Airbnb is a hot new online marketplace launched in August of 2008. It connects travelers to those who want to lease lodging accommodations to them. The company does not own the properties; it collects a broker service fee from both the guests and the hosts when the bookings are made. It currently services over 65,000 cities in over 191 countries.
Each city and country has its own laws that govern how businesses can operate there. This article explains the legal risks of using Airbnb in Hong Kong and discusses how you can protect yourself while you are visiting the country. People are attracted to the Airbnb option because, according to a September 2016 study, it was revealed that in many cases an entire home could be rented from Airbnb for the same cost of renting a room at a hotel.
Since the group started, it has been the source of constant criticism and lawsuits from hotel groups, regulatory bodies, residential property owners and affordable housing groups. Even though regulation and taxation issues are never ending, the company has a simple core mission: to connect travellers looking for affordable accommodations to homeowners that are trying to increase their household income.
When using the air B&B service many of the legal risks fall upon the property owners. You must be aware of the laws, rules and regulations related to short-term occupancy requirements in your area before you register and try to rent your property.
Here are some things to consider before registering as a host with Airbnb:
- Check the laws in your city regarding short-term rentals. Fines associated with doing business online illegally can be quite steep. Preparing in advance can save you a lot of pain, money and frustration in the future.
- Do your homework! Proper permits or licenses are required in many cities. They may consider Airbnb to be a short term rental requiring a special city permit or license. If they do, make sure you get these before you start trying to rent your property.
- Make sure you pay your taxes properly. Sometime you need to collect special occupancy taxes on short term rentals.
- Remember to check if subleasing is even permitted in your area. You may find yourself facing eviction charges if you sublet an apartment you are renting without the permission of the landlord or property manager. Always check your lease and ask your landlord to give you written permission before listing your extra room with Airbnb.
- If you are going to become an Airbnb host make sure you take out a really good insurance policy to cover any damages that might be caused by your guests.
- Remember that if a guest is injured on your property you may be held liable. Make sure everything in your home or apartment is up to health and safety codes.
AirBnB regulations in Hong Kong
Some people feel that Airbnb is actually providing a valuable service in Hong Kong by helping to relieve some of the large hotel room shortages currently impacting the city. Air B&B is only going to continue to expand operations in the Hong Kong market segment. Even though this expansion into this market is only going to grow, there are some serious legal issues facing Airbnb hosts in the city.
Hong Kong currently has a Hotel and Guesthouse Accommodation Ordinance that requires a guesthouse license in order to rent rooms in the city. It is next to impossible for an individual host to get a guesthouse license to rent their space because there are a lot of requirements that must be met before you can become eligible to apply for one. Some of the requirements have to do with things such as fire safety, corridor width, and food safety. There is a long list of other criteria that must be met as well. Many commercial property owners are using Airbnb to get around these regulations, which is why the government has started to crack down on them. You can find more information about this here: http://www.hadla.gov.hk/en/hotels/
In June 2016, Hong Kong had over 6,124 rooms for rent on Airbnb. That number is growing every day. Marie Cox, the founder of Inside Airbnb noted in August 2016 that more than 60% of all the rooms available for rent on Airbnb in Hong Kong were listings from hosts that had more than one accommodation listed on the site. This suggests that there are a large number of commercial operations that are attempting to get around the Hong Kong Guesthouse ordinances and trying to avoid getting proper permits.
According to the Hong Kong Hotel and Guest House Accommodation Ordinance any premise that offers sleeping accommodations for fewer than 28 days must be licensed by the office of Licensing Authority under the Home Affairs Department. This is the enforcement body responsible for carrying out ordinance violations. A spokeswoman for the Department made the announcement that they have a dedicated team in the department with the sole responsibility of searching the internet in order to locate suspected unlicensed guest houses. Violators can face fines up to HK$200,000 and possible prison sentences of up to two years. At the moment individual room renters are not being targeted. They are going after those who have multiple listings and are clearly in violation of the city ordinances.
The reality of the situation is just that there are way too many travellers and hosts using the site every day that the authorities just cannot keep up with it. The laws are outdated and do not reflect the new realities facing the short-term rental market. Enforcement may be successful against the largest abusers of the system, but for now they do not have the time or desire to go after individuals renting a single property, even if it is against the law to do so in Hong Kong.
The income potential of renting spare accommodations is so tempting that many individual hosts trust Airbnb to protect them against damages and disputes. Airbnb seems to be the new way to book accommodations when travelling. With little to no legal risk to single property owners and travellers, this business will continue to grow and the legal sector will just have to adapt itself if it wants to provide better regulation of the new temporary housing trends of the future.