Lending Real Estate

Schatz, Warren, Feinstein want FTC investigation of AirBnb, short-term rental industry

Democratic senators worry about impact on housing costs, availability

AirBnb, travel apps

Three Democratic senators are concerned about the impact of short-term home rental companies like AirBnb, HomeAway, VRBO, and Flipkey on communities’ housing markets and want the Federal Trade Commission to investigate.

In a letter sent Wednesday to FTC Chairwoman Edith Ramirez, Sens. Brian Schatz, D-Hawaii; Elizabeth Warren, D-Mass, and Diane Feinstein, D-Calif; state that they are especially concerned that short-term rentals are not only making housing more expensive in certain communities, but also making it harder to buy a house in the first place.

“We are concerned that short-term rentals may be exacerbating housing shortages and driving up the cost of housing in our communities,” the Democrats write in their letter.

The Democrats say that companies like AirBnb are not without their merits, especially to the property owners, but they are worried about the effect that commercial operators can have by managing multiple properties.

“We write today to urge the Federal Trade Commission to study and quantify the degree to which the rapidly expanding short-term lodging rental market consists of persons or firms acting in a commercial manner by renting out entire residences or multiple residences simultaneously,” the Senators write.

“This distinction is critical to Congress and state and local lawmakers as we seek to assess the wide-ranging impact of the short-term rental industry on the communities in which they operate,” they continue.

“In recent years, we have seen the emergence and rapid growth of companies like Airbnb, HomeAway, VRBO, and Flipkey,” the Senators continue.

“On one hand, these firms have sparked innovation, increased competition, and have provided new means by which our constituents can earn extra income,” they add, with a caveat.

“We have also read troubling reports of racial discrimination on some short-term rental platforms,” the Senators say. “Furthermore, we are concerned that communities and consumers may be put at risk through violations of sensible health, safety, and zoning regulations under state and local law.”

The Democrats cite a report from the New York Attorney General, which found that “commercial users (those with 3 or more unique units) accounted for a disproportionate share of the revenue generated from short-term rentals,” according to the Democrats.

“The commercial users accounted for only 6% of the hosts in New York City, yet generated 37% of the revenue,” the Senators write. “Furthermore, the report indicated that 72% of unique units rented in New York City appeared to violate state and local law.”

The Democrats also cite a June 2015 workshop on the “sharing economy” hosted by the FTC.

According to the Democrats, during that workshop, there was “widespread agreement that more information and data was needed to properly assess the impacts of the short-term rental industry” on cities.

“Unfortunately, the platform companies, which are the best positioned to provide this type of information, seem reluctant to do so,” the Senators write.  “And even if platform companies do share their data, concerns have been raised about the reliability of this data.”

The Senators also state that they are “troubled” by the efforts of the “platform companies” to negotiate tax deals with state and local governments and say that they believe some platforms “appear to be complying with state and local tax laws inconsistently, collecting taxes in some jurisdictions and not others.”

For those reasons, the Senators call on the FTC to investigate the short-term rental industry.

“In order to assess of the use and impact of the short-term rental market, we need reliable data on the commercial use of online platforms,” the Senators conclude. “We believe the FTC is best positioned to address this data gap in an unbiased manner and we urge the Commission to conduct a review of commercial operators on short-term rental platforms.”

To read the Democrats’ full letter, click here.

(Image above courtesy of easy camera / Shutterstock.com)

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