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The Airbnb civil war: politicians look at limits, while hosts point to the benefits

April 6th, 2016 · 29 Comments

Vancouver is gearing up this week to deal with Airbnb, with Councillor Geoff Meggs spearheading a motion to have staff get more aggressive about getting information from the company and about getting information on the impacts.

It’s a popular move for many. Landlords, strata councils, neighbours, housing advocates and more are all worried about the impact of having all residential areas turning into scattered hotel sites.

But there are also local Airbnb hosts who are worried about an impending crackdown, saying that what they’re doing doesn’t take away renter housing and that it adds life and a financial benefit to their communities. Those who only rent a spare bedroom or who only rent out their places while they are out of town especially feel strongly that they are providing a benefit that doesn’t take away from the local housing stock.

Their story here.

Categories: Uncategorized

  • Kirk

    Naively, I had been thinking AirBnB owners were just making an extra couple hundred bucks of spending money once in a while. But, wow, it’s so much money that homeowners are relying on it now.

  • Tiktaalik

    Does anyone else think there’s a pretty significant difference between someone renting out the basement of the house they occupy on Airbnb and someone buying a new condo in order to exclusively rent it out on Airbnb?

    In the housing scenario someone renting their basement on Airbnb potentially decreases the city’s vacancy, but the main part of that house is occupied, and I don’t think we really expect every single family homeowner to have a suite they’re permanently renting out. A house renting out their basement and increasing city vacancy is somewhat of a bonus. There are likely a lot of marginal basement suites that would really be unacceptable for permanent residency (eg. too small, no full kitchen), but would be great for a traveller staying just one night. For that reason there could be many basement suites around town that are being rented on Airbnb that would never have been rented long term in the first place.

    In the other scenario someone is buying a new condo purely for investment purposes and rents it on Airbnb for the maximum income generation ability. This new housing unit does nothing to raise the city’s vacancy rate. Ostensibly this unit was built to be someone’s home and the city approved it to increase the supply of housing, but that’s not the end result. I’d rather see us building housing to house locals who want to live here, so I feel pretty uncomfortable with this scenario, and I don’t think it’s something we should be supporting.

    I don’t know do people see a difference at all? Is one more acceptable than the other?

  • boohoo

    I’m not relying on it, but it’s no doubt nice to have a bit more money.

  • Richard Campbell

    Bottom line is that Vancouver is a popular city with a booming economy. One of the fastest growing in Canada. We need to build more homes of all types in all parts of the city. And visitors are an important part of our ecomony so we need to build places for them to stay.

    Time to stop focusing on problem and instead find solutions.

  • IanS

    I don’t think there’s much of a difference. The net result is pretty much the same, isn’t it? In both cases, there’s a unit which could be used for rental purposes, but isn’t.

    And why limit the hypothetical to an AirBnB rental? Is there any difference between someone who rents out their basement suite (or condo) and someone who simply chooses to leave it empty? For the purpose of your point, the result is the same, ie. there’s one less unit available for rent.

    As to your final point, why not be concerned about people who chose to build hotels (or strata units, I suppose), rather than rental housing? It’s not “housing to house locals” and the net result is that the units in the building are not available for rent.

    Once you get to the point where the authorities are telling people that they can’t rent out short term because those units are not available for rental, why not follow the idea to its logical conclusion?

  • IanS

    Having more money is good, yes. 🙂

  • IanS

    One interesting thing about this new witch hunt is the manner in which the focus of the search for “someone to blame” for our housing woes has changed over time.

    Not that long ago, it was the damn foreigners (read Chinese) with their evil offshore money who were buying properties in Vancouver and leaving them empty, hollowing out the city and ruining it for good, honest local folk. However, perhaps starved for evidence, that argument, with its undertones of racism and xenophobia now seems to have morphed into more of a class warfare argument, in which the evil property owners are buying up properties and renting them out on a short term basis, ruining the city for good, honest local folk.

    So, we’ve had racism and classism now. I can’t help but wonder what’s next. Sexism? Perhaps City Council will next turn its attention to a study to see whether evil men are buying up properties and not making available for good, honest local women? Or agism, perhaps? Evil young people buying up properties and not making them available for good, honest old folk.

    Only time will tell, I suppose.

