> For instance, with unlawful subletting, I don't see who's harmed as long as guests behave responsibly, which should be ensured by the reputation system.
As a fellow tenant, my level of comfort with my daughter running unattended to a friend's apartment in the same building is less if I know there are lots of people running AirBnB sublets out of their apartments than if I know everyone is a resident subject to a background check and on a 6-12 month lease.
Maybe the increase in risk from transient AirBnB tenants is small, but it's not zero. That loss of comfort, and that non-zero increase in risk is a harm to the other tenants in the building.
Presumably the landlord would be liable for any harm incurred by other tenants under this scenario (especially as they've broken their lease agreement), which provides them with a fairly strong incentive to check up properly. The reputation system is also designed to help them with this.
EDIT: I was actually talking about the subletter (person who signed the original lease) rather than the landlord of the property itself.
Sure you can sue the AirBnB host, but individuals rarely have the money to pay judgments for serious damage or bodily injury, nor do they have insurance for such occasions. That's the whole point of renting in a reputable apartment complex--it pushes the responsibility and and liability for security in the common areas to the building management, an insured entity with the resources to pay for any resulting damages.
I think people who are proponents of AirBnB dramatically underestimate how much monetary value people attach to the kind of people they live around, especially in city apartment buildings where lots of people who barely know each other live in close proximity. A condo in a building that has some fraction of renters can sell for substantially less than an identical condo in an identical building that is 100% owner-occupied. Rents at buildings with 12-month minimum leases are higher than rents in buildings with 1-month minimum leases. People go out of their way to buy into coop buildings that have minimum down payment requirements, etc.
I live in an apartment in downtown Chicago. The major businesses in the area are Northwestern Memorial Hospital and Northwestern University. Thus, most of the residents are medical residents, nurses, graduate students, etc. This tenant composition is priced into my rent. We have a lot of families that live here because it's a bit away from all the tourists on Michigan Ave and because every tenant undergoes a background check. If a bunch of tenants started illegally subletting their apartments on AirBnB to aforementioned tourists, that would upend everyone's expectations and decrease the value of the building to all of us.
Do you think the grad students in your apartment ever have family to stay? What about friends? What about couchsurfers (if there are any meaningful number of students in your apartment, it's very likely at least one an active couchsurfer)?
Who do you think poses a bigger risk to other tenants, my cousin's friend who's crashing with me in Chicago while he finds a place to stay permanently, or someone with 100 positive reviews on AirBnB? 20 positive reviews on AirBnB? Where do we draw the line on what's ethical here? I think most people wouldn't see any problem with the first scenario but would with the second, but the risk is probably lower in the second scenario.
(Perhaps AirBnB should purchase insurance on behalf of AirBnB landlords. I'm sure they have data on how often these kinds of problems occur and I can't imagine it being too expensive)
The difference is that the building's management company takes responsibility for the typical temporary guests of those who live in the building. AirBnB does not take any responsibility for the guests of AirBnB hosts. Moreover, nothing requires an AirBnB host to only take people with 20+ positive reviews. It's entirely up to the AirBnB host. The host has full control over the decision, even though his decision exposes the rest of us to risk.
It looks like AirBnB will already cover some kinds of theft or vandalism. It presumably wouldn't be too hard for them to extend that to personal injury in shared spaces, which would partly address your concern.
Also, the building management company would evict tenants who had troublesome guests, which provides the tenant (AirBnB host) with an incentive to only take people who are reliable.
Why do you presume it would be easy for them to provide personal injury protection across their entire inventory of rentals? The set of circumstances that led to their particular current coverage of theft and vandalism is worth revisiting.
Well, it's pretty much a textbook case for insurance: a very small risk spread across a large number of rentals where the worst case is bad. AirBnB has the advantage that they could tailor the premium based on the exact parameters of the rental.
If it's so straightforward for Airbnb to insure the things you're talking about, why is the "Host Guarantee" they came up with along with Lloyds of London so restrictive? For instance: if you let a place out to an Airbnb guest, and they forget to lock the door, and your place is burgled as a result, you're not (it seems) covered.
Landlords of desirable properties are aren't incentivized to allow their spaces to be listed on Airbnb at all; the good properties will have naturally low vacancies, because apartments in desirable locations have effective markets already, and those markets provide much better terms to landlords than Airbnb rentals do.
So you're left dealing with an unfortunate subset of landlords.
It's very likely that the liability policy that the landlord carries has an exclusion for the type of subletting that AirBnB does, putting all of the liability on an effectively uninsured landlord.
Comments
> For instance, with unlawful subletting, I don't see who's harmed as long as guests behave responsibly, which should be ensured by the reputation system.
