Are governments trying to kill the sharing economy?
NB: This is a viewpoint from Arnaud Bertrand, CEO at HouseTrip.
Until recently, travel companies in the ‘sharing economy’ have fallen below the radar when it comes to government regulation. These companies have enjoyed rapid growth, with legislators uninterested in coming up with any form of legal framework.
But this is all changing, as proven by the recent move by the city of New York to switch from a state of ‘don’t ask, don’t tell’ to one of prosecuting and fining hosts who rent out their homes to holidaymakers.
The New York law is just the tip of the iceberg, though, as other locations such as Berlin and Spain are also examining laws in the same vein.
In each market contemplating holiday rental bans, the reasons behind the proposed prohibitions differ.
Spain had a law on its books dating from the mid-90s that is being revised by an association of four Spanish regions who are compiling information to determine the future of holiday rentals in the country.
This move is mainly motivated by the need to make more landlords declare and pay tax on income – but the hotel lobby is pressuring hard to go even further and make the practice of renting out one’s home almost impossible.
Vacation rentals in Berlin
Berlin differs from Spain in that local legislators blame the rapid rise in rental rates and property prices for local residents on the increase in holiday flats in the German capital.
In a city of over four million private dwellings where a mere 12,000 units are dedicated for holiday use, this view is shortsighted. The reality is that a booming economy has brought thousands of job seekers to Berlin and rents have naturally increased.
Official numbers state that there are 40’000 new Berliners every year; that is the real issue behind the increase in prices. However, in an election year, it’s much easier to blame problems on tourists who can’t vote rather than local government failings regarding home construction and infrastructure development.
And it’s not just holiday rentals. Uber, the fast-growing taxi service is another sharing economy startup facing its own array of legal challenges in the US.
Short-sighted government regulators?
Governments need to realize that the sharing economy is a rare opportunity for badly needed growth. To be fair, some do: For every New York that chooses to ignore the growth by banning it, there is an Amsterdam or a Paris that sees the value in sharing economy models and tries to establish sensible legislation.
Instead of forbidding an entire economy outright it defines its boundaries so as to ensure a form of growth that has a net positive impact overall.
At HouseTrip, we support efforts for clear and sensible “net positive” legislations.
When it comes to holiday rentals we think it sensible, in specific destinations with a pressurized real estate market, to put a cap on the amount of “dedicated holiday rentals” (properties for the sole use of travellers).
But we do not favour nor understand restrictions on the rental of primary and secondary residences to travellers. By definition primary and secondary residences are inhabited at least a few weeks a year by their owner so if they are forbidden for short-term renting, they wouldn’t go back on the long-term market. We therefore see no point at all make them stay empty when not inhabited by their owner.
Legal questions in our space are going to continue. The question will be around which regions choose to be progressive by searching for ways in which the sharing economy can operate effectively and which regions choose to kill an entire economy because they will not have taken the time to understand it or will have yielded to lobbies or vested interests.
Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.