Airbnb, the innovative resource-sharing website that lets people rent other people's homes, apartments or just their couches for short stays, is getting major blow back from San Francisco landlords who are serving eviction notices to tenants who participate.
San Francisco has a law against short-term rentals, as do some of the other “34,000 cities in 192 countries” where the six-year-old company claims to have planted its flag. But until recently, much of the resistance to Airbnb has come from municipalities who see it as a threat to their hotel industry and the taxes it generates.
The San Francisco Chronicle reported that the city Planning Department is currently investigating 85 people for violating an ordinance that requires someone like Jeffrey Katz to acquire a conditional-use permit to house someone for less than 30 days. Katz, a special-ed teacher, found out the hard way that the law is being enforced.
He got an eviction notice for letting people camp out in his living room. When Katz appealed to Airbnb for help, he found out that he was on his own. Airbnb takes no responsibility for the illegality of its business model. “Unfortunately, we can't provide individual legal assistance or review lease agreements for our 500,000 hosts, but we do try to help inform people about these issues,” Airbnb executive David Hantman told the Chronicle.
So Katz got a lawyer, Joe Tobener, who expanded on one of the issues: “They thought it was OK to rent out on Airbnb because the company didn't tell them otherwise. Airbnb should be defending these tenants, or they should disclose to every person who rents in San Francisco that (short-term rentals are illegal) and tenants are being evicted.”
That's not going to happen, although other measures are being taken to reconcile conflicts with Airbnb. The company reluctantly reached agreements a week ago with San Francisco and Portland to collect the cities' hotel tax as part of its billing arrangement.
That might not do much to assuage the neighbors of Airbnb hosts who seem to make up the bulk of complaints about the strangers in their midst, but it could help the startup's image as it tries to corral money from investors.
Airbnb is talking to investors about raising around $450 million, which would value the company at $10 billion. That's more than Wyndham Worldwide Corp ($9.4 billion) and Hyatt Hotels Corp. ($8.4 billion).
Airbnb is fighting with state and local governments over whether they should be covered by regulations that govern rental markets and the hotel industry or be treated as something new and different. Critics say the innovative business models that link seller and client rely for their profitability on skirting laws that ensure safety and fund government oversight. In the case of ride-sharing companies like Uber, they initially undercut the taxi business, in part, by not providing any benefits to their drivers and eschewing responsibility for car inspections, training, background checks and insurance.
Airbnb and ride-sharing companies claim they don't fit the descriptions of traditional businesses and are basically app companies whose software facilitates the businesses of independent contractors. But governments take a keen interest in anything that affects housing and transportation and are still in the early stages of figuring out how to regulate these companies—or if they can.