Airbnb, the popular site that lets people rent out rooms or whole apartments for short times, could face strict new limits in DC under a bill from Councilmember Kenyan McDuffie (Ward 5). Does Airbnb need regulation, and if so, what kind?
McDuffie's bill would only allow people to rent out all or one part of their primary residence, not another home they don't live in. They would either have to be there (renting out part of the home only), or could only rent it while out of town for 15 days. All hosts would have to get licenses before renting. McDuffie held a hearing on his bill on Wednesday. We asked our contributors what they think.
What kinds of rentals are abuses, and what make sense?
In one of the worst abuses (and apparently a major impetus for McDuffie's bill), the owner of a rent-controlled apartment building was renting out all the units on Airbnb, essentially circumventing rent control laws. Others, essentially, operate unlicensed hotels with multiple rooms, and are unfairly competing with hotels that do pay for licenses, get inspections, and the like.
There was generally consensus that regulation should stop cases like this. But contributors also pointed out a number of reasons people might rent on Airbnb which make more sense.
Daniel Warwick, an Advisory Neighborhood Commissioner in Dupont Circle, wrote:
Someone buying up rent controlled (or otherwise affordable) housing and using it for Airbnb is something that should be regulated away.
However, there are cases when Airbnb is not impacting the long-term housing supply. Some constituents of mine in Dupont are a young family who bought a townhouse with a cellar apartment. Their elderly parents live abroad, but visit once a year for 1-2 months at a time. They are unwilling to rent their cellar unit to a long-term tenant, so they rent on Airbnb.
Another great use case is someone who owns a 2-bedroom condo and rents one of the bedrooms out, or someone who travels for work a few months out of the year.
In Mount Pleasant, ANC commissioner Jon Stewart relayed this story:
[One] family is from overseas, the father a professor. They go back to their home country over the summer to visit extended family and to support his academic research. They rent their house out during that time, and that extra bit of income goes a long way with mortgage payments. We believe many other Mount Pleasant residents have similar situations, given how many folks have an international focus in their jobs.
Does Airbnb compete with regular renters?
Of the main more urbanist arguments against Airbnb is that it might remove housing supply from the market. After all, temporary visitors are willing to pay more per night than someone renting for years. Does that hold water, or is Airbnb ultimately a drop in the bucket that won't really affect prices?
Topher Mathews said,
I've definitely seen houses and apartments that used to rent out annually become Airbnbs. They haven't been “nuisance” properties (i.e. party houses) but the neighborhood has been deprived of the full time residents that would have taken that house, and those potential tenants have been denied that opportunity for housing. Visitors now have more options and probably can pay less and get more, but I don't think it's inappropriate for the city to prioritize residents over visitors.
Ultimately I think it's somewhat of a self-correcting problem. The market can't support too many short term rentals. So dramatic action may not be appropriate. But bringing it under some semblance of supervision, if not just to ensure safety and anti-discrimination compliance seems absolutely necessary.
On Facebook, one Anacostia resident wrote, “Quite a few of my neighbors do Airbnb and do it well. And they live here. As far as its implementation in my neighborhood, it seems a swell deal. Brings folks to the neighborhood who would otherwise be downtown. Helps homeowners with additional income.”
Daniel Warwick added,
In these cases [the ones described above as more acceptable], Airbnb is probably helping the broader housing supply because it allows more efficient use of the already built environment. From a broad macroeconomic standpoint, any person who chooses to rent an otherwise vacant space on Airbnb is either not going to make the trip (bad for tourism business) or is going to stay in a traditional hotel, which drives up occupancy at existing hotels and makes it more likely for a new hotel to be developed when otherwise there might have been housing developed.
Historically, short-term rentals were very common in DC
David Cranor noted that renting out rooms is a time-honored tradition in DC… or was, anyway:
We Airbnb our house when we go on vacation because it helps defray the cost. We've never hit the 14 day limit at which federal taxes are required, so we're certainly not hitting the housing market - just the hotels. But a family of 8 would never be able to stay in DC hotels for what we rent our house to them for so I don't see it hurting them much.
It used to be that pretty much every widow in DC rented out rooms in her home on a short time basis (ever see the original “The Day the Earth Stood Still”) [Editor's note: that's the subject of one of our best posts ever], but to some extent that was regulated away via lobbying by the hotel industry so I don't mind to see that swing back. Yes, long term residents add to the community, but so do visitors. I'm not sure I would value one over the other.
Dan Malouff said,
David Cranor is right. Before zoning regulated flexibility out of our housing market, everybody rented out rooms. We need that kind of flexibility back if we're ever going to solve DC's affordability problems. That includes short term rentals like Airbnb and longer term ones like accessory dwelling units.
That said, I definitely think there's a difference between the homeowner who's renting out spare rooms, and the off-site landlord using a property like a mini hotel. The former offers a path to affordability for the city's would-be homeowners, with much lower barriers to entry than carving out separate apartment units, and deserves maximum flexibility. The latter takes units off the market and should be carefully regulated.
So by all means, let's have an Airbnb bill. And by all means, let's put properties with on-site homeowners in a different category than off-site ones. But let's give on-site homeowners as much flexibility as possible; I don't like the one-room limit.
Does Airbnb hurt hotels? Do we care?
