Is the government killing the sharing economy?

Sharing economy travel companies have recently attracted the attention of government regulators as these companies have grown rapidly because legislators in some countries have not felt the need to establish any kind of legal framework to regulate their behavior.

But that is slowly changing, as evidenced by New York City’s recent move to prosecute and fine homeowners who rent out their homes to vacationers on a short-term basis, after previously adopting a “don’t ask, don’t tell” policy toward the sharing economy.

New York City's legal regulation of the sharing economy is just the tip of the iceberg, with governments in other destinations such as Berlin and Spain also reviewing similar laws.

Governments in some markets are considering short-term rental bans, and each has different reasons for banning short-term rentals.

In Spain, laws governing short-term rentals date back to the mid-1990s. An association of representatives from four Spanish regions is currently revising those laws as they gather information to determine the future of the Spanish vacation rental sector.

The Spanish government's main reason for taking the above measures is that it needs more homeowners to declare their income and pay income tax, but the hotel industry has continued to exert pressure and threatened to make it basically impossible for homeowners to rent out their properties short-term.

Berlin's vacation rental sector

Unlike the situation in Spain, Berlin's legislature has been critical of rising rental prices and property prices for local residents as the number of holiday apartments has rapidly increased.

The legislature's view is narrow, given that Berlin has more than 4 million private homes, of which only 12,000 are used exclusively for holiday rentals. In fact, the booming economy has attracted many job seekers to Berlin, so rents have naturally risen.

Official figures show that Berlin is adding 40,000 people a year, which is the real reason for the rise in holiday rentals. This year is a chancellor election year, so it seems to the local government that it is better to blame the problem on foreign tourists who have no right to vote than to admit that they are poorly implementing housing construction and infrastructure development.

In addition to vacation rental sites, other companies using the sharing economy model have also been plagued by government regulatory issues. One of them is Uber, a fast-growing ride-hailing app startup, which has also faced legal issues in the United States.

Are government regulators shortsighted?

Governments need to realize that the sharing economy is a rare opportunity that can bring growth to a depressed market, and this growth is what governments urgently need to achieve. Some governments do realize this, and although New York City has chosen to impose a ban on short-term rentals, Amsterdam and Paris see the value of the sharing economy model and are trying to establish more reasonable legal regulations.

Rather than saying no to the entire sharing economy, Amsterdam and Paris are defining the model’s boundaries to ensure that the growth it brings has an overall positive impact.

At HouseTrip, we strongly support governments setting clear and reasonable laws based on the overall positive impact of the sharing economy.

When it comes to vacation rentals, if the housing market in certain destinations faces upward price pressure, governments could choose to limit the number of “dedicated vacation rentals” (properties that are available only to travelers).

However, we do not recommend that the government restrict short-term rental services for primary and secondary homes provided by homeowners to travelers. By definition, primary and secondary homes are homes where the owner lives for at least a few weeks each year. Even if the government imposes a short-term rental ban on primary and secondary homes, these homes will not return to the long-term market. Therefore, we believe that there is no need for the government to allow these homes to remain vacant when no one is living there.

We will continue to face legitimacy issues in the sharing economy. The key will be which governments find ways to make the sharing economy model work and move forward, and which governments are unwilling to take the time to understand the model, or choose to give in to hotels and vested interests and ultimately kill the sharing economy as a whole.

via: traveldaily