As a fellow tenant, my level of comfort with my daughter running unattended to a friend's apartment in the same building is less if I know there are lots of people running AirBnB sublets out of their apartments than if I know everyone is a resident subject to a background check and on a 6-12 month lease.
Maybe the increase in risk from transient AirBnB tenants is small, but it's not zero. That loss of comfort, and that non-zero increase in risk is a harm to the other tenants in the building.
Presumably the landlord would be liable for any harm incurred by other tenants under this scenario (especially as they've broken their lease agreement), which provides them with a fairly strong incentive to check up properly. The reputation system is also designed to help them with this.
EDIT: I was actually talking about the subletter (person who signed the original lease) rather than the landlord of the property itself.
Sure you can sue the AirBnB host, but individuals rarely have the money to pay judgments for serious damage or bodily injury, nor do they have insurance for such occasions. That's the whole point of renting in a reputable apartment complex--it pushes the responsibility and and liability for security in the common areas to the building management, an insured entity with the resources to pay for any resulting damages.
I think people who are proponents of AirBnB dramatically underestimate how much monetary value people attach to the kind of people they live around, especially in city apartment buildings where lots of people who barely know each other live in close proximity. A condo in a building that has some fraction of renters can sell for substantially less than an identical condo in an identical building that is 100% owner-occupied. Rents at buildings with 12-month minimum leases are higher than rents in buildings with 1-month minimum leases. People go out of their way to buy into coop buildings that have minimum down payment requirements, etc.
I live in an apartment in downtown Chicago. The major businesses in the area are Northwestern Memorial Hospital and Northwestern University. Thus, most of the residents are medical residents, nurses, graduate students, etc. This tenant composition is priced into my rent. We have a lot of families that live here because it's a bit away from all the tourists on Michigan Ave and because every tenant undergoes a background check. If a bunch of tenants started illegally subletting their apartments on AirBnB to aforementioned tourists, that would upend everyone's expectations and decrease the value of the building to all of us.
Do you think the grad students in your apartment ever have family to stay? What about friends? What about couchsurfers (if there are any meaningful number of students in your apartment, it's very likely at least one an active couchsurfer)?
Who do you think poses a bigger risk to other tenants, my cousin's friend who's crashing with me in Chicago while he finds a place to stay permanently, or someone with 100 positive reviews on AirBnB? 20 positive reviews on AirBnB? Where do we draw the line on what's ethical here? I think most people wouldn't see any problem with the first scenario but would with the second, but the risk is probably lower in the second scenario.
(Perhaps AirBnB should purchase insurance on behalf of AirBnB landlords. I'm sure they have data on how often these kinds of problems occur and I can't imagine it being too expensive)
EDIT: Looks like they already do have insurance of some kind: https://www.airbnb.com/guarantee
The difference is that the building's management company takes responsibility for the typical temporary guests of those who live in the building. AirBnB does not take any responsibility for the guests of AirBnB hosts. Moreover, nothing requires an AirBnB host to only take people with 20+ positive reviews. It's entirely up to the AirBnB host. The host has full control over the decision, even though his decision exposes the rest of us to risk.
It looks like AirBnB will already cover some kinds of theft or vandalism. It presumably wouldn't be too hard for them to extend that to personal injury in shared spaces, which would partly address your concern.
Also, the building management company would evict tenants who had troublesome guests, which provides the tenant (AirBnB host) with an incentive to only take people who are reliable.
Why do you presume it would be easy for them to provide personal injury protection across their entire inventory of rentals? The set of circumstances that led to their particular current coverage of theft and vandalism is worth revisiting.
Well, it's pretty much a textbook case for insurance: a very small risk spread across a large number of rentals where the worst case is bad. AirBnB has the advantage that they could tailor the premium based on the exact parameters of the rental.
If it's so straightforward for Airbnb to insure the things you're talking about, why is the "Host Guarantee" they came up with along with Lloyds of London so restrictive? For instance: if you let a place out to an Airbnb guest, and they forget to lock the door, and your place is burgled as a result, you're not (it seems) covered.
OT: Chicago, engineer, lawyer. Neat! (My office is in Printer's Row). Do you practice law, or are you in tech?
Very cool! I was in tech (wireless), now I'm doing the law firm thing for awhile.
Landlords of desirable properties are aren't incentivized to allow their spaces to be listed on Airbnb at all; the good properties will have naturally low vacancies, because apartments in desirable locations have effective markets already, and those markets provide much better terms to landlords than Airbnb rentals do.
So you're left dealing with an unfortunate subset of landlords.
It's very likely that the liability policy that the landlord carries has an exclusion for the type of subletting that AirBnB does, putting all of the liability on an effectively uninsured landlord.