Online accommodations service Airbnb is under siege, as the legal issues that the company is facing in New York and its home city of San Francisco could potentially deal a severely damaging blow to how the company works and its earnings.
In New York, Gov. Andrew Cuomo has signed into law one of the strictest regulations in the United States covering short-term apartment rentals. The law, which only applies to apartments in multi-unit buildings, will place fines of up to $7,500 against people who advertise rentals for only 30 days or less.
Renting out apartments for less than 30 days has actually been a violation in New York since 2010, but it has largely been ignored by landlords and tenants on Airbnb.
Airbnb attempted to get Gov. Cuomo to hold off on signing the bill into law by proposing new rules that include only allowing members to list one house within New York's five boroughs and requiring them to pay local taxes. It seems that the proposed updated guidelines are not enough to placate Gov. Cuomo.
According to a spokesman for Gov. Cuomo, Rich Azzopardi, the illegal rentals allowed by Airbnb compromise the efforts to promote and maintain affordable housing by transforming the apartments into unregulated hotels.
Of course, Airbnb was not happy about Gov. Cuomo's decision.
"In typical fashion, Albany back-room dealing rewarded a special interest — the price-gouging hotel industry — and ignored the voices of tens of thousands of New Yorkers," said Airbnb New York public policy head Josh Meltzer.
Airbnb immediately filed a lawsuit in federal court in an attempt to overturn the new law. However, Airbnb's problems with regulations against the rentals made possible through the service does not end in New York. Berlin has passed a law that bans most forms of short-term rentals, while Amsterdam and Barcelona have started to impose steep fines for listings that violate rental laws.
Airbnb is not even safe in its home city of San Francisco, where the company has filed a lawsuit against a new requirement that Airbnb reject booking fees from landlords who have not undergone proper registration with the city government.
The legal battles that Airbnb is facing right now in New York and San Francisco will severely test the business model of the online booking service. Airbnb is saying that it could not be held responsible for how property owners use the platform. If the company would be required to enforce laws passed by local units regarding short-term rentals, the listings on the service would likely decrease, along with the company's earnings.
