The “sharing economy” has taken the United States by storm. In less than a decade, companies such as Uber, Handy, and Airbnb have become well-known brands and, in some places, market leaders. But the laws regulating these companies and their users can often seem like a gray area. Now some lawmakers are taking a close look to see if it’s time for state legislation of these activities.
Airbnb is the latest company to experience such scrutiny. Founded in 2008, the website allows its users to list, find, and rent short-term housing. The site is popular among users who are seeking an affordable alternative to hotels. The site is also popular among property owners looking to rent out extra space, whether it be an entire house, an apartment, or just an extra room.
But not everyone is enamored with Airbnb. Renters have complained of substandard or even dangerous accommodations, and owners have complained of renters who have damaged their property. Beyond user complaints, Airbnb has also felt backlash in communities that see it as a way to evade land-use laws and taxes. Neighborhood residents often find that properties in quiet, residential areas are turned into de facto hotels or flophouses.
Airbnb claims that most of its users rent out properties on only a temporary basis and that it simply connects interested parties to one another. To that point, its critics respond that the company has effectively created an online marketplace for transient housing. They also claim that Airbnb has taken too much housing off market for local residents, thereby creating housing shortages.
Many states are now considering state legislation that would formally regulate the short-term rental market that has proliferated as a result of Airbnb. In Massachusetts, state legislation has been proposed that would require registration of all short-term lessors of property. The legislation would also impose safety standards and allow local governments to inspect properties for safety violations. The law would also impose a 5% tax on such rentals, similar to the tax levied on hotel stays.
If the law passes, Massachusetts would be the first state to regulate the short-term rental market. Some cities have already done so, including San Francisco, Portland, and Philadelphia. As sites such as Airbnb continue to grow, more states will have to determine if and how they are going to regulate their activities.