's a big opportunity. The special case when the resource is people's skills is particularly interesting.

DanielBMarkham2• 14 years ago

What the internet is doing is taking our private lives and making them public.

If I sell an apple to you from my lunchbox, am I a food vendor and need to get a license? What if I sell 100 apples? A thousand?

Government has created these boxes around what it considers employees, restaurants, hotels, businesses, and so forth. Then the industry has waddled up to the trough and helped create a web of laws that prevent just any random schmuck from getting into one of these official categories. Now that we have this ton of innovation, expect a lot of pushback. This article only scratches the surface. If you are acting in the capacity of a hotel, should you have health inspections? Carry a certain kind of insurance? Or are you a landlord, but just for a day? In that case you have all sorts of tenant rights and landlord responsibilities to consider. And the key question behind all of this is: do we want government to apply the same kinds of broad solutions we needed to safeguard consumers in 1850 (I exaggerate for effect) in the hotelling business to one guy who rents his house for a couple of weeks a year? If not, what is the difference? We're going to have to choose: either accept massive government intrusion into every small detail of our lives (monitored by the internet) such that we still fit into this concept of a 1950 economy or deal with a world where these risks we used to not have to worry about are commonplace.

Like I've always said, SOPA and such are just the beginning of the battle. Lots more to come. It's not just big industry protecting it's turf; there'll be a lot of that. It's the problem that the structure of the governmental system doesn't match up to the actual way people are beginning to live their lives. That's a much more fundamental issue.

I don't think legalizing AirBnb is going to help internet entrepreneurs any more than brandishing a squirt gun is going to save you from an armed robbery. The best it will do is cause an imperceptible delay in the oncoming storm.

_delirium5• 14 years ago

I think your dichotomy is a bit too stark, and the result will end up having to be some mixture of traditional regulation and exemptions for small-scale activity. With AirBnB, the guy renting his house a couple weeks a year I agree is not a model that makes sense to shoehorn into 1950s hotel regulation. But what's causing problems is that a number of AirBnB renters are literally unlicensed hotels, of the slummy, bug-infested, inadequate-fire-escapes sort that the original hotel regulation was intended to put an end to. They're not any sort of new 2012 problem, but exactly the same 1950s problem (and in NYC, often quite literally in the same old buildings).

The problem isn't you or me renting out our apartments, but the guy in NYC who's converting an apartment block into a full-time commercial hotel without meeting the proper safety/health standards. So far, I think this is a minor problem on AirBnB except in NYC, where slum-hotel listings are starting to proliferate, often dishonestly listed as if they were someone personally renting out their private apartment (though the review system does help limit this after the first few people are fooled).

smokeyj2• 14 years ago

"I think your dichotomy is a bit too stark"

Kids are getting their lemonade stands shut-down by cops. Traveling vendors are getting shut-down in cities because they're competing with established restaurants. The Amish are getting raided by feds for selling raw milk. I can keep going if you wish.

astine• 14 years ago

Assuming people know that they are renting slummy, dangerous apartments, I see no reason why they should be prevented from doing just that. Unless it's creating a wider problem for the community, I just don't see the benefit of baroque licensing and regulations.

rprasad6• 14 years ago

1 apple? No. 100 apples? Maybe. 1000 apples? Yes.

You don't even need these "boxes" because you can apply common sense: you are selling a lot of apples. This makes you a "vendor." Apples are food, hence you are a "food vendor." At that point, you have a substantial number of customers.

If the apples you sell are contaminated (by your or a supplier), we need to be able to track down your customers for public health reasons. Hence, the license.

This does not require massive government intervention. That exists because of all of the cruft built up over decades to prevent bad apples (pun intended) from abusing loopholes in the rules.

Food vendor licensing has a common basis with hotel licensing. SOPA is a red herring, as there is no public safety basis that ties it to food or hospitality.

Symmetry2• 14 years ago

The problem with this is that different people are going to have different common sense ideas of where the cutoff is, so the numbers have to get written down. Then you to worry about how many things constitute an "item", like if I'm selling boxes of packs of raisins do you count the boxes, the packs, or the raisins? And is the count different for apples and hams? Pretty soon you're arguing in court about whether a Fig Newton is a cookie or not.

But then again, we're already arguing in court about whether or not a Fig Newton is a cookie for purposes of sales tax, so this isn't an infeasible solution, just one that imposes costs we should be aware of.

larrys2• 14 years ago

"we needed to safeguard consumers in 1850 (I exaggerate for effect) in the hotelling business to one guy who rents his house for a couple of weeks a year? If not, what is the difference? "

My law of large numbers: One guy who rents out his house for a couple of weeks is de minimis and can and will be overlooked. 1000 guys who rent out for a couple of weeks is not de minimis. Problems tend to get solved and addressed when there is a bad event or outcome or a large number of people appear to be doing something objectionable to someone. The more events happening the greater the chance of something bad happening, more people being affected and something being done about it.

