The stranglehold that's closing in on Airbnb

Harriet Green
Follow Harriet

Airbnb is a company thriving on the sharing economy. The online platform enables people to rent out space in or their entire home to someone else for a short-term stay.

Gluing traditional house swap sentiment with a growing appetite for sharing and localism, it gives people the opportunity to make money when it’s tight, and enjoy a holiday in an often unusual or interesting place for a little bit less.

But Airbnb operates in what's still a grey area when it comes to legislation. Valued at $10bn (£5.6bn), the company is now coming up against it, as those questioning regulatory need close in.

First came Eric T. Schneiderman, the New York attorney general, who’s taking Airbnb to court in a bid to get the names of 15,000 hosts in the city, along with other data. He believes that the majority go the New York listings on the site are illegal short-term rentals of fewer than 30 days.

This fight is part of a larger skirmish Airbnb's in with the hotel industry, which has highlighted the fact its hosts aren’t taxed and don’t have to pay insurance for rentals. In a statement last week, Airbnb said:

The Airbnb community will generate $768m in economic activity in New York in 2014 and support 6,600 jobs. Travellers will have the chance to stay in unique spaces and visit small businesses in all five boroughs, and the Airbnb community will pay more than $36m in sales taxes.

Schneiderman’s vowed to stand for New York’s hotels, but Airbnb’s accused him of harassing inhabitants who are just trying to make ends meet. A petition calling for him to support and protect New Yorkers - not just hotels - has received over 25,000 signatures.

Airbnb says it makes cities affordable. 62 per cent of its New York hosts said using it helped them stay in their homes, earnings them an extra $7,530 per year. It’s true that many hosts are renting out second homes, but 87 per cent of all hosts also rent out the one in which they live.

According to some number-crunching by Quartz, you can get 1.6 houses in New York for every one here in property-squeezed London, where there are 8,128 places to stay listed.

Schneiderman’s railing was added to yesterday with the news that three prominent San Franciscans, including planning commissioner Doug Engmann, are moving to restrict rentals via Airbnb and its fellow online rental platforms.

Measures being pushed include commercial zoning, with a mandatory registry for those renting out short-term space, and range all the way to financial rewards for those who spot hosts flouting the rules. Unfortunately, San Franciscan law on short-term renting is ambiguous, and finding a way through it will no doubt see people choosing to sit very firmly on one side of the fence.

Fellow group member Calvin Welch said to the San Francisco Chronicle: "The short-term rental market is exploding and cries out for some sort of regulation. People are stunned to find out that a house on their block is now a hotel."

The fuzzy grey space many sharing economy-based businesses are occupying can, like anything, lead to malefactors. Schneiderman’s office circulated a list of users who had a large number of listings, i.e. those stepping from between the ‘personal’ and ‘commercial’ and firmly into the ‘commercial only’ bracket. Airbnb says it’s now permanently removed those users, and they’ll no longer be able to operate. It admits they were "in some cases... making communities worse, not better".

It’d be unlikely if this satisfies New York’s attorney general and other detractors, though - and of course, it’s never as simple as regulation/no regulation when layers of legislation already exist.

Whatever the upshot, hopefully it won't threaten those for whom a reputation-based platform means more choices.

Related articles