U.S. Sen. Brian Schatz and two other senators have asked the Federal Trade Commission to investigate whether online short-term rental companies such as Airbnb and HomeAway are compounding housing shortages and driving up rents in some communities.
Schatz and U.S. Sens. Dianne Feinstein, D-Calif., and Elizabeth Warren, D-Mass., are asking FTC Chairwoman Edith Ramirez to gather data on the commercial use of online short-term rental companies.
In their letter, the senators cited a report by the New York attorney general that found that 72 percent of units rented out by “commercial” short-term rental operators — defined as operators with three or more units — appeared to be violating state and local laws.
The July 13 letter raised concerns that “communities and consumers may be put at risk through violations of sensible health, safety and zoning regulations under state and local law.”
“We are concerned that short-term rentals may be exacerbating housing shortages and driving up the cost of housing in our communities,” the senators wrote. “We have also read troubling reports of racial discrimination on some short-term rental platforms.”
Schatz said in an interview it is up to the FTC to decide the best way to research the effects of those commercial operations, but policymakers in Hawaii need reliable data to make good decisions about the rapidly growing industry.
“The truth is we don’t know yet what the impact is of Airbnb and other platforms, but we’re all working together and focused on affordable housing, and to the extent that the existing rental housing stock is being moved from rental for local people into rentals for tourists, that ought to cause worry and concern,” said Schatz, D-Hawaii.
Lawmakers across the country need to understand how the use of Airbnb and other online companies, such as VRBO and Flipkey, are transforming the housing and transient accommodations markets, he said.
“It’s revolutionary, and it’s got lots of positive implications, but we shouldn’t be too triumphant about it until we understand whether it’s harming the availability of rentals for local people,” Schatz said.
Chris Lehane, spokesperson for Airbnb, said in a written response to the senators’ letter that “the vast majority of our hosts in Massachusetts, California, Hawaii and across the county are middle-class people who depend on home sharing as a way to address economic inequality.”
“We welcome any opportunity to work with lawmakers and regulators who want to learn more about how home sharing helps the middle class address the issue of economic inequality,” said Lehane, who is head of global policy and communications for Airbnb.
Lehane cited a study showing a typical Airbnb host makes about $7,530 by sharing a home 66 days per year. Airbnb also recently released another study showing that 51 percent of Airbnb hosts in some of the largest U.S. cities depend on the extra money they make from home sharing to make ends meet.
An Airbnb spokesman also said the company’s data shows that more than 60 percent of Hawaii Airbnb hosts share space in their permanent homes. The company said 84 percent of Airbnb hosts in Los Angeles share their permanent homes.
However, the letter from Schatz and his colleagues cited data from the New York attorney general suggesting that commercial operators with more than three units actually account for an outsize share of the short-term lodging market.
Commercial operators accounted for only 6 percent of the hosts in New York City, but generated
37 percent of the revenue, according to the senators’ letter.
Short-term rentals that use Airbnb or similar internet brokers have been a hot local political issue this year. Gov. David Ige on Monday vetoed a bill that would have allowed brokers such as Airbnb to act as tax collection agents for the state.
The state Department of Taxation supported the bill, which could have helped the state collect millions in unpaid transient accommodations taxes. Airbnb has executed similar tax agreements with other states in recent weeks including South Carolina, Pennsylvania, Arizona and Connecticut, and the company lobbied aggressively for the bill.
However, Ige said that using brokers as tax collection agents would have provided a “shield” for illegal operators who are not complying with county laws that prohibit short-term rentals in certain neighborhoods.
He also said the bill would have encouraged illegal vacation rentals at a time when Hawaii communities have a shortage of affordable rental housing.