Unlicensed Airbnbs: Lessons for Scotland from a global crisis

Today is the day when unlicensed Airbnbs will face consequences.

Instead of Scotland, where an ongoing resistance is taking place concerning the control of temporary rentals, the situation unfolds in New York.

Starting today (September 5), the largest city in America is requiring hosts to officially register with the mayor's office. Today is the final day to meet this requirement.

New York City is simply the most recent local or national governing body attempting to control an industry that has flourished ever since the emergence of Airbnb and comparable online platforms, as they have provided homeowners with a convenient means to transform their residences into unregistered accommodations.

New York, a highly sought-after travel hotspot, offers over 40,000 lodging options suitable for visitors, entrepreneurs, and various other individuals seeking short-term accommodations.

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Similar to Scotland, industry representatives argue that the implementation of regulations will result in the closure of numerous small enterprises, potentially leading to a scarcity of vacation accommodations within the urban area.

According to the authorities in New York, web platforms such as Airbnb or booking.com would be in violation of the law if they facilitate financial transactions for hosts who are not registered.

However, business proprietors show no urgency in adhering to the program...and there exists a surplus of paperwork for local administrators to tackle.

"I believe it is evident, considering the rate at which the city is handling applications for hosts, that a significant amount of available supply will diminish," remarked Sean Hennessey, an associate professor at the Jonathan M. Tisch Center of Hospitality at New York University School of Professional Studies, in a recent interview with US Today, The Herald's American affiliate.

Other news sources in the United States over the weekend indicated that just 25% of hosts had completed their registration process. It is possible that certain hosts may never have the opportunity to register.

According to AirDNA, a research company, around 7500 accommodations listed on Airbnb do not meet the new regulations and will ultimately vanish. This includes highly popular rental properties, like completely vacant apartments, which could potentially lead to a 40% loss in Airbnb's earnings in one of its largest markets.

According to the regulations in New York, landlords or supervisors of residential buildings have the authority to prohibit tenants from engaging in temporary rentals.

According to the Gothamist website, they utilized laws pertaining to freedom of information to determine that a total of 8,700 buildings have already been accounted for. This encompasses a wide range of structures, varying from tall skyscrapers in midtown to charming small buildings found in Greenwich Village.

Earlier this year, experts predicted that around 10,000 properties would be removed from the listings in New York.

Travel specialists have suggested that this might lead to an increase in prices for visitors to the city.

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Airbnb and a few of its hosts engaged in a legal dispute but were unsuccessful in their attempt to prevent the implementation of New York's recent regulations. These rules were established as a result of legislation enacted in January 2022. The judge presiding over the case deemed the proposed regulations entirely logical and reasonable.

The recent legislation in our town was enacted following a staggering number of 12,000 official grievances submitted between the years 2017 and 2021 concerning temporary housing arrangements within the urban area.

Like Scotland and numerous other places, New York's regulation was also prompted by worries regarding the availability of housing.

Temporary rentals appeal to tourists and contribute to the monetary influx of the tourism industry. However, they simultaneously burden the overall economy by impeding workers' access to housing.

Airbnb and the hosts it supports maintain, not only in America but also in other regions, that the pros surpass the cons.

The recent regulations on short-term rentals in New York City are a major setback for the tourism industry and the numerous individuals and small enterprises in the outer boroughs that depend on home sharing and tourist spending to sustain themselves. According to Theo Yedinsky, Airbnb's Global Policy Director, this action from the city conveys an unambiguous message to millions of potential tourists. It signifies that they will now have limited choices for places to stay when they decide to explore the vibrant city of New York, ultimately making them feel unwelcome.

Various parties involved, such as the heads of prominent urban areas and local districts, have their doubts.

Scotland's system for granting licenses for short-term accommodations is scheduled to be implemented a few weeks later than New York's, specifically on the 1st of October. A number of politicians and business groups are advocating for a postponement.

Just like in New York, there are worries about excessive bureaucratic procedures. According to The Herald's recent report, a mere 2.2% of Edinburgh hosts who have requested planning permission have been granted it. And without this permission, they are unable to obtain a license.

Officials from the Scottish government emphasized that they have already prolonged the duration for submitting applications and that there have been no rejections thus far.

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The outcome is uncertain for New York and Scotland if they are subject to regulatory systems with weak adherence.

Nevertheless, previous endeavors to establish a regulatory structure for temporary accommodations in other areas have proven to be partially ineffective.

Several operators globally have simply disregarded limitations, rules, licensing, and even safety inspections.

This has been true, even in the most advanced nations that have a solid foundation of legal systems.

According to a recent inquiry conducted by Bloomberg, the renowned news organization, Copenhagen was mentioned as a city that still allows short-term vacation rentals despite efforts to curb such practices.

In Copenhagen, the capital of Denmark, property owners are no longer allowed to rent out their properties for more than 70 days annually.

Bloomberg interviewed residents living in Nørrebro, the once blue-collar area located north of the city center that is now becoming fashionable and diverse.

An individual, who requested to remain anonymous due to concerns over possible retaliation from the landlord, revealed that they were vacating the vicinity.

"My apartment building has become like a hybrid hotel," the tenant remarked.

The regulations in Copenhagen and Berlin are more stringent compared to those in Scotland. Berlin, the capital of Germany, initially prohibited short-term rentals in apartments but later realized it was difficult to enforce such a ban. Consequently, they have now loosened their regulations and instead require individuals to obtain a license for such activities.

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Barcelona is arguably the city that has engaged in the most prominent conflict with temporary rentals. Its Mayor Ada Colau was voted into office with a commitment to fight against Airbnb, as it was causing the removal of numerous homes from the local housing market.

The urban area possesses a sufficiently financed body responsible for enforcing its regulations. However, presently, slightly less than fifty percent of the total number of airbnb listings within the city of Catalonia are related to unlicensed properties, as indicated by the information available on insideairbnb.com.

There are other websites besides Airbnb that provide similar rental options, but it is the most accessible source of data. Specifically, in Edinburgh, a website called insideairbnb.com has discovered 7698 listings with an approximate average yearly income of over £15,000 per listing. In total, this amounts to a whopping £116 million per year.

Will New York mirror the worldwide trend of widespread disregard or insufficient adherence to regulations? Will Scotland do the same? We can only wait for D-Day to find out.