AirBNB – a revolutionary business model or one that facilitates law breaking?

Most of what I blog about is education and technology, so this is a bit different. I have a bone to pick with AirBNB as follows.

Their platform knowingly allows their ‘hosts’ to break the law in many countries. A quick example: in the London block where I own a flat, all the Local Authority leases – for owners and renters – contain specific provisions prohibiting short-term letting. In fact, our council say that they actively pursue anyone with a lease who breaks this clause. Regardless of the form of tenancy, anyone offering accommodation via AirBNB has to meet some very specific criteria relating to fire safety and access. These include complying with all the elements of the Housing Health and Safety Rating System  (HHSRS), specifically:

• Having appropriate smoke alarms (tested at the start of each tenancy) as well as carbon monoxide alarms where there is a solid fuel appliance. This includes records of testing compliance for all mandatory systems
• Undertaking a Fire Safety Order – a specific risk assessment for the property being rented as well as for any common areas used for fire exit (e.g. fire escapes)

In fact, AirBNB even allows hosts to highlight that their property does not have the most basic fire safety protections – specifically smoke and/or carbon dioxide alarms (see attached image). They are thus facilitating hosts in breaking the basic laws relating to the safety of guests. What their system should do is require all listings to have completed a checklist linked to evidence that host and property have:

• Legal authority to provide short-term letting
• Valid insurance for the property that specifically allows and covers short-term letting
• Evidence that the property contains the necessary safety systems,  checked and certified, including a fire safety risk assessment for the property and any common areas such as fire escapes, including for guests with disabilities (mobility, sight, hearing, etc.)
• Smoke and fire alarms (heat and/or optical) with regular checks
• Portable Appliance Testing (PAT) compliance (minimum every 2 years)

Without these I am led to believe that both the host, probably the owner/leaseholder and AirBNB may be jointly and severally liable (including personally) for any injuries or damages. This is why most mortgages specifically require disclosure from applicants about short-term letting with most declining to offer finance if this is part of the buyer’s funding model.

It’s not a impossible problem to solve and all that AirBNB is doing will drive down the value of the business for most investors (but not short sellers). It’s avoidable and stupid, not revolutionary or enterprising.