As sharing economy grows, Airbnb and city regulations collide

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Photo Credit: Chelsea Purgahn | Daily Texan Staff

Lizzy*, a senior at UT, makes $300 a month, but she doesn’t work a traditional on-campus job or get the money from her parents. 

Instead, she charges guests to stay in a room in the bohemian-themed West Campus apartment she shares with three roommates through Airbnb, an online marketplace that matches property owners with people looking for a place to stay. Inspirational quotes on the wall, maps and African-themed poles and totems line the walls of the apartment, which has a 4.5 out of 5 star rating on Airbnb.

After paying a 3 percent service fee to Airbnb from her earnings, she makes enough to purchase groceries and other necessities. She described hosting through Airbnb as not only a way to make money but also meet interesting people from around the world. 

“It’s much more personal,” Lizzy said. 

There’s only one problem: She’s breaking the law. Her apartment complex prohibits her from unofficially renting her apartment to guests, according to the lease she signed. The City of Austin requires her to obtain a type-one short-term rental license to host paying guests, which costs $285 for the first year and $235 every year afterward. 

Lizzy, who asked to remain anonymous, said she already knew the apartment did not allow her to rent her place through Airbnb but said she did not know the City required her to obtain a license. 

“[I wouldn’t pay the City fee] for as little as I’m making,” Lizzy said. 

Listings on Airbnb have come under scrutiny in recent years as many U.S. cities, including Austin, have raised concerns over the legality of Airbnb listings. The Austin City Council discussed stricter short-term rental regulations in 2015 to minimize “party house” disruptions and increased enforcement of existing regulations, but no ordinances have been drafted.

Assistant architecture professor Jake Wegmann said, based on his research, there are more listings than authorized STR rentals, suggesting that most Airbnb listings do not comply with the law.  

“I think a lot of people putting an Airbnb listing on their property quite reasonably make a calculation that there’s a pretty low chance that they’re going to suffer any consequences,” Wegmann said. 

When asked about the legal status of listings on Airbnb, the company said it provides links to applicable laws during the sign-up process. According to a 2014 Airbnb report, 67 percent of listings were rented in Austin for fewer than 30 days in 2014.

“We ask all of our hosts to comply with local law when they sign up for Airbnb,” Airbnb spokesperson Alison Schumer said in an email.  

Murray Cox, a self-described “community activist” who tracks Airbnb data, said the company may inform people about the law, but doesn’t take active steps to ensure its listings comply with the law. 

“[Airbnb] always says it’s up to the host to obey the law, even though Airbnb is part of the transaction,” Murray said.

Even Lizzy said she “has a conscience” when it comes to renting from Airbnb. She said she has significantly cut back the days she rents out her room from last semester. 

“If you’re making more money per month than your rent, I think it shouldn’t be allowed,” she said. “Anything more than that, you’re running a small business and profiting off your apartment building.”