  • Chris Keam

    “why not follow the idea to its logical conclusion”

    Because we are rational grown-ups who can make reasonable compromises for the overall benefit of the whole community? Yes, I know — crazy talk.

  • IanS

    Hey Chris. It’s been a while!

    Any thoughts to contribute on the topic or is this just a casual drive by snipe?

  • Chris Keam

    I don’t have any solutions to offer. I think it’s a very real issue, but the people who could fix it largely benefit from the status quo. Not a snipe but a very real opinion — taking things to their ‘logical conclusion’ isn’t much of a contribution either frankly. What would be great would be intelligent people offering potential solutions in a collaborative fashion on forums such as this. More crazy talk. 🙂

    cheers,

    CK

  • IanS

    Well, I’ll take that as a “no” (or, at best, one of your non sequiturs) and move on.

    Good to hear from you again though. 🙂

  • Chris Keam

    You’re welcome to take it however you like. There’s a fairly clear opinion and a suggested approach to the issue in my previous post. Non sequiter/uncomfortable truth. Poe-tato/Patay-to. LOL

  • IanS

    I won’t be drawn into another CK Squabble here, but I have to ask: did you even read the original post by Tik, the one to which I was responding? I kind of get the feeling you might have missed it in your zeal to snipe.

  • Chris Keam

    “Does anyone else think there’s a pretty significant difference between someone renting out the basement of the house they occupy on Airbnb and someone buying a new condo in order to exclusively rent it out on Airbnb?”

    Absolutely true in my opinion. Not so in yours. Thanks for asking.

  • Alec Smecher

    IanS, you’ve annoyed me into commenting. Can I slightly overstate your case as “the damned foreigners aren’t solely responsible, so let’s vilify anyone pursuing that line of inquiry; AirBnB can’t be solely responsible, so let’s vilify anyone doing that; and for good measure let’s preemptively vilify whatever people look into next”?

    The region is in crisis. Inquiry in each direction is good. At some point inquiry should give way to positive change and a range of policy will probably be needed to deal with the variety of imbalances.

    People are begging, borrowing, and stealing to get into ownership. When the focus turns to AirBnB operations — which AFAICS are illegal but unenforced — the predictable reaction from participants is “yes, please do something about housing, but make sure it doesn’t affect my precarious little operation.” With ownership and debt rates at all-time highs, every niche that’s permitting mortgage-holders to survive will have its defenders because those niches are keeping noses above the water.

    Finally, for a region awash in wealth and enjoying a golden era of prosperity, I’m hearing an awful lot of anecdotes about its acolytes moonlighting as scullery crew in their own houses in service of their mortgages. And begging for the right to continue.

  • A Taxpayer

    “The region is in crisis”

    No, a crisis would be a sudden collapse in real estate prices and homeowners can’t refinance their mortgages forcing them to sell at distress prices wiping out any equity they have built. It is not having to purchase/rent in Surrey instead of Kitsilano.

    As well, it would seem that it is Vancouver that is making the most noise about affordability while neighbouring municipalities like Burnaby and Surrey go about building more housing (and are preferred by developers to do business). Vancouver is not the same as Metro Vancouver.

  • spartikus

    In 2011, 136,135 private households were rentals (51% of total) and in October 2015 there were 26,001 rental condos.

    Source: http://vancouver.ca/files/cov/housing-characteristics-fact-sheet.pdf

    I had heard on some news report somewhere there 4000-5000 AirBnB listings for Vancouver. Perhaps that’s Greater Vancouver, can’t remember. Currently there are 17 pages of search results with 18 listings per page (306) for AirBnB for CoV.

    Just to introduce some numbers.

  • IanS

    Alec,

    I apologize for annoying you, though I would prefer to characterize the effect of my post as one of “stimulating conversation”.

    As to your point, I understand where you are coming from and I don’t disagree that there may well be problems with housing prices and with rentals. However, and this was my point, the concerted search for the different villains de jour is, in my view, striking. A few months ago, we were seeing posts about how the rich foreigners were buying up housing and leaving them empty, hollowing out our neighborhoods. Now we’re seeing the same comments made with respect to people renting out their own property on a short term basis.

    I think my point was valid and I am curious to see who gets blamed next.

