Airbnb is facing a backlash in some cities as housing prices increase amidst claims that the short-term vacation rentals are taking affordable real estate off the market. At the same time, cities are dusting off housing and tax regulations that have been dormant for years as a reason to ban or regulate the booming industry.
"Voters in liberal San Francisco are in the midst of an meltdown over Airbnb, with opponents pointing fingers at the company for adding fuel to the city's already sky-high rents." — CBS MarketWatch
The state of New York has a law on the books that an apartment cannot be rented for less than 30 days. According to New York State Attorney General Eric Schneiderman, 72 percent of Airbnb rentals in New York are illegal.
In Los Angeles, a rental property owner received an offer to lease a 245-square-foot apartment in the trendy Las Feliz neighborhood for $875 a month, a rate that was more than he was asking. The prospective tenant said he wanted to turn around and rent it out on Airbnb, where he could double his money in short term rentals.
In March 2015 the Los Angeles Alliance for a New Economy released a report that more than 7,000 homes and apartments have been taken off the market to serve as short-term rentals.
The counter argument is that companies like Airbnb benefit both travelers and hosts (homeowners or apartment leaseholders). It allows visitors to visit parts of cities not as tourists, but as a part-time local. It has allowed many hosts to meet people from other areas of the world. And, there is no doubt that it has been a financial benefit to many homeowners and travelers, as well as Airbnb.
Airbnb has grown into a company with an estimated value of $25 billion. According to Bloomberg nearly 40% of the company’s revenue is created by “super hosts.” This suggests that the model is shifting away from the concept of an individual homeowner looking to share their home, to one that is more similar to a commercial landlord. As Airbnb has increased in popularity, it has increasingly affected the hotel industry. A study by Boston University concluded that companies like Airbnb had a “quantifiable negative impact on local hotel room revenue.” In turn, this has caused local revenues from ‘occupancy taxes’ to decrease.
The focal point in Airbnb’s increasingly contentious relations with local government is ironically most notable in its hometown of San Francisco:
"Even though San Francisco, the hometown of Airbnb, has gone much further than most cities to regulate short-term rental platforms, a new report issued by the city shows most short-term home rentals and hosts operating in the city are not abiding by local laws. "— Report issued by city of San Francisco Board of Supervisors
In June of this year, Airbnb sued the city of San Francisco objecting to short-term rental rule changes approved by the Board of Supervisors. The battle between Airbnb and local governments appears to be far from over.