Concerns about Airbnb Could Lead to Stronger Regulations

Jul 15, 2016

New technology is disrupting all kinds of industries, everything from newspapers and taxis to music and now hotels. The latest technology allows homeowners to rent out rooms of their house, or sometimes the entire house. That’s causing alarm among lawmakers, who are now engaged in an effort to craft new kinds of regulations.

Credit OPEN GRID SCHEDULER / GRID SCHEDULER / CREATIVE COMMONS

For many neighborhoods across Virginia, the dawn of the new Airbnb era has brought with it a sense of uncertainty — a watchful and suspicious eye toward strangers parading in and out of their neighborhoods. Mike Rioux says his Fairfax County neighborhood was recently transformed into a location shot by an Airbnb rental on his street.

“It started at 7 o'clock in the morning. They erected tents in the street, blocked mailboxes, had all kinds of trucks. I mean this is totally outside the bounds of what’s acceptable to us as far as what we think Airbnb should be doing."

During a recent hearing in Richmond, lawmakers heard from speaker after speaker about how their neighborhoods have been transformed from quiet suburban streets into clandestine commercial strips. Kate Walsh lives in Fairfax County. 

"Because of the hotel on our street, we are forced to deal with a regular influx of strangers in our neighborhood by the day, the week or the weekend. We never know when people are coming, how many or for how long."

For now, the market is dominated by Airbnb. But Josie Ballato pointed out that might change at any minute. 

“There are apps now offering bookings by the hour of bedrooms, pools, hot tubs, decks, you name it."

And all that business is going on without any regulation — and untaxed for the most part. Mark Haskins at the Department of Taxation says very few — if any — of the thirty five hundred Airbnb hosts are paying taxes as required by law.

“Now from a compliance perspective, is it worth sending an auditor around to everybody’s house to say hey and knock on the door and ask, ‘Do you rent your house?’ No. That’s probably not something we want to do."

That leaves a huge pool of money untapped. Beth Erickson at the Loudoun Convention and Visitors Association says ...

"Sixteen percent of our available hotel rooms are Airbnb listings. They are not taxed. They are not held to the same accountabilities. Sixteen percent, ladies and gentlemen – that’s a staggering number to me and it’s growing."

During the panel discussion, Staunton Commissioner of Revenue Maggie Ragon asked Airbnb’s Jillian Irvin what would happen if the company knew for a fact that one of their hosts was not paying taxes.

“Would that be an offense with which you would declassify them as a host?"

"No because we’re trying to work with localities to be able to collect and remit. We don’t think that most of our hosts are really sophisticated enough to figure out the nuances of the tax codes."

Republican Senator Bill Stanley asked about the possibility of illegal surveillance. 

“We live in a digital society where people have cameras all over the house. This could be a trap for someone to put cameras around the house and be peeping using their own house to a renter. I mean, what happens?"

“If we were to find out something like that we would take them down immediately, obviously."

“You would just kick them off? You don’t have any other penalties?

“Other than not being able to host anymore? No."

Delegate Paul Krizek, a Democrat from Fairfax County, says maybe lawmakers should start thinking about how much of a house can be rented.

“If I was able to waive a magic wand over this, I would have it so that Airbnb is only allowed to rent rooms — people are only allowed to rent one or two rooms in their house and they have to be present, they have to live in the house."

Before the next General Assembly session, the panel is expected to come up for a set of recommendations for collecting taxes and distribution revenue. But that’s the easy part. Easing the concern of neighbors about safety concerns is likely to be more difficult.