"Shareable housing" is causing apartments to vanish from SF's rental market — yet popular, profitable sites like Airbnb violate local laws
Fajardo knows where laws limit her opportunity for gain and to remain within their bounds. But most hosts, the ones Airbnb advertises as offering "unused space to pay your bills or fund your next vacation," aren't running a sophisticated business. And Airbnb offers them little help or support.
Airbnb just lists the rentals then mediates the payments. And the company collects revenue at both ends of transactions, charging guests a 6-12 percent service fee upon booking then taking another 3 percent before remitting payment to hosts.
Anyone can create a guest or host profile and Airbnb conducts no user verification, although both can leave online reviews. "We do not attempt to confirm, and do not confirm, any Member's purported identity," Airbnb states in its terms of service. "You are responsible for determining the identity and suitability of others."
The company advertises a $1 million "Host Guarantee" backed by Lloyd's of London, but warns that it "should not be considered as a replacement or stand-in for homeowners or renters insurance. The Host Guarantee does not cover: cash and securities, collectibles, rare artwork, jewelry, pets, personal liability."
The site also does not vet the content of property listings for legality. Hosts can set their rates and even add on a cleaning fee or refundable security deposit, but it offers no functionality for hosts to itemize and collect the TOT, now more than a year after San Francisco required that it be collected.
Tax issues are only vaguely addressed in an FAQ section for hosts, noting that "some hosts are required by their locality to charge a tax." Hosts ambitious enough to attempt compliance must essentially become amateur tax specialists. Few, however, have the experience to decipher the code correctly and even fewer are likely to seek it out in the first place.
A search for the word "tax" across the site's roughly 4,750 San Francisco listings yielded a mere 174 hits and myriad approaches to the issue. Several hosts mentioned collecting the TOT in cash on arrival or required credit card information in advance — a clear incursion into the secure nature of the transaction. A host named Jesse with 85 listings told the Guardian that he just rolls the TOT up into his daily rates, despite the city's requirement that it be listed separately.
Fajardo isn't alone in creating a full-time business of short-term apartment rentals. Casa Buena Vista Rental lists 76 properties on its website, many of which overlap with Jesse's 85 Airbnb listings. A host named Bernat has 48 listings that also appear on Come2SF.com. Gaylord Suites, a Tenderloin apartment complex, markets at least seven different apartments in the same building on the site.
Fajardo said she's pushed Airbnb for a dedicated TOT field "until [she's] been blue in the face," but she feels strongly that the company should not be held responsible for the collection of tax itself. "It's not their burden," Fajardo argues in defense of Airbnb. "They're a booking agent. They funnel the money and they expect you to do the taxes."
OTHERS CAN DO IT
The New York- and Singapore-based Roomorama was founded in 2009 and has a nearly identical payment model to Airbnb's. But it has a formal host verification process and a higher price point that CEO Jia En Teo told us helps to filter out bad guests.
"Our host verification is very tight," