Diane Francis: It’s time to clean up the so-called ‘sharing’ economy
10 March 2017
In November 2013, I found out that a handful of my New York condo
neighbours were renting out their units through Airbnb. This was
unacceptable and I wrote an article in a major New York newspaper that
helped fan a movement.
We made presentations to city council and the legislature and, three
years later, the State of New York has essentially banned short-term
rentals by Airbnb or others.
I’ve also kept Airbnb out of my Toronto building and have written about
the so-called “sharing economy” (which includes Uber) and the public
concerns they raise.
Many others cities—San Francisco, Berlin, Barcelona, to name a few—have also moved to restrict or ban Airbnb and/or Uber too.
The central issue is not economic. It’s that these platforms enable
users to get lower cost services by bypassing laws, zoning, regulatory,
insurance, taxation and safety requirements. Such restrictions are
there for good reason, notably those involving safety.
In Canada, the conversation about this business model is just
beginning. This week, the Institute for Hospital and Tourism Research
at Ryerson U’s Ted Rogers School of Management held a symposium about
Airbnb. Its figures show that 1,121 units and 1,305 units each night
are booked in Vancouver and Toronto respectively, according to
Assistant Professor Chris Gibbs.
The potential is enormous. In Toronto, some 28 per cent of dwellings are condos, up from 5 per cent a few years ago.
The discussion involved pro and con but everyone agreed that all levels
of government and condo boards plus landlords must address the issues.
This doesn’t mean a ban necessarily, but better financial and legal
arrangements can be forged as is the case in some cities.
Most importantly, however, both companies as constituted represent
public safety threats. As far as Airbnb is concerned, strangers in
buildings are a hazard because of access to residents, children,
corridors, stairwells, gyms, pools, playgrounds, garages, storage
areas, and lounges.
While the horror stories are relatively rare, there are enough to be concerned.
Some unscrupulous “owners” have rented space out short-term to
prostitutes. Others have unwittingly yielded up their homes to noisy
parties, even “orgies,” according to some reports.
The guests sometimes fare no better, in part because the vetting of
owners is not rigorous enough. Recently, Las Vegas police arrested a
host for filming with hidden cameras the bedrooms of his Airbnb rental
for purposes unknown. Guests also have no knowledge as to who else has
keys to their space.
Then there’s Uber. It poses a safety risk because, in many cities,
drivers are their vehicles do not face the same standards as regulated
taxis. In many cases it is barely more than digitized hitchhiking.
Another concern is tax evasion.
The Canadian Revenue Agency should force Airbnb, Uber and others to
issue T4 income slips to all Airbnb hosts or Uber drivers so they pay
taxes on their income. These T4s should also be sent to landlords or
condo boards so they know what’s going on as well as with other levels
Other obligations are dodged. Airbnb “hosts” commercialize their units
and, as such, should pay higher mortgage rates, condo fees, and
property taxes. (In New York, longer-term tenants must be approved and
are assessed at least 25 per cent more in condo fees for wear and tear
to the building caused by their rentals. Insurance and mortgages are
more expensive for rental units too.)
Another issue is that about 52 per cent of the Airbnb rentals in
Toronto are “hosts” who are doing this for multiple units, said
Ryerson’s Professor Gibbs.
This practice raises the question of whether they are really just
running illegal hotels and has led San Francisco and other cities to
demand that Airbnb impose a “one home, one host” rule.
Then there are the rights of other owners or neighbours in multiple
unit dwellings where short-term rentals occur. Condo boards that allow
or don’t deal with short-term stays endanger or inconvenience other
residents due to noise, pet, smoking or other violations.
Then there are squatters’ rights. In one New York case, one “guest”
refused to leave the apartment on the basis he was disabled. Eviction
was almost impossible. The same could happen in Canada.
Ontario is reviewing its Condominium Act and should insist that condo
boards have tools to deal with this problem. A board should be forced
to have a policy on short-term rents, stipulate conditions, and levy
higher fees, but only if 80 per cent of owners approve. Conversely,
they should be allowed to ban Airbnb and their competitors and enforce
As for Uber, cities should require drivers to meet identical taxation,
licensing, insurance, maintenance and training requirements as must
traditional taxi and limo drivers.
People have a right to rent out their residence (apartment), but not to
afflict their neighbours, the public, or to bypass laws. People have a
right to hire someone to drive them around, but not if those people are
untrained, untaxed and uninspected and can harm the public.
Governments must catch up to these proliferating websites to stop abuses.