We’ve been covering this story for a while, so we knew it was coming, but now it’s official. Massachusetts has passed a new law that was basically designed to run Airbnb out of business in their state. Governor Charlie Baker has signed it and it takes effect in July. Baker and his supporters continue to issue bizarre claims about how they’re being “fair” to all sides, but what this boils down to is a huge win for the lobbying interests who forced this issue through behind the scenes. (Boston Globe)
Governor Charlie Baker on Friday signed first-of-its-kind legislation to tax and regulate the short-term housing rental market in Massachusetts, capping years of debate over how to navigate an industry that has exploded through companies like Airbnb.
The new rules will take effect July 1 and could transform a market that spans the state, from Cape Cod summer homes to Boston apartment buildings to Western Massachusetts vacation retreats.
The bill requires every rental host to register with the state, mandates they carry insurance, and opens the potential for local taxes on top of a new state levy. A chief negotiator for the House said the goal is to register every short-term rental in the state by September, and local officials, including in Boston, say the new law will help buttress their own efforts to regulate the booming market.
Baker is touting this as a compromise which he claims is able to, “avoid placing undue burdens on occasional renters.” This is nonsense, of course, because in order to qualify for the exemptions to most (though not all) of these new burdens on hosts, you can only rent out your room for a maximum of fourteen nights per year. For most hosts, that’s not going to be worth the bother of signing up for the app in the first place.
And what are these burdens? First of all, anyone with a spare room will now have to carry the same type of insurance as a hotel chain, basically wiping out any profit they might make. On top of that, they’ll be paying a 5.7 percent state tax, plus another 6% tax if municipal or county governments decide to impose one.
Further, hosts will be legally required to list themselves on a publicly available registry. Proponents claim this allows neighbors to know who is renting out rooms to “strangers” but it’s obviously intended as an intimidation tactic, opening up hosts to public shaming, abuse or worse.
The bottom line here is that the hotel industry and their lobbyists have won a massive victory. They don’t like private citizens cutting into their business so they’ve greased the palms of enough politicians to essentially shut Airbnb down in the state. As the New York Times reported more than a year ago, leaked documents from the American Hotel and Lodging Association (AHLA) revealed, “a multipronged, national campaign approach at the local, state and federal level.” The goal of that campaign was to enlist elected Democrats to pass laws which would choke the life out of Airbnb and protect their profits. They specifically mentioned Boston as one of their key target markets, and now they have succeeded in bribing the state government to shut Airbnb down.
It’s true that some people have begun “abusing” the system by purchasing large amounts of property and renting it out like a hotel using the app service. Perhaps a law like this might have been more palatable if it were applied only to people with more than ten rental units or something along those lines. But for all the private individuals with an extra room or a guest house who were using the system as originally intended and making a little extra money, this basically shuts them out of the game.
Airbnb already has one lawsuit in progress against Boston for similar municipal laws they passed earlier. Now they’re saying a new suit against the state may be coming. But if they find no satisfaction through the courts we’re probably seeing the beginning of the death of the gig economy along with the chance for private citizens to profit from their own homes or apartments.