Are Airbnb Users Breaking the Law?

Airbnb(NEW YORK) — Are homeowners and renters breaking the law when, to make some extra money, they charge strangers for staying overnight on their couch or in an extra bedroom?

A growing chorus of critics — including landlords, municipalities, neighboring homeowners and local B&Bs — claim that yes, they are.  They want to crack down on sites including Airbnb, which facilitate short-term stays by bringing hosts and guests together.

Such facilitation has become big business.

By its own account, Airbnb’s growth has been exponential.  It booked 10 million guest-nights in June 2012, up from half that number six months before.  It now lists lodgings in more than 30,000 cities in 192 countries.  It makes money by collecting a percentage of what the guest pays and the host receives.

Silver Lake, a neighborhood of Los Angeles, is the latest to cry foul. According to The Los Angeles Times, a committee of the Silver Lake Neighborhood Council heard complaints from locals worried about safety issues and traffic stemming from an increase in local transient guests.

The news site Eastsider LA says a recent check of Airbnb showed more than 200 listings for short-term lodgings in Silver Lake, ranging from a shared studio apartment for $60 a night to a two-bedroom house with pool for $425 a night.

Council member Anne-Marie Johnson told the Times that such arrangements violate local zoning laws, which prohibit rentals shorter than 30 days, except for hotels and licensed bed-and-breakfasts. 

Addressing the belief that hosts are taking in the occasional guest in order to help pay their mortgage or otherwise defray living costs, Johnson told the Times: “People have jumped into that urban myth: ‘We had to do it or we wouldn’t survive.’  Then why not run a bordello?  If you’re really upside down in your house, then have an escort service run out your house.  Where does it end?”

She and other critics contend that many Airbnb hosts are running what amount to hotels, without paying the applicable fees or taxes, or abiding by the applicable regulations. They cite examples of owners who have subdivided their properties into multiple tiny units, to accommodate and profit from transient guests.

Cities including Yountville, Calif., Sedona, Ariz., and New Orleans have passed rules against property owners charging rent for short-term stays.

New Orleans City Business says local ordinances prohibit unlicensed property owners from renting to anyone for less than 60 days in the French Quarter and less than 30 days elsewhere in the city.  It quotes a member of the Professional Innkeepers Association of New Orleans, which represents 55 B&Bs, as saying she doesn’t object to competition from amateurs, she just wishes that amateurs had to pay the same fees and taxes as licensed B&Bs.  Then both would have a level playing field.

In San Francisco, where Airbnb is headquartered, the San Francisco Apartment Association, an advocacy group for landlords, has its own bone to pick. Janan New, the group’s executive director, tells The New York Times that, moving forward, the association’s policy will be to evict tenants who take in short-term paying guests.

“I believe [Airbnbn] should have the social responsibility to disclose what the laws are in the jurisdiction that they’re in,” the Times quotes New as saying.

Molly Turner, director of public policy for Airbnb, tells ABC News that the company’s website explicitly informs prospective hosts that they have an obligation, before signing up with the site, to find out what local laws and regulations permit and what they prohibit.

“In many cities,” says Airbnb’s advisory, “you must register, get a permit, or obtain a license before you list your property or accept guests.  Certain types of short-term bookings may be prohibited altogether.”  By accepting Airbnb’s terms of service, it declares, “You certify that you will follow your local laws and regulations.”

Turner says further that Airbnb has commissioned studies by HR&A, a real estate and economic development consulting firm, to document the demographics of both hosts and guests, and to measure guests’ economic impact on the communities where they stay.

Reports already are out on San Francisco and Paris.

According to the San Francisco study, Airbnb guests contributed $56 million to the local economy between April 2011 and May 2012, of which $43 million was spent at the neighborhood level on local businesses.  That spending occurred in neighborhoods that had not previously benefited from tourist spending.  That’s because 72 percent of guests stayed outside the central hotel corridor, in neighborhoods “off the beaten path.”

The study says 90 percent of hosts take in visitors only on an occasional basis.  Hosts use nearly half of the resulting income to defray their rents or mortgages, or to pay their utilities or other domestic bills.

“It’s very clear from the data,” Turner agues, “that we’re helping the middle class to be able to afford to stay in San Francisco and in their homes by providing additional income.  Upwards of 80 percent of hosts are renting because they need to make ends meet.  In San Francisco, a huge percentage of hosts are below the local median household income.  A majority are low-income.  They rely on this.  As for the guests, a lot say they would not have come to the city or spent money if they hadn’t been able to find a host.  Compared to hotel guests, they visit more frequently and stay longer; they also spend more money in total than do hotel guests.”

They’re not frugal, she says.  It’s only that they choose to spend their money on things other than $900 a night hotel rooms.  With the money saved, she says, “They patronize the local café, the neighborhood restaurant.”  Thanks to Airbnb, neighborhoods and small businesses that have never before benefited from tourist spending now do.

“We have a great relationship with B&Bs,” Turner insists.  Many B&Bs use Airbnb to find guests, she says.  Nor are big hoteliers worried.  “They see we have a very different business model from theirs.”

Asked if she is seeing any organized, national opposition to Airbnb, she says, “No, not yet.  The concerns we hear are very, very local.  People see something different happening in their neighborhood, and they want to control it.  Our concern is to have people understand what’s really going on.”

Airbnb, she says, is not against communities like Silver Lake taking steps to control short-term rentals.  “We applaud them for that,” Turner says.  In fact Airbnb (along with HomeAway, FlipKey and TripAdvisor) has established a website called the Short Term Rental Advocacy Center (STRAC) to assist communities trying to regulate the practice.  According to the website, STRAC “compiles the best data and resources available for use in understanding the impacts and advocating for the smart regulation of short-term rentals.”

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