I would like to know if AirBnB is covering the $2,400 assessed penalty on behalf of Nigel Warren.
I am also curious about the immediate steps AirBnB is taking to address this, not the long term lobbying effort mentioned at the end of the article. For example, will AirBnB disallow NYC listings under 29 days until this is resolved? Or will they let people roll the dice with disclaimers that such rentals may violate local law and result court assessed fines.
As naive as this may sound, especially for a company that is likely already valued over $1 billion, this is a golden opportunity for AirBnB to gain unparallelled media and bolster main stream support.
I wish the article explored the penalties associated with continued rentals in violation of the new regulations. Obviously there could be tax penalties but I'm curious if there are additional civil fines, potential criminal violations, or hell maybe civil forfeiture laws might apply (I saw that tounge and cheek but after another front page post that may be a reality?). Would airbnb pay costs and lawyers fees like Uber has done?
This is one of the things about AirBnB that bothers me. They know it's not legal for him to rent it because of NYC's Illegal Hotels Act. I can't shake the persistent feeling that they know their business model relies on people breaking the law and they just don't care. That bugs me.
> As depicted in Figure 3 below, the 300,891 reservations that appear to violate the building use and zoning laws yielded approximately $304 million for hosts during the Review Period. Airbnb itself earned almost $40 million in fees from these transactions. This represents approximately two out of every three dollars Airbnb received in connection with the Reviewed Transactions.
> New York City Is Likely Owed Millions in Unpaid Hotel Taxes from Private Short-Term Rentals. A number of taxes may apply to private short-term rentals. See Appendix A. In particular, New York City assesses a hotel room occupancy tax of 5.875 percent that applies to private short-term rentals. Excluding fines and penalties, the total estimated liability for hotel room occupancy taxes associated with the Reviewed Transactions is over $33 million.
> Few Airbnb hosts appear to have filed the paperwork with New York City necessary to remit hotel room occupancy taxes, nor did Airbnb collect any of the hotel taxes owed for the Reviewed Transactions.
If it ever files to go public, the Risk Factors section of Airbnb's S-1 is not going to be pretty.
Obviously, it could get very ugly for Airbnb and its hosts in cities where officials don't offer a free pass like San Francisco. Right now, it looks like New York City is out for blood and is not going to follow San Francisco's lead. But even if you assume that Airbnb and hosts receive get out of jail free cards in many cities, as regulation catches up to the market, it's quite possible that Airbnb will see less supply and less demand.
On the supply side, hosting is only going to get more complex and costly. That will obviously convince some hosts to leave the market. Many of the illegal commercial operators who have been violating the law and not paying taxes will either move on or get shut down, and limits like the ones imposed in San Francisco will also work to reduce the legitimate inventory.
On the demand side, the need to deal with red tape and tax compliance will likely remove some of the savings that hosts have been able to pass on to their guests. Obviously there's a segment of the guest market that prefers the Airbnb experience, but there's almost certainly a large(r) segment that chooses to use Airbnb primarily because of cost.
This is the irony of many of the "sharing" economy and "on demand"[1] startups: once their primary competitive advantage is removed (reduced costs from flouting of laws), the economics of their businesses could change for the worse, literally overnight. For those already operating at a large enough scale, an implosion is a real possibility.
Illegal hotels are actually a legit problem in NYC. I'd have to dig up the article but I've read about shady landlords evicting residents and turning entire apartment buildings into Airbnb hotels. Its big business, my friend pays his entire rent with Airbnb.
Real estate is at an extreme premium and hotel space is scarce. There are a lot of scammers and shady people in this city so its only natural that Airbnb will be abused (I've even been sucked into an Airbnb-based con job in NYC myself).
I think the issue isn't so much that this law is on the books, its that they haven't updated the legislation to accomodate people who rent on Airbnb safely.
This is an old article (from 11/24/16), which talks about Airbnb's suit against NY State, and says that their other suit against NY City is still pending. However, the latest news is that Airbnb has now dropped its suit against NY City. See, for example, this article in today's NY Times:
This means that Airbnb will not challenge the law that allows people who post illegal listings on Airbnb (rentals less than 30 days) to be fined $7,500.
I'm _extremely_ grateful that my current lease, as well as the upcoming one that I hope to sign if my application is approved, explicitly spells out the penalties for renting out apartments on Airbnb as a fee equivalent to 2 months rent immediately applied to the tenant.
It's been a massive improvement to not have to deal with the externalities that come from sharing a building with Airbnb guests.
AirBnb has recently been made illegal in my state (New York State) for stays under 30 days. Of course a lot of people don't know or don't care about the law, but they're giving out fines left and right. This is likely true with other states as well.
The local or municipal government should put the onus on AirBnB. If they made rental illegal, and fined the site for allowing a posting to go up, they would fix it immediately.
It's amazing why AirBnB insists on being the antagonist here. There is already a clear bad faith actor, and everybody wants to see them punished / fail. but AirBnB insists on inserting themselves as a side-plot, rather than simply recognizing the situation for what it is, and doing everything they would want someone else to do if they were in that position.
As much as people want to like AirBnb, I'd guess most rentals in NYC are illegal given the existing laws on the books. This is why NY is requesting the data from AirBnb.
Owners can not rent less than 30 days unless they are present. In addition, I do not know of a single condominium building that allows AirBnb style rentals -- most at this point have modified their rules/by-laws to explicitly forbid it so as not to leave any room for interpretation open.
I am President of my condo board and we both have this language in our rules as well as have a hefty fine for violating them. The minimum allowed rental is 12 months and includes a full background and financial check. Unit owners with common amenities do _not_ want short-term rentals in their buildings and can prevent them legally.
Behavior like this will lead to Airbnb being sued until a point where they recognize it is cheaper to put a zip-code blacklisting system in than continue to break the law. Right now they make money from this behavior. It's a poor long term strategy that made sense when they were small and scrappy but is no longer acceptable.
Also, they're losing public support - I've used airbnb for years in SF and around the country and they used to have people on their side because they were the underdog. They are no longer the underdog. They are now worth roughly the same as Marriott.
They could disallow that host from listing their space. Small revenue loss to AirBnB. Big revenue loss to the host. Not really worth the few bucks to not be able to use airbnb.
I doubt it. I'm sure Airbnb new exactly what risks there were in offering this service, and had lawyers very carefully craft terms of service that protect the company from damage done by renters.
A good lawyer would argue that this is a criminal case between the renter and the home owner, not a civil case between the home owner and Airbnb.
This sounds great, but I see problems on the horizon. If you are using a site like AirBnB I assume you are able to avoid paying hotel related taxes. Many cities get a significant portion of their revenue from these taxes. There are already laws on the books in many cities that restrict AirBnB style rentals. It's only a matter of time before cities begin enforcing those laws.
I am also curious about the immediate steps AirBnB is taking to address this, not the long term lobbying effort mentioned at the end of the article. For example, will AirBnB disallow NYC listings under 29 days until this is resolved? Or will they let people roll the dice with disclaimers that such rentals may violate local law and result court assessed fines.
As naive as this may sound, especially for a company that is likely already valued over $1 billion, this is a golden opportunity for AirBnB to gain unparallelled media and bolster main stream support.
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