Virginia Legislature's Airbnb Battle: Who Rules Your House?

Right now, renters can't collect.

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The hotel lobby's effort to stop Airbnb rentals, says Tucker Martin, is like the horse-and-buggy lobby trying to stop the car industry.

Martin—a political consultant doing work for Airbnb, which enables homeowners to make a little extra money by renting out rooms for short periods—could have cited many other examples: Record companies trying to stop music downloads and streaming. Taxi companies trying to stop Uber. Newspapers trying to stop the Internet.

Such attempts (some of which have taken place) would be fools' errands. Technological and business innovation—the "gales of creative destruction," as Joseph Schumpeter called them—can't be stopped. Nor should they be.

Last year Virginians arranged 133,000 stays through Airbnb, which represented a 160 percent jump over the year before—even though Airbnb rentals are, in many localities, illegal. That's the case in Richmond, which nevertheless saw several hundred transient rentals during the UCI road cycling championships.

This year Del. Chris Peace introduced legislation that would create a statewide framework for Airbnb—the first such state-level framework in the country. It would have ensured that homeowners could rent out rooms for short stints no matter where they live in the commonwealth, and would have set up an arrangement for Airbnb to remit taxes to the state, which would then route them to the appropriate locality. Other provisions would ensure that property owners could use only their primary residence—a way to keep landlords from running what amounted to illegal hotels—and would prevent homeowners from renting out multiple rooms, so they didn't become de facto bed-and-breakfasts.

Those considerations have not mollified market incumbents or their advocates, such as state Sen. Tommy Norment, the majority leader.

Something must have crawled up Norment's nose and died this year. First he kicked members of the press out of their traditional spot on the Senate floor, then only grudgingly allowed them back—but without a desk to work on. Then he pushed legislation to weaken the anemic ethics reforms passed last year in the wake of Gov. Bob McDonnell's gift scandal.

Now, Norment—who has a financial interest worth more than half a million dollars in two hotels and who represents the hotel-heavy Williamsburg area—has inserted language in the Senate version of the state budget to kneecap Peace's bill by delaying its implementation for a year. Peace says the ploy is unprecedented.

It's also undemocratic. The legislation to legalize Airbnb already passed the House and Senate. But it worked: The House has conformed its bill to Norment's liking, which means it won't take effect for a year—if it ever does. A lot can happen in a year.

Yet Norment's maneuver won't stop people from using Airbnb. It will only stop localities from collecting the revenue they claim they need so badly. Curiously, some localities oppose Peace's legislation because they don't like losing authority over certain short-term rentals. Apparently they would rather have the illusion of control than the reality of additional revenue.

The hotel industry's concern about Airbnb is understandable: Nobody likes more competition. But its objections might be overstated. Many Airbnb listings offer rooms in residential neighborhoods far from hotel districts, which has the potential to induce tourism where it otherwise might not occur. Martin mentions the weekend fisherman who wants to hit a spot along the Rappahannock River where no hotel rooms can be had.

Granted, a lot of Airbnb rentals take place in cities, particularly during large sporting events and other big draws. In those cases, short-term residential rentals could act as a pressure valve on prices. Hotels might not be able to jack up room rates to twice the normal going rate if visitors have other options.

And having visitors spread themselves out can be good for the local economy. A visitor to Central Virginia who relies on a hotel chain might end up staying on Midlothian Turnpike and eating at Applebee's. A visitor who takes a private room in the Fan might have dinner at a funky neighborhood joint instead.

Peace—who also is championing partial deregulation of health care through a measure to reduce the scope of Virginia's odious certificate-of-need law—offers a purely normative reason for his Airbnb bill: If you own a house and you want to rent a spare room to someone every now and then, what right does anyone have to say you can't? It is, after all, your property.

For those unpersuaded by such principles, Airbnb can provide big numbers showing how much money homeowners can make and localities can reap in taxes through formalized arrangements. Figures from self-serving studies tend to be inflated and untrustworthy. But it's fair to say this much: Peace's legislation would ensure localities get vastly more from Airbnb rentals than what they are getting now: zilch.

This column originally appeared at the Richmond Times-Dispatch.

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  1. The only anti-Airbnb argument I’m sympathetic to is the one where these short-term rentals are essentially party houses for tourists and the neighboring residents are (justifiably to me) peeved. However, that’s no reason to restrict Airbnb; nuisance ordinances exist for a reason.

    1. That, more than anything, might be the service’s undoing. All it takes is one bad guest breaking the wrong thing for a provider to withdraw from airbnb under the “it’s not worth it” clause. The question is how many people will tolerate the crap regular hospitality services have to put up with on a regular basis.

