It’s time to clean up the so-called ‘sharing’ economy

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 socalled “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 and 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 of government.

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 shortterm stays endanger or inconvenience other residents due to noise, pets, 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 that.

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.