We have years of experience with it. Has it worked? Do we still have "mob hotels" in NYC? Are people still unlawfully subletting their apartments?
Moreover, what's the theory on which it could work? If you have the capital to buy a building solely to collect rents on Airbnb, what stops you from just unloading the building if/when your reputation becomes a meaningful obstacle, and then just using a different shell to buy and let out a different building?
I think there's a lot of thinks Airbnb could do here; I like Airbnb. But I'm always a little skeptical of the magical powers of "reputation systems".
It depends what you mean by 'worked'. It's certainly worked for me and the vast majority of AirBnB guests and hosts, I imagine. If you value obeying the law above all else then probably not, but most people don't. For instance, with unlawful subletting, I don't see who's harmed as long as guests behave responsibly, which should be ensured by the reputation system.
The 'buy a whole building just to rent it out' case is a little more ethically dubious for me, but normally that kind of operation isn't too hard to spot from afar, and I can't imagine AirBnB guests being too thrilled staying there.
> For instance, with unlawful subletting, I don't see who's harmed as long as guests behave responsibly, which should be ensured by the reputation system.
As a fellow tenant, my level of comfort with my daughter running unattended to a friend's apartment in the same building is less if I know there are lots of people running AirBnB sublets out of their apartments than if I know everyone is a resident subject to a background check and on a 6-12 month lease.
Maybe the increase in risk from transient AirBnB tenants is small, but it's not zero. That loss of comfort, and that non-zero increase in risk is a harm to the other tenants in the building.
Presumably the landlord would be liable for any harm incurred by other tenants under this scenario (especially as they've broken their lease agreement), which provides them with a fairly strong incentive to check up properly. The reputation system is also designed to help them with this.
EDIT: I was actually talking about the subletter (person who signed the original lease) rather than the landlord of the property itself.
Sure you can sue the AirBnB host, but individuals rarely have the money to pay judgments for serious damage or bodily injury, nor do they have insurance for such occasions. That's the whole point of renting in a reputable apartment complex--it pushes the responsibility and and liability for security in the common areas to the building management, an insured entity with the resources to pay for any resulting damages.
I think people who are proponents of AirBnB dramatically underestimate how much monetary value people attach to the kind of people they live around, especially in city apartment buildings where lots of people who barely know each other live in close proximity. A condo in a building that has some fraction of renters can sell for substantially less than an identical condo in an identical building that is 100% owner-occupied. Rents at buildings with 12-month minimum leases are higher than rents in buildings with 1-month minimum leases. People go out of their way to buy into coop buildings that have minimum down payment requirements, etc.
I live in an apartment in downtown Chicago. The major businesses in the area are Northwestern Memorial Hospital and Northwestern University. Thus, most of the residents are medical residents, nurses, graduate students, etc. This tenant composition is priced into my rent. We have a lot of families that live here because it's a bit away from all the tourists on Michigan Ave and because every tenant undergoes a background check. If a bunch of tenants started illegally subletting their apartments on AirBnB to aforementioned tourists, that would upend everyone's expectations and decrease the value of the building to all of us.
Do you think the grad students in your apartment ever have family to stay? What about friends? What about couchsurfers (if there are any meaningful number of students in your apartment, it's very likely at least one an active couchsurfer)?
Who do you think poses a bigger risk to other tenants, my cousin's friend who's crashing with me in Chicago while he finds a place to stay permanently, or someone with 100 positive reviews on AirBnB? 20 positive reviews on AirBnB? Where do we draw the line on what's ethical here? I think most people wouldn't see any problem with the first scenario but would with the second, but the risk is probably lower in the second scenario.
(Perhaps AirBnB should purchase insurance on behalf of AirBnB landlords. I'm sure they have data on how often these kinds of problems occur and I can't imagine it being too expensive)
The difference is that the building's management company takes responsibility for the typical temporary guests of those who live in the building. AirBnB does not take any responsibility for the guests of AirBnB hosts. Moreover, nothing requires an AirBnB host to only take people with 20+ positive reviews. It's entirely up to the AirBnB host. The host has full control over the decision, even though his decision exposes the rest of us to risk.
It looks like AirBnB will already cover some kinds of theft or vandalism. It presumably wouldn't be too hard for them to extend that to personal injury in shared spaces, which would partly address your concern.
Also, the building management company would evict tenants who had troublesome guests, which provides the tenant (AirBnB host) with an incentive to only take people who are reliable.
Why do you presume it would be easy for them to provide personal injury protection across their entire inventory of rentals? The set of circumstances that led to their particular current coverage of theft and vandalism is worth revisiting.
