Will legitimization of Airbnb hurt affordable housing?

Hospitality industry claims that cheaper apartments will be bought, turned into makeshift hotels

From left: Chief executive of AirBnB Brian Chesky and Geoffrey Mills
From left: Chief executive of AirBnB Brian Chesky and Geoffrey Mills

Airbnb’s recent promise to start contributing to New York City’s tax base would give the city a multi-million dollar boost, but some industry leaders say accepting the money would be the equivalent of legitimizing the business — and that the move could damage affordable housing.

Since Airbnb’s relatively cheap short-term rentals hit the market, landlords and developers have fought to drive away the competition by painting the online business as a tax-dodging, quasi-legal plague on affordable housing, New York Magazine reported.

The city took the tax accusations seriously, ordering Airbnb to hand over a list of users in order to enforce occupancy taxes, which are normally included in a hotel room-bill but can be avoided under Airbnb’s setup.

For now, that is. Airbnb recently offered to toe the tax line in exchange for legal status. The offer would net the city an additional $21 million in tax revenue, the online business estimates.

Granting such status to Airbnb requires overturning current regulations, however, including the ban on homeowners from renting out their residences for less than thirty days while they’re away. That’s the exact business model of Airbnb. Hoteliers, who are losing customers to the startup, point out such a move could put a serious dent in the inventory of affordable housing for New York City.

“Residential zoning laws prevent short-term illegal conversions in order to protect limited, affordable housing stock from being turned into makeshift hotels, which raises rents, creates a nuisance to neighbors as well as unanticipated impacts on the quality of life in communities all over the city,” Geoffrey Mills, chairman of the Hotel Association of New York City, told New York Magazine.

If the laws are changed, Airbnb would start charging hosts as early as July, according to the article. [NYM] — Angela Hunt