      1. That’s why airbnb is cool. There is a rating process for both rentors and rentals. Both parties to the transaction are vetted.

        1. You could se a metastable state where the service contracts to a point where no one will trust a person without a history, resulting in a stagnation of the service, rendering it effectively dead.

          1. It will be interesting to see how social networking and your online reputation will give people access to the “sharing economy” and restrict others. It’s a fascinating experiment.

    2. I’m sympathetic to landlords being able to add no-unapproved sublease clauses to their leases. Every property I’ve leased was very specific about who the tenants were and what the rules were for guests/subleases. Of course, that is a private matter and the government should be restricted to enforcing contracts.

  2. Honest question: who wants to – unwittingly – live next to a revolving door of transients?

      1. Thank you!

    1. That would be an improvement over some neighbors I’ve actually had.

      1. No kidding. The house next to mine was owned by a jackass who moved and rented it out to a constantly rotating cast of nice, quiet families (i don’t think any of them were there longer than 6 months). Then he sold it to a different jackass, who spends an hour a day engaging in screaming contests with his wife and throws his garbage in my driveway.

    2. Not just no, but hell no. I can’t even stand the neighbors that I have currently.

      I wouldn’t regulate them though.

      1. I wouldn’t regulate them though.

        I agree but I’m still sort of thinking out-loud on the issue. It’s possible that existing regs handle all situations already, e.g. the nuisance regs mentioned by bassjoe above. Or the leases that renters sign.

        1. Undoubtedly, but most people won’t figure that one out and we’ll have another set of redundant laws with vague interpretations.

          1. AKA “stimulus”.

        2. “Or the leases that renters sign.”

          Anyone who owns a building can easily put it in the lease that renters are not allowed to use Airbnb without prior approval or at all. They’re the ones who actually own the property and if other people in the building get annoyed by Airbnb guests, all they have to do is demand that this no longer be allowed.

          The state is completely unnecessary for dealing with any of these problems.

        3. I agree, existing regs cover these issues. To me it’s more of an issue of the existing government and its bureaucracies failing to enforce the laws we have.

    3. Your transphobia is despicable.

    4. Honest question: when will you stop beating your wife?

      1. Well, it would have to be after aquiring a wife and starting beating her.

    5. How do you know that you already don’t?

      1. Observation. Also I live in an apartment building that doesn’t allow it.

        1. To answer your question, that depends on the people.

          I have more faith in the outcome of people freely contracting with one another, than the gentle ruling fist of the state to stamp out what it does not approve.

          This, of course, doesn’t guarantee any particular outcome in the former.

    6. The great thing about America is you don’t get to tell you neighbors what to do and vice versa.

      Americans can have a bossy streak when it relates to others and zero responsibility policy when it comes to themselves.

      Besides, there is nothing that you can do to prevent a homeowner from turning their house into a rental house. All you can do is hope the tenants are nice and respectful people.

  3. The hotel lobby’s effort to stop Airbnb rentals, says Tucker Martin, is like the horse-and-buggy lobby trying to stop the car industry.

    That’s a bit much. Hotels aren’t going to go away.

    1. You can still take a buggy ride around Central Park.

      1. Not if Deblasio gets his way.

  4. “Other provisions would ensure that property owners could use only their primary residence?a way to keep landlords from running what amounted to illegal hotels”

    Retarded. Why can’t I decide the terms by which people can stay in a building I own?

    1. Because you don’t own it. You’re renting from the state.

    2. You didn’t build that.

    3. Taxation, insurance, licenses, and so-on.

      So if you reject the validity of those to start with, then I doubt you can be persuaded the state has a legitimate interest.

  5. The AirBnB story is not insignificant but it’s really small potatoes compared to the CON reform briefly mentioned in Barton’s piece.

    HB 193 creates a three phase process to sunset most of Virginia’s COPN (extra “P” is for Public) laws over a three year period. It squeaked past the VA house 52-46 and is now with the senate undergoing compromise so there will be reform.

    The FTC and DOJ’s antitrust support reform.

    Institute for Justice recently lost their latest appeal of VA’s CON in fed court.

    1. For those of us who are not familiar with the issue, what do those acrnyms stand for?

      1. IJ’s primer:

        http://ij.org/case/vacon-2/

        COPN = certificate of public need

        For a new business to provide a medical service it must first get permission and a COPN from Virginia’s govt. Any nearby provider can prevent you from providing a similar service by claiming the competition would put them out of business. It’s government-granted monopoly.

  6. “The hotel lobby”…. the sentence didn’t go the way I thought it was. Had to start again.

    1. “Hotel lobby”? Isn’t that the room with the reception desk and the entrance to the restaurant/bar?

      1. +1 ” but that’s not important right now”

        1. +1 Dead Leslie

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