Well, it's pretty much a textbook case for insurance: a very small risk spread across a large number of rentals where the worst case is bad. AirBnB has the advantage that they could tailor the premium based on the exact parameters of the rental.
If it's so straightforward for Airbnb to insure the things you're talking about, why is the "Host Guarantee" they came up with along with Lloyds of London so restrictive? For instance: if you let a place out to an Airbnb guest, and they forget to lock the door, and your place is burgled as a result, you're not (it seems) covered.
Landlords of desirable properties are aren't incentivized to allow their spaces to be listed on Airbnb at all; the good properties will have naturally low vacancies, because apartments in desirable locations have effective markets already, and those markets provide much better terms to landlords than Airbnb rentals do.
So you're left dealing with an unfortunate subset of landlords.
It's very likely that the liability policy that the landlord carries has an exclusion for the type of subletting that AirBnB does, putting all of the liability on an effectively uninsured landlord.
> I don't see who's harmed as long as guests behave responsibly, which should be ensured by the reputation system.
I agree, but I have a feeling that it won't play out that way in practice.
I would have agreed with you up until about 2 years ago. I've been a home owner for a good 10 years now, we moved a couple of years ago into a new neighbor hood.
Most of hte homes are very nice and well kept up, but the ones that are the most in need of repair are the rentals. And subsequently the houses beside them take a hit in property value.
We know most of the renters and they are nice hard working people who do the upkeep( cut grass, weed flower beds, etc), but the large repair items are always left undone.
the painting, shingling, gutter cleaning, etc. And it makes sense for both parties not to do it. The renters don't care and the home owners don't care about their property values until they sell.
Sadly though having renters in a neighborhood brings down property values. I'm pretty certain that having a high concentration of AirBnB renters would bring down values even more.
My wife's uncle had a renter for a house in the woods. The renter let her dogs urinate freely in the house. My wife's uncle has totally resurfaced the floor and still can't get the smell out. He'll have to rip out all the drywall because the urine has wicked into it from the floor boards.
Now obviously this is an extreme example, but stories like this aren't totally unheard of. If you know several people who rent out properties regularly, chances are that they have a couple of horror stories between them.
Presumably your wife's uncle did everything right (credit and background checks) and still got burned. Without being snarky, he might well have had more luck with AirBnB.
The point isn't that AirBnB is better or worse for finding a renter than Craigslist or an ad in the local paper. The point is that renters create more risk than owners, and short-term renters create more risk than long-term renters.
If you own a house in the middle of the woods, you bear all the risk for the quality of your renter. If you live in a condo building, the other tenants are exposed to that risk. In the former case, I can totally control the level of risk I'm exposed to based on my choices of who I host. In the latter case, if I'm a fellow tenant, I have no control over that risk. The AirBnB host in my building might only choose tenants with 100+ reviews, or they may choose tenants with no reviews.
Your argument is that you wouldn't want to live in a building where the tenants hadn't undergone background checks and credit checks, and that this increases risk. My argument is that they obviously don't do much to protect the host anyway, if plenty of landlords have horror stories. I've talked to every AirBnB host I've stayed with (and I've stayed with a few) about this and not one had anything negative at all to say about their guests.
I would suggest trying AirBnB a little and looking at what the people who actually use the service are like first without worrying about some kind of imagined stranger danger.
Having any short-term renter increases risk versus a long-term renter versus an owner. That's just the nature of the industry.
My point is that as a tenant in a building with an AirBnB host, I have absolutely zero guarantees about what kind of tenants AirBnB hosts take on. Maybe some need the money and are willing to take on people with no reputation scores? I'm willing to trust my building management to take responsibility for screening tenants because if they fail I can sue them and I know they can pay because they are insured.
That's the point you keep dancing around. AirBnB's reputation system might be great. That's irrelevant to me as a tenant in the same building. I don't get to see or have any control over the reputations scores of the people AirBnB hosts in my building take on. The AirBnB host exposes me to a level of risk, he is in total control over that level of risk, and he doesn't carry insurance against that risk. That is a harm to me.
> Your argument is that you wouldn't want to live in a building where the tenants hadn't undergone background checks and credit checks, and that this increases risk.
Not really, my point was with respect to who cares for their property the most: owners > long term renters > short term( 1 week or less) renters
The owner of the property is harmed, when they agree with a renter on a contract with specific terms, and the renter then secretly reneges on those terms to take all the profit from the owner's increased risk for themselves.
