×

City regulations on Airbnb rentals are 'punitive' to ordinary people, co-founder says

  • City regulators have been cracking down on the rental service.
  • Airbnb and French authorities will go head-to-head in court on June 12.
  • If Paris wins, it could remove up to 84 percent of the city's Airbnb rentals from the website.
  • City officials claim that houses used for Airbnb renting end up inflating property prices and have a negative impact on the community, while the company's executives say it only increases prices "on the margins."
The Airbnb app on display in Paris, France.
Chesnot | Getty Images
The Airbnb app on display in Paris, France.

Home-sharing platform Airbnb has been increasingly under fire from city authorities attempting to limit residential rentals through the online marketplace.

Arguing in the company's defense this week, Airbnb co-founder and Chief Technology Officer (CTO) Nathan Blecharczyk told CNBC in Paris that this is largely a result of "misinformation" and hurts ordinary people.

Varying local regulations, which often fine users as well as Airbnb for breaching local rules on property renting, are "punitive" to regular people and hit many users' sources of income, Blecharczyk said during the Organization for Economic Cooperation and Development's (OECD) annual forum this week.

City regulators have been cracking down on the rental service. In Berlin, owners who rent more than half of their properties out without city council permission could face up to $100,000 in fines. Dublin requires planning permission for users who want to change the use of their property for short-term lets. New York City's mayor in 2016 signed a bill to fine landlords letting out their properties for less than 30 days, while London requires planning permission for rentals longer than 90 days.

The local officials claim that houses used for Airbnb renting end up inflating property prices and have a negative impact on the community, while the company's executives say it only increases prices "on the margins." Varying metrics examining the platform's market impact have produced conflicting results, but the rise of short-term rentals has taken thousands of houses off the market in individual cities and increased demand in already high-demand areas.

Court date

Parisian laws forbid owners from renting for more than 120 days of the year, and the city is now taking Airbnb to court over claims that 43,000 homes listed on the site are not registered with the government.

"It's easy to come up with regulations that sound reasonable on paper but in practice can prove difficult and needlessly harmful to the business. So sometimes we do need to push back," Blecharczyk said, adding that the company would rather engage in a back and forth discussion than immediately complying with demands. The company says it has partnerships with over 400 jurisdictions and has remitted more than half a billion dollars in tourist taxes to various governments.

Airbnb and French authorities will go head-to-head in court on June 12. If Paris wins, it could remove up to 84 percent of the city's Airbnb rentals from the website. The company paid $1.6 million in fines last year, according to deputy mayor for housing Ian Brossat, who told local media that "Airbnb does not respect the law," and has "not made the slightest effort" to do so.

Airbnb responded by pointing to Parisian laws as "complex and confusing," and more suited to professional real estate players than regular homeowners.

'Shut out of an economic opportunity'

"That's why we take a hard stance, especially when you consider this impacts many ordinary people, for whom if they can't meet the requirement, they are shut out of an economic opportunity," Blecharczyk said. "And when we feel particularly strongly is when we feel we have an obligation to stand up for the wellbeing of our hosts," the CTO added, stressing that "that doesn't mean the professionals, I'm talking about the ordinary people."

Blecharczyk also pointed to Amsterdam, which he said has one of the strictest private renting policies of the more than 65,000 cities where Airbnb operates. The city caps hosting at 60 days.

Airbnb’s founders (left to right): Nathan Blecharcyk, Brian Chesky, and Joe Gebbia
Source: Airbnb
Airbnb’s founders (left to right): Nathan Blecharcyk, Brian Chesky, and Joe Gebbia

He called the policy "unnecessarily punitive to ordinary people who want to do home sharing responsibly," and while admitting that unlawful activity was still taking place, called for "another way to address it." This could include different models, the CTO described, that have been developed in other cities according to those cities' needs.

These tensions are emblematic of the wider debate over how to regulate the gig economy, something public authorities have struggled with as new and popular service providers challenge the paradigms of traditional business.

As of March 2018, Airbnb had 150 million users and 640,000 hosts across more than 191 countries. The average amount a host earns annually from renting their space on the platform is $7,350, according to TechCrunch.com, and the company takes a 3 percent cut.

Correction: This story has been updated to reflect that Dublin requires planning permission for users who want to change the use of their property for short-term lets and also that Amsterdam caps hosting at 60 days. It has also been updated to state that Airbnb says it has partnerships with over 400 jurisdictions.