Morning Fizz

Council Pushes Limits on Airbnb as Hosts Say Tax Us Instead

Debate over Airbnb centers on affordable housing stock.

By Josh Feit July 21, 2016

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The city council’s neighborhood committee held a hearing yesterday on its revised proposal to regulate the short-term rental market for online platforms such as Airbnb.

The proposal would ban future hosts from renting out rooms at secondary properties (i.e. at homes that aren’t the host’s primary residence.) Hosts who already rent at secondary properties would be grandfathered in, but would only be allowed to continue to rent for 10 years, and they would only be allowed to rent out one offsite unit.

The goal of the proposed crackdown on off-site rentals, according council members Tim Burgess and Mike O’Brien, is to protect long term rental housing stock.

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While Airbnb says only 13 percent of its hosts rent off-site, which translates into just 300 units of the 320,000 units in Seattle’s rental market, O’Brien was tweeting out data from the low-income advocacy group Puget Sound Sage yesterday that showed Airbnb hosts had a bigger impact on the long term rental market than that.

Using data from Airbnb’s website, Sage estimates that 12 percent of Airbnb hosts list more than one “whole unit” for short term rental (a whole unit is one that comes with its own separate entrance.) Here’s Sage’s report—and the assumption they make is that once you start listing more than one whole unit, you’re more than likely talking about a place that’s not at your primary residence.

Sage also calculates that the fastest growing segment of Airbnb’s explosive growth came from whole units, and by far, the biggest portion of that growth, nearly half of it, was driven by hosts listing multiple whole units.

Using those numbers, they predict that going forward, Airbnb could take 2,000 units off the long term rental market by 2021.

Airbnb simply tells Fizz Sage’s report is “inaccurate” and “mischaracterizes our community.”

The one specific argument they gave me was that the 12 percent figure doesn’t account for a new crop of entrepreneurs who manage properties for several different hosts and list all those separate whole units themselves.

However, Sage policy advisor Howard Greenwich, who did the Airbnb study for Sage, says “The 12 percent of multi-listing hosts could, in fact, include a few hosts whose business model is to manage other people's STRs that may be part of their own primary residence…But I don't think it changes my findings significantly.”

Noting that his math indicates the 12 percent of Airbnb hosts who list more than one whole unit actually manage 36 percent of all Airbnb listings, Greenwich says the remaining 64 percent that he’s not including in his estimate of potential off-site hosts may actually include off-site hosts—which would make up for any overcounting in the 36 percent. For example, Greenwich says there could be hosts who rent their whole unit without their landlord’s knowledge or have other listings that are not located at their primary residence that are listed under family members who have registered as separate hosts.

As to the characterizing the 36 percent who do list multiple whole units, Greenwich says by using hosts user IDs, he was able to refine his snapshot of the properties being rented and says: “The majority of the units managed my the multiple listers that I investigated are apartments and condos - not mother in law or DADUs in someone's primary residence. As an educated guess, I would say that the number of hosts that [are managing other people’s properties] are very small.”

Burgess had a stat of his own yesterday to make the case that Airbnb listings were cutting into the long-term rental market: Airbnb’s whole unit listings make up 12.8 percent of the city’s current market.

Airbnb didn’t respond when I asked them for their take on that stat, but HomeAway, another short term rental platform was skeptical of the number. Noting that there were fewer than 500 HomeAway properties rented between April 2015 and April 2016— less than two- tenths of a percent of the existing Seattle housing stock, they said—HomeAway’s lobbyist, Natalie Quick told Fizz: “If we have 329,000 total housing units, 12 percent would be around 32,000? If Home Way only had 500 bookings last year and Airbnb has a few thousand...?” she trailed off shrugging her shoulders in disbelief.

Council member Rob Johnson used yesterday’s hearing to continue to push for an alternative solution. He asked staff to look at taxing Airbnb hosts to help fund affordable housing rather than imposing bans and limits.

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It’s an idea that the Airbnb hosts themselves are calling for. Andy Morris, one of the short term rental hosts who packed the council yesterday in lime green t-shirts bearing the slogan "Save Seattle's Short Term Rentals," to testify against the regulations, said: “We are sympathetic to the council’s goal of preserving affordable housing. So, how do we achieve affordable housing? Tax me. I encourage you to raise our taxes to the level of the lodging tax and use those funds to support affordable housing initiatives.” Currently, Airbnb pays the 9.6 percent sales tax, but they do not pay the additional 7 percent lodging tax that hotels pay.

Another alternative proposal came from an Airbnb host who told council yesterday they should put a cap on the number of units a host can rent out rather than preventing them from renting altogether. Sage's Greenwich told me that solution made sense to Sage as well.

In other news: Cola reporter Spencer Ricks was at the Delridge district council meeting last night (you can check out his tweets at our twitter feed.) He'll post a report later today.

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