    Out of curiosity, what makes you think that AirBnB operations are illegal? I’m not saying otherwise, but I’m curious to know the basis for your statement.

  • Jeff Leigh

    Maybe Vancouver zoning bylaw 10.21.6?

    “10.21.6 No person shall use or permit to be used any dwelling unit for a period of less than one month unless such unit forms part of a hotel or is used for bed and breakfast accommodation.”

  • IanS

    That might well be correct, although, from my very brief review of the bylaw, a short term “Air BnB” type rental might well fall within the definition of “hotel” or “bed and breakfast accommodation”. Still, the intent of that provision would seem to be to prevent or limit short term rentals.

    There are sure some interesting bylaws in that section. Bylaw 10.21.1 provides that “No dwelling unit shall be used or occupied by more than one family….” I wonder what enforcement of that provision would look like.

    And, of course, I think we can all get behind10.23: “No person shall use or occupy land and no development permit shall be issued for the manufacture, distribution or storage of a nuclear weapon or any component thereof”. 🙂

  • A Taxpayer

    Some more numbers to add to the debate. According to Tourism Vancouver there are 24,000 hotel rooms in Metro Vancouver of which 10,000 were in the downtown core. If active Airbnb listings are in the 3,000 to 4,000 range then one would expect the impact would be noticeable on hotel occupancy rates and/or room rates rentals. On the contrary, last fall the Vancouver Sun reported:

    “Smith Travel Research data for the first six months of 2015 shows the downtown Vancouver hotel occupancy rate rose four percentage points to 74 per cent while the average room rate rose about $20 to $188 a night.”

    http://www.vancouversun.com/business/Vancouver+hotel+market+heats+American+visitors+return/11258723/story.html

    Of course it can be argued that both occupancy and room rates would have been even higher without Airbnb but it is also possible that the lower rates available through Airbnb will increase the number of visitors to Vancouver because a visit becomes affordable. Restricting Airbnb might then reduce the number of visitors and the income they generate for the local economy.

    I suspect that by the time you factor out the casual rentals of units on Airbnb that wouldn’t be in the rental pool anyway, the actual impact on rental suite availability is not going to justify the regulation and compliance costs of separating the two.

  • peakie

    Recent items about the outlaw Online-Home-Rental-Booking-App, AirBnB and others and their tax treatments.
    This is much like the outlaw Ride-Hailing-Personal-Car-App, Uber and their tax avoidance.

    It has been pointed out that these outlaw Apps are mainly financed by Venture Capital (VC) money nowadays and haven’t had an Initial Public Offering (IPO) when they will have to report their exact financial structure and that they make no profits from their “business” yet.
    With the IPO they would have to fill in a US Securities and Exchange Commission 10-K form and reveal much more than they do now.
    The infamous Item 1-A would show they are not well, and Item 3 would show that they are in endless litigation.

    ———- A Few Recent Items in the English Language —–

    Should Airbnb rentals be subject to hotel taxes and regulations?
    By Matt Rocheleau, Boston Globe Staff April 04, 2016

    The proposed legislation has support from Airbnb, HomeAway and Short Term Rentals Boston, as well as the Travel Technology Association, a trade group that represents numerous short-term rental companies.
    One reason: The companies see the tax as lending legitimacy to their industry. [ MORE ]
    ———-

    Montreal man owes $62K in unpaid taxes for Airbnb rentals
    CTV Last Updated Wednesday, March 23, 2016 7:05PM EDT

    Over four years, Dany Papineau claims he’s made more than $200,000 renting properties with Airbnb.
    [ MORE ]
    ———-

    Los Angeles is losing out on $41 million in taxes from Airbnb, study says
    by Hugo Martin, Los Angeles Times 31. March 2016

    In Los Angeles, the latest study said about 22% of Airbnb operators rent their properties for at least 180 days a year, while 4% offer the homes for at least 360 days a year. The neighborhoods with the highest number of Airbnb operators were Venice, West Hollywood, Hollywood and the areas around Silver Lake and Echo Park, the study found.
    If all Airbnb operators were to pay the same room tax, tourism fees and assessment charges that are levied on hotels, Airbnb would owe the city of Los Angeles $41 million a year, the Penn State study concluded.
    [ MORE ]

