By Steven Hill, Tagesspiegel, June 2, 2016
(German language version, Berlin sollte härter gegen Airbnb vorgehen)
The cost of rental housing in Berlin has nearly doubled in the last 10 years, making it harder for many people to make ends meet. Many factors cause housing prices to rise, but one market pressure has come from the hotel service Airbnb.
Based in Silicon Valley and valued at $25 billion, this global company uses app- and web-based technologies to rent out vacant apartments to tourists. Regular people “hosts” have made extra money by renting out a spare room, but professional real estate operatives increasingly have taken over Airbnb.
Of Airbnb’s 13,000 units listed in Berlin, 61 percent are entire homes or flats, not spare rooms. Many are controlled by professionals that remove those units from the local housing market, which contributes to rising rents for Berliners. Some of these professionals control dozens of properties; 40% to 50% of Airbnb “guest visits” and revenue typically come from these highly lucrative operations.
To protect the housing stock for local residents, the Berlin Senate recently launched a new law to regulate Airbnb (and a German counterpart, Wimdu). But it replicates some regulations passed in other cities that have failed to restrain Airbnb.
The new law requires that Airbnb’s hosts actually live in their residence, and those hosts can only rent out a spare room, not the whole apartment. Hosts also must register with the city, and can be fined up to €100,000 for violations.
Over a year ago San Francisco passed a similar law; to date only 15% of hosts have registered. Restrictions on spare rooms vs. whole apartments also have been ineffective –how can city regulators monitor that without hiring an army of officials to go door-to-door?
Here is what other cities have learned about Airbnb: it is virtually impossible to monitor or regulate unless regulators get detailed data from the company, telling them which hosts are renting, for how many nights and how much they are charging per night.
This data is also important for assessing taxes owed. Traditional hotels pay an occupancy tax, which is an important source of revenue for local governments. But Airbnb refuses to pay this tax in most cities (including Berlin). Recently Airbnb started paying taxes to San Francisco, about $12 million per year, but without the data nobody knows if the city is receiving the correct amount.
The new Berlin law does require Airbnb to provide some data in certain circumstances, but the requirement is not aggressive enough. In New York City and other places, Airbnb has strongly resisted providing this data. Berlin is hiring more people to oversee enforcement, but Berlin taxpayers – not Airbnb — will have to finance this enforcement.
What kind of regulations should Berlin city officials apply to Airbnb and related services?
1. Require Airbnb to pay the same occupancy taxes as regular hotels.
2. Require that Airbnb only list on its website legally-registered hosts, and levy fines against Airbnb if it lists any hosts that are either unregistered or have multiple properties.
3. Most important, require that Airbnb provide the data (host, number of rental nights, rates) that cities need to enforce regulations and taxation.
Airbnb could be a helpful service, allowing regular people to occasionally rent out a spare room to earn extra money. But without accurate data from Airbnb, professional realtors will be able to circumvent the new law. We have seen this in city after city in the US.
[Steven Hill is the Holtzbrinck Fellow at the American Academy in Berlin and the author of Raw Deal: How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers]