More AirBnB lawsuits, settlements, and residential unrest

AirBnB will say it is not to blame. It is just a booking mechanism, after all. But another sequence of events draws attention to the company, its hosts, and how they exploit residential neighborhoods in the name of profits.

Berlin

AirBnB was illegal in Berlin, Germany from April 2016 until earlier this month. A change of heart by the city Assembly means homeowners will once again be permitted to rent units for short-term stays. Permits are required and the rule structures create a scenario where a host running multiple properties will be much more difficult. At least in theory.

The city-issued permits are expected to be relatively easy for the first application from any given owner. A second, third or more is expected to attract greater scrutiny. The city also instituted a 90-day cap on total rentals for any year (London has a similar rule, one that AirBnB cooperated on the implementation of) and a fine structure up to €500,000 for violations. Oh, and the city can seize a property and sell it off to pay the fine, if needed.

Read More: AirBnB costs a NYC landlord $1.2 million

Of course, this only matters if we assume anyone was enforcing the rules, anyways. The website didn’t care, allowing bookings even while they were prohibited by the local law (I stayed in one during that period, unaware that they were banned). And expecting local authorities to effectively police such things will only lead to disappointment.

Japan

The new rules in Japan are more generous than Berlin or London, allowing up to 180 days of usage rather than just 90. Homeowners will be required to register their property and prove that it has proper fire suppression systems installed.

Read More: My AirBnB conundrum

Even at 180 days some current hosts are angry; it still cuts deeply into their revenue stream. On top of the national law cities or even districts within cities are creating their own limits. One neighborhood in Tokyo prohibits weekday rentals. Kyoto only allows bookings for two months of the year, the off-peak window between January 15 and March 16. Alas, much like the Berlin rules, these are not enforced by the company.

If you still don’t believe that the short-term rentals destroy the residential market the story about Japan’s rules gives an interesting data point. One of the superhosts quoted in the story (first name only, of course) admits that she earns triple the regular rental rate by running the condo as a hotel rather than as a residence.

San Francisco

The latest story from San Francisco is a doozy. And it is all the more intriguing given that the city and the website came to an agreement back in 2014 on the regulations for hosts there. It involves a couple that evicted tenants from an apartment building and converting it to an illegal hotel. In 2014 the couple was caught and eventually agreed to a $276,000 penalty with a promise to not do it again.

Spoiler alert: They did it again.

This time around the pair are accused of renting 14 units (of the 45 they apparently own) as short-term stays rather than residential dwellings. The city claims that the 14 properties accumulated a total of 2,271 nights of bookings and roughly $700,000 in revenue. That converts to just over $300 per night per apartment on average.

Even in the incredibly challenging San Francisco housing market that would extrapolate to $9,000/month, though presumably there were some vacancy nights. Still, the sky high rates again show the value proposition to owners of playing the short-term game rather than offering long-term leases. As long as they don’t get caught.

Read More: Is AirBnB worth potential jail time?

In this case the couple got caught, paid the penalty and then got caught again. The second time around they tried to hide it from officials. That did not go well.

“Every apartment had the same staging: the same Costco food items scattered about, the same arrangement of dirty breakfast dishes in every kitchen sink, same personal products in each bathroom, same damp towels artfully draped over doors as though someone had recently showered,” the filing said.

The city is seeking a $5.5 million fine this time around, $750 for each day an apartment listed or $1,500 (5x the realized revenue) for each day one rented.

Ouch.