    ———-
    The Sharing Economy Doesn’t Share the Wealth
    As Airbnb and Uber inch toward profits, tax authorities worry.
    by David Kocieniewski. Bloomberg News, April 6, 2016

    Every time Ian Haines rents out his spare room in the Australian port city of Albany, Airbnb takes a 13 percent cut. Haines, who’s semi-retired, uses the extra money to supplement his income running a local farmers market. He says he’s careful to pay taxes on the Airbnb money, because the San Francisco company may report the transactions to the Australian government.
    For Airbnb, things are different. Because it manages its finances via units in Ireland and tax havens like Jersey in the Channel Islands, only a small part of its share of the revenue is ever likely to be taxed by Australia or the U.S. A review of Airbnb’s overseas regulatory filings shows it has a far more extensive web of subsidiaries than it has publicly acknowledged—more than 40 in all.
    For years, pharmaceutical and tech companies including Pfizer, Merck, Google, and Apple have slashed their U.S. federal tax bills by using offshore tax havens and shifting profits abroad. Airbnb and Uber are starting to extend this strategy across vast new fields: PricewaterhouseCoopers estimates that sharing-economy businesses generated $15 billion in revenue in 2014 and will take in $335 billion in 2025, growing largely at the expense of companies that pay billions in U.S. taxes.
    Money from Airbnb transactions in 190 countries, including Haines’s rentals in Australia, goes directly to a payment center in Ireland. Airbnb collects 6 percent to 12 percent of the rental price, depending on cost, then deducts 3 percent from the host’s take before passing the money along. This lets Airbnb shield most of its profit from the country where the service was delivered. (Airbnb Ireland pays the Australian subsidiary a small fee for marketing in-country, and the subsidiary pays tax on its profits.)
    [ MORE ]

    ———-
    SF wants Airbnb hosts to pay taxes on beds, stoves and cutlery
    By Carolyn Said, SFGate. Online version of SF Chronicle
    Updated 3:52 pm, Thursday, March 17, 2016

    San Francisco has a message for vacation-rental hosts: You owe more taxes.
    Next week the city will notify hosts using services like Airbnb and HomeAway/VRBO that they must submit an itemized list of all the “furniture, appliances, supplies, equipment and fixtures” used in their rentals, specifying the cost and acquisition date. After the assessor’s office calculates depreciation, this “business personal property” will be subject to a tax of slightly over 1 percent of its value.
    For rental hosts, the items to report could range from the furniture and linens in a single bedroom to the entire contents of their house, depending on whether they rent just a room or the whole house. A Chronicle analysis last year showed that two-thirds of about 5,500 Airbnb listings in San Francisco are for entire homes. All 1,400 listings on HomeAway/VRBO and FlipKey are for entire homes.
    [ MORE ]
    ———-

    Airbnb plays nice, but city should keep the pressure on
    The San Francisco Chronicle
    April 4, 2016 Updated: April 4, 2016 5:19pm
    [ MORE ]

  • peakie

    A new house being shoddily built nearby, selling for more than 1.5 million is advertising “rental income” (not the inflated ‘secret’ money from AirBnb, VRBO and other such Internet-short-term-nightly-rental apps) from basement and laneway house as $7000 a month.

    I expect it to be fully rental, if sold, as 3 other houses in the same block which can’t find buyers for the prices they set and have been turned into full-time rentals of all floors.

  • Tiktaalik

    People really need to stop understating the level of price increases the region has had.

    It is not an issue of privileged millennials whining that they can’t live in Vancouver. There have been staggering price increases region wide. It’s no longer reasonable to hand wave away affordability concerns and tell people to move to the suburbs. At this point you will be very hard pressed to find a house in Langley for under $700k.

    For a family that requires more space than a two bedroom townhouse I think we are at a crisis point. There’s really nothing affordable out there, and we don’t have quality enough infrastructure that commuting into Metro Vancouver from Abbotsford is a viable option.

  • Everyman

    Consider that the housing affordability crisis is a result of all those factors coming together, rather than just pooh-poohing it and not providing any alternate explanations.

