I’m on an American Airlines flight right now reading the New Yorker. I’m thankful that I brought a few back issues with me because it’s distracting me from the semi-deplorable conditions found in the rear of the plane.
The TV in front of me is broken and they have run out of everything that could be considered edible. Instead of the humble wrap I wanted, I was offered a soggy box of vegetable crackers and hummus. The hummus came in a small toothpaste-like tube that squirted out some kind of watery substance. Not yet sure what it is because I stopped eating it. Thankfully the lady behind me managed to smuggle on a cheeseburger and a basket of onion rings. So I’ve been subsisting on her fumes for the last hour.
In any event, onion rings and watery hummus are not actually what I want to talk about today. Last week’s New Yorker has an essay in it all about the gig economy. One of the sub-stories is about a woman named Caitlin Connors (real name?) who rents a 3 bedroom duplex with a friend in Williamsburg, Brooklyn.
Her and her roommate’s goal is to rent out their place on Airbnb for at least a week each month. Often during this week they’ll take off traveling somewhere (net net they seem to come out ahead this way), but sometimes they’ll just decamp and stay with friends in the city.
One of their criteria when they were initially looking to rent a place was that it had to be “Airbnb-able.” That’s partially what drew them to Williamsburg. They knew that tourists would see the area as trendy and want to stay there. So far that investment thesis has proven true, as their plan allows them to cover their $4,000 per month rent.
The reason I mention all of this — the gig economy, not cheeseburgers — is because I recently attended a panel discussion about the current state of purpose-built rentals in Toronto. At the end of the discussion, somebody in the audience asked about how they’re dealing with Airbnb and each of the panelists responded in exactly the same way. Essentially: we closely monitor our buildings and crack down on it the best we can.
My view about these sorts of things — Airbnb, Uber, and so on — is that they’re not going away so we should try and figure out how to accommodate and work with them. But how exactly should that play out?
Do you get rid of the 6 month minimum lease term that is commonly applied to condo buildings in this city and let people do whatever the hell they want? Do you create rules, so that guests can, for instance, rent a room in a place but not rent an entire apartment? Or do developers need to start creating dedicated Airbnb floors and buildings? (It’s already happening in some cities.)
I believe that there are ways to manage the negative externalities potentially associated with short-term rentals. But I would love to get all of your temperatures on this. Are you a firm yes or no to Airbnb in multi-family buildings, or are you a qualified yes with the right rules and regulations in place? Would you have an issue sharing a wall with an Airbnb suite?
Let’s talk it out in the comments.
New York State Governor Andrew Cuomo recently signed a bill that will levy heavy fines (up to $7,500) on Airbnb hosts who do not abide by local housing regulations.
Hours after, Airbnb filed a federal lawsuit claiming “irreparable harm.”
However, they also proposed a 5 point plan that they hope will make home-sharing work in New York City and then serve as a framework for new legislation.
Here are Airbnb’s 5 points (summarized by me):
One host, one home: Just like it sounds, this would limit people to renting a single home within the five boroughs.
Require registration: State would require short-term rental hosts to register. Airbnb would be authorized to register people on behalf of the state.
Make home-sharing work for all: Landlords would be able to set specific rules for short-term rentals in their buildings and then secure a portion of the revenue for maintenance and so on. (I would imagine that the same could be done by condo corporations.)
Good neighbor rules: Platforms would be required to have dedicated 24/7 hotlines should any neighbor complaints arise as a result of home-sharing.
Taxes to support affordable housing: Airbnb would collect and remit additional taxes on behalf of hosts, which could then be used for things such as affordable housing.
It’s interesting to think about Airbnb’s evolution. It started out as air mattress rentals on the floor and nobody thought it would ever work as a business. Now it’s a huge business and governments everywhere are trying to figure out an appropriate response. Hopefully a suitable middle ground will be found.
How do you feel about Airbnb’s proposed 5 point plan? With this framework, would you be comfortable with Airbnb in your building? I know that many of you are also hosts (some of you do it for a living), so I would be curious to hear your thoughts.
This morning venture capitalist Fred Wilson wrote a post on his blog talking about the gig economy and Hillary Clinton’s economic speech last night.
Here’s a snippet from Clinton’s talk:
Meanwhile, many Americans are making extra money renting out a small room, designing websites, selling products they design themselves at home, or even driving their own car. This on-demand, or so-called gig economy is creating exciting economies and unleashing innovation.
But it is also raising hard questions about work-place protections and what a good job will look like in the future.
So, all of these trends are real and none, none is going away. But they do not determine our destiny. The choices we make as a nation matter. And the choices we make in the years ahead will set the stage for what American life in the middle class and our economy will be like in this century.
The headlines this morning are making it seem like Hillary Clinton is taking direct aim at companies like Uber. But the transcript suggests that she’s being far more balanced than that: these new companies are creating exciting opportunities, and they are not going away, but there are still things to figure out.
That’s basically how I feel.
Take, for example, Airbnb. I think Airbnb is a great idea and company. A lot of my friends use it both as consumers and as suppliers of space.
But for many (most?) condos in Toronto, owners are strictly prohibited from renting out their units on leases that are less than six months. It’s a direct ban on short-term leasing and it’s written into the Condo Corporation’s Declaration.
And there’s good reason for that. Who wants to buy a condo only to find out that next door is being operated as a nightly hotel? Most people would even prefer that their neighbor is an owner rather than a renter.
That doesn’t mean I believe Airbnb should not exist. I think we’ll likely end up getting more transparent about how buildings (and portion of buildings) are operating, as opposed to it being a shadow economy. And that could help.
If you have any ideas for how companies like Airbnb might be better integrated into urban life, I would love to hear from you in the comment section below.