A single user will fly under the radar. The mere fact that a larger percentage of people are doing something (in this case renting out their rooms) means there is a problem that could happen that needs to be addressed.

sammyo• 14 years ago

Does a broker of services have an explicit legal responsibility to monitor tax issues of the clients? Wouldn't that put an absurd onus onto services like craigslist?

Nutella2• 14 years ago

No, because Craigslist is not a broker. They're an advertiser. AirBnB is a broker because all the financial transactions go through them so their legal and tax responsibilities are different.

rprasad6• 14 years ago

Possibly, depending on the jurisdiction. Most VRBO's provide this service to the home owners.

Indeed, it seems that one of AirBNB's primary cost advantages over other VRBO's is that they don't cover tax withholding. This may not matter much if you know how to handle tax payments yourself, but it could become a significant issue when a lot of AirBnB users get audited for underreporting taxes (AirBnB reports payments to the IRS, which makes it easier to spot underreporting).

Note: income tax payments must be made at least quarterly, not annually. The annual payment is intended to cover shortfalls based on estimated taxes following short of actual taxes and yearly tax items (i.e., credits/deductions).

hef19898• 14 years ago

What I missed is a clear anser to the question wether AirBnB is illegal or not. And if yes, in which countries.

The only constraint I see in Germany come from your rental contract in case the room / appartment you rented out via AirBnB is not your own property. In this case technically you would need the OK from your land lord. If it's owned by yourself, you would have a legal contract with the person staying over. But I'm not a legal expert on that.

EDIT: What puzzles me are some of the comments here. I rather expected them to be along the line of "of course it is, WTF are you thinking it souldn't be???? And "how I like it, great product". But maybe it's just me, I really had a... weird day today! :-)

jellicle• 14 years ago

Hotels are regulated at the state and municipality levels, so the answer is different in many thousands of different jurisdictions.

In most cases it isn't that "AirBNB is illegal" it's that people using AirBNB aren't complying with all local regulations.

subpixel2• 14 years ago

Another comment makes a great point re: insurance. If a tenant burns your house down, or floods your basement, or invites someone over who falls and breaks their leg in your home, you may be in for a world of hurt.

kephra• 14 years ago

One note, is that common clause to disallow subletting is not legal in Germany.

But the law in Germany has an other trap. You need to file a book, with passport numbers and name of your tenants, if you are running a hotel like business.

gautamc• 14 years ago

I haven't used airbnb but after reading some of the comments here, I looked up the airbnb site to check if they have tools/features which try to address the "I am renting to a total stranger/I am renting a strange place" issue - http://www.airbnb.com/safety#reputation - I guess these tools could be improved/enhanced.

But, just because something doesn't follow an established pattern, doesn't mean its illegal. It would make sense if a community decided to add a "no airbnb" clause to their bylaws/rules - but the govt picking and deciding what is abuse of resources and what is not doesn't sound practical - esp when the resource usage of an airbnb unit is no different when it is rented out versus the owner(s) occupying it themselves.

If there can be things like credit-default-swaps, I don't see why the insurance industry should not come up with instruments for this kind of a market - where there is a market, there must be a way.

Spooky232• 14 years ago

The issue isn't that an unconventional pattern is illegal. The issue is that the risk models of residential mortgages, many apartment leases and insurance are designed for people living in a home.

That distinction is important, because people generally treat their home with more care. And insurance/mortgages are priced accordingly.

An apartment tenant generally doesn't leave the door open or unlocked -- they don't want their stuff to be stolen or destroyed. But a hotel guest or AirBNB renter has no skin in the game. Have you ever worked at a hotel? People routinely leave patio doors open or prop entry doors when they leave the room.

Spooky232• 14 years ago

AirBNB isn't illegal -- it's analogous to the "personal services" sections in newspapers that are almost certainly including advertisements for prostitution.

The problem is, the people renting out their rooms on AirBNB are in many cases violating local law, lease terms or insurance contracts. They're also in moral hazard -- they are paying for homeowners/renters insurance while running a roominghouse.

AirBNB's legal position has to be "buyer (ie. landlord) beware". But their marketing position is that it's easy to cover your expenses by renting out your apartment. That paradox is a variation of Napster's old "people are just sharing music like they always have" line.

subpixel2• 14 years ago

One of my family members in Charleston, SC was making $30k+ annually with Airbnb, until the city threatened her (and everyone else in town offering space on Airbnb) with steep fines and even jail.

She chose to pull her listing, and most others in town did as well.

rprasad6• 14 years ago

Ironically, it would have been acceptable if she had used a normal VRBO service (like HomeAway), as those services usually take care of any licensing and taxes associated with renting out one's home.

shek• 14 years ago

I wonder what is the impact of AirBnB on rents. If landlords see that (despite their leases prohibiting them) their renters are making money through AirBnB, they would want to jack up rents to get a piece of the action.

Legalize Airbnb

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