  • peakie

    Airbnb-Anbietern droht BuĂźgeld von 100.000 Euro [ Airbnb providers threatened with fines of 100,000 euros ] 09.04.16
    http://www.welt.de/reise/article154159863/Airbnb-Anbietern-droht-Bussgeld-von-100-000-Euro.html

    State Senate of Berlin has had a 2-year transition and now will act.
    There are some 16 000 AirBnb rentals in Berlin
    “Airbnb-Zimmer sind teurer als FĂĽnf-Sterne-Hotels”

  • IanS

    IMO, the current situation with housing prices / lack of rental is the result of a number of issues. I don’t doubt for a moment that people choosing to rent units on a short term “Air BnB” basis, rather than long term, is a factor which takes units outside the rental pool. That’s simple math. And, given the bylaw cited by Jeff above, this would seem to be an issue which the City is well equipped to address, if it chooses to do so.

    My “pooh poohing” was directed that the torch and pitchfork crowd, running from perceived villain to perceived villain (“It’s the Chinese! NO, it’s the Shadow Flippers! Oh no.. it’s the Air BnB renters!!”), in an increasingly vociferous effort to find someone (else) to blame.

  • Chris Keam

    “the torch and pitchfork crowd”

    Who are these people? It sounds like a rather jejune and un-nuanced attempt to unsuccessfully build a strawman. Can you provide a better example of who you are talking about?

  • peakie

    Aug 11, 2016. (REUTERS) Online home-rental marketplace Airbnb paid less than 70,000 euros ($77,000) in taxes in France in 2015, 18 percent less than the previous year, even though Paris is the company’s most popular destination, French newspaper Le Parisien reported on Thursday.
    Multinational companies can lower tax payments by using subsidiaries in countries where corporate tax rates are low, such as Ireland. Some of these companies, such as Google , have come under increasing pressure in Europe, and in France in particular, from governments angry at the way businesses use their presence around to world to minimise tax.
    “Airbnb abides by the fiscal laws of the countries in which it operates,” the Californian company said in a statement to Reuters. It also said its “office in France provides marketing services and pays all applicable taxes.”
    The group also says that the money it redistributes to apartment owners who rent out their homes is liable for tax. Airbnb began collecting tourist taxes from guests in Paris in 2015 and has since struck similar arrangements with 20 towns in France.
    According to Airbnb France’s 2015 last statutory filing, seen by Reuters, the company declared 4.96 million euros in revenue in the country and a profit of 97,205 euros. Le Parisien said it paid 69,168 euros in taxes on that. [ MORE ]

    From Le Parisien
    leparisien.fr/economie/comment-fonctionne-la-combine-11-08-2016-6030923.php
    « Entre septembre 2014 et aoĂ»t 2015, 3,9 millions de voyageurs ont utilisĂ© Airbnb pour visiter la France et 4,1 millions de Français s’en sont servis pour leurs vacances », se fĂ©licitait l’entreprise dans une rĂ©cente Ă©tude sur son impact Ă©conomique en France. Et ce, grâce Ă  un catalogue de locations qui s’Ă©paissit de jours en jours, le nombre d’offres ayant « plus que doublĂ© » chaque annĂ©e depuis 2010.
    Chapeaux ! De quoi gĂ©nĂ©rer un confortable chiffre d’affaires ? Impossible Ă  dire, la firme amĂ©ricaine garde secrète cette donnĂ©e stratĂ©gique. Mais l’entreprise dissĂ©mine, un peu partout, des informations, qui permettent de s’en faire une petite idĂ©e. « Nous nous rĂ©munĂ©rons en prĂ©levant des frais de service sur chaque transaction, Ă  hauteur de 3% du cĂ´tĂ© de l’hĂ©bergeur et […], en moyenne, de 9 % du cĂ´tĂ© du voygeur, soit 12 % au total », indiquait en 2014, lors d’une audition Ă  l’assemblĂ©e nationale, Nicolas Ferrary, le reprĂ©sentant d’Airbnb en France.
    Mais, surprise, la filiale française du groupe, dans ses comptes 2015 — que nous avons consultĂ©s — ne dĂ©clare pourtant que 4 958 859 € de chiffre d’affaires. Soit treize fois moins que notre estimation.

    Also considers LinkedIn and Google’s tiny tax payments in France.
    Graphic with the international exchange network.

    Will Vancouver just ban AirBnB or tax it? which is better/worse.