While protecting regular renters is a somewhat popular aim of the bill, there's no doubt that the hotel industry is also lobbying for this. Nick Burger, an ANC commissioner on Capitol Hill, had some insightful thoughts on the hotel market and whether the hotels that will really hurt are the cheap ones far outside the city:
Airbnb is competing with hotel markets, whether or not the units are less expensive than DC hotels. If a $120/night Airbnb is at a renter's budget constraint, then there's a good chance the hotel losing out is an airport hotel out by Dulles (and maybe a rental car company). Or the person renting a $120 Airbnb may be willing to pay $220, so the Airbnb means they can avoid a DC hotel, and the effect is to transfer some producer surplus to consumer surplus. Those aren't necessarily bad scenarios, but Airbnb is certainly competing with hotels somewhere, and it would take a lot more work to determine how often it's enabling travel to DC that wouldn't have happened otherwise (as opposed to shifting where people stay or who reaps the surplus).
My view is that Airbnb is a useful service, but we need to make sure we have appropriate regulations in place—for everyone. There's no question users like Airbnb, partly because it often offers a different product than a hotel, and partly because it's often less expensive. If it's cheaper because it brings lower-priced rental stock into the market (that spare room in your house you're not using and wouldn't otherwise rent), great. If it's cheaper because it's differentially regulated, then that isn't necessarily fair to other established firms that are subject to more stringent regulation. This goes for hotels and for apartments. We tend to tax hotel units higher than rental units, so a homeowner may opt to rent their basement 1-bedroom through Airbnb in part because they're accessing a more lucrative market (hotels) without paying the full cost (taxes + regulations) that hotel operators face. If the playing field was leveled, some homeowners might choose to put their units back on the long-term rental market.
Nick also pointed out that the solution to “level the playing field” could be to reduce some regulatory burdens on hotels, not just raise them on Airbnb hosts. Several other contributors, including ones who rent out spare rooms themselves, added that the license should not be too burdensome to get.
Speaking personally, once we had kids we've almost exclusively stayed in Airbnb rentals when traveling. That's not just because it's cheaper (though that's certainly a plus), but because with Airbnb, you can rent an apartment with a kitchen. I have many not so fond memories of staying in hotels with my family growing up, and each morning my dad would go to the store and get some bananas and those little tiny single-serve cereal packs, which we'd eat crowded around the tiny desk made for working, not eating. Maybe we could cram a few things in the hotel mini-bar fridge.
In many markets, there are few or no hotels that accommodate families nearly as well. We might be forced to stay in a hotel if Airbnb isn't legal, but that's not the reason hotels should get more business. (Plus, we like staying in walkable neighborhoods with amenities and playgrounds, not necessarily in the part of the city with most of the hotels, which in a lot of cities isn't the enjoyable part, particularly with a family.)
It's true that these things—a family-sized unit, in a neighborhood with playgrounds and grocery stores and walkable to transit, is also something scarce in the general housing market, at least in DC.
What about discrimination? Tenants' laws?
Unlike hoteliers (usually, anyway), Airbnb hosts have more flexibility to discriminate in violation of fair housing laws. Here's Eve Zhurbinskiy, an ANC commissioner in Foggy Bottom:
I've never used AirbnBb but will say that generally I am supportive of the concept because of the usefulness of the service for short-term stays. However, one thing that is super concerning is last year's HBS study that found rampant racial discrimination on the platform, including in DC. I realize the company is taking steps to address this, but it seems too early to tell if that's really working. There's a rival black-owned company called Innclusive (formerly Noirebnb) that started up last year as an Airbnb without discrimination. They only have 28 DC listings on their site right now (and some of them seem to be in Maryland), but it'll be interesting to see if they will gain a wider share of the market here.
At the hearing on Wednesday, some hosts also noted that they use Airbnb to avoid being subject to the District's TOPA law, which gives any tenant a right to buy a property if it's sold (and potentially delay a sale). Using Airbnb also circumvents other tenant laws. Like any tenant laws, such regulations can help curb serious landlord abuses, but there are also (likely far fewer, but still some) abusive tenants. There have been proposals to limit TOPA to not apply to single-family houses or one rental in a house; but regardless, for better or worse, there need to be tenant protections and thus there are incentives to get around them with Airbnb.
Require Airbnb to disclose more data
Airbnb could do one thing to help cities better understand their effect on the housing market: provide open data. Like Uber, Airbnb has jealously guarded data about its operations. While regulated services like taxis and hotels have to disclose information which cities can use in planning, that's not true of newer services.
Tracy Hadden Loh said,
They are not transparent with their data, and they instead selectively release it to consulting firms and commission “studies” where the findings are reviewed by Airbnb, not by peer scientists.
It's an open question what impact Airbnb has on the rental housing market, one that could be answered transparently if Airbnb shared their data. Instead, Inside Airbnb is scraping data from the Airbnb site and making it available to anyone for analysis…but they can't get occupancy data, since that's not published on the site (only reviews are).
Require some data disclosure by Airbnb would be a good element to add to the bill. As for the rest of it, contributors seem to generally agree with the idea of requiring a basic license (but not too burdensome) and stopping people from renting out whole buildings full of units, especially rent-controlled ones. But they also seem to concur with the Post editorial board that other elements may be too restrictive.
Martin Austermuhle writes that at the hearing, an Airbnb representative said the company was fine with a limit of renting out a whole unit for 180 days (instead of McDuffie's 15) and a limit of three rentals per host (instead of McDuffie's one and only the primary residence). Somewhere on the spectrum between these numbers is where DC's law will likely end up.
What do you think DC should do regarding Airbnb?
Update, 10:30 am: Some changes made this morning were accidentally lost. The post has been updated.
Update, 3:00 pm: Councilmember McDuffie's staff reached out to note that at the hearing, he expressed a willingness to modify the bill, especially the 15-day limit. He told the City Paper, “We have received a lot of feedback since introduction on issues ranging from party houses, public health and safety, and the 15-day limit on home-sharing while the homeowner is away from their residence. I am open to revising the bill, including the 15-day number.”