New York and the Airbnb Issue
When companies introduce new technology or business models, governments must often scramble to keep up. New laws can encourage innovation, but sometimes they create serious challenges for pioneering businesses. That’s what happened when New York introduced a rule that affects home sharing companies like Airbnb.
The New Law
Under the new legislation, it became illegal to advertise entire unoccupied living spaces for rent for less than 30 days. Those who violate the law face a fine of $1,000 for the first offense. For the third infraction, the fine can climb to up to $7,500.
Over half of New York Airbnb listings are for entire apartments or homes, listings which violate the new law. According to an Airbnb survey, upwards of 30,000 New Yorkers could face eviction or foreclosure under the new rule.
The Old Law
The new regulation makes it illegal to advertise these rentals, but they were already effectively illegal under New York’s multiple dwelling law, which New York’s government instituted in 2011. This legislation made it illegal for someone to live somewhere for less than 30 days unless it’s zoned as a hotel or hostel.
Concerns About Airbnb
The novelty of businesses like Airbnb has generated a lot of uncertainty and worry, which led to New York’s Airbnb laws.
The multiple dwelling law was enacted mainly to stop operators from buying up multiple living spaces and effectively creating an Airbnb hotel. Some worry that this kind of home sharing operation drives up the cost of housing. The new law makes it more feasible to enforce that rule.
One of the bill’s sponsors, Linda Rosenthal, also argued that with Airbnb, you never know who’s renting out your neighbor’s apartment. This degrades the sense of community in a neighborhood and could be dangerous, according to Rosenthal.
There’s also the issue of local taxation. Taxes can be confusing for Airbnb hosts, and the new industry brings up new questions. Should an Airbnb operator be categorized as an ordinary homeowner or a business owner?
Various groups are concerned about the effect Airbnb is having on their businesses. Some landlords worry about who is responsible if something goes wrong while an Airbnb customer is renting out their apartments. The hotel industry is also concerned about home sharing’s threat to their income.
The Counter Argument
Airbnb claims that the laws were introduced largely to protect the hotel industry. The site says that its operations don’t hurt the economy. Instead, it says, they bring new customers to local businesses and help New Yorkers pay their expensive rents.
Several venture capitalists, such as Ashton Kutcher and Paul Graham, have expressed their disappointment in the new law, claiming that it hurts innovation. The Internet Association has also shown support for Airbnb by placing radio ads in the Albany area.
The majority of Airbnb’s users, supporters say, do not set up ‘Airbnb hotels’ in violation of the multiple dwellings law. The new law, they claim, hurts the average user of the service who advertises properties for rent only occasionally.
Airbnb is not taking this new threat lightly. The company is suing New York, claiming the law infringes on its rights to free speech and due process and violates the Communications Decency Act, which says websites can’t be held responsible for content its users post.
This is not the first legal challenge Airbnb has launched. It’s also suing San Francisco and Santa Monica. The home sharing enterprise continues to fight to operate overseas, as well as in cities like Berlin, Amsterdam and Barcelona, which have punished or banned illegal postings.
What’s at Stake?
This fight is exceptionally important for Airbnb, as New York is the site’s most active area in the U.S. It could also set a precedent for how governments regulate home sharing and have a huge effect on the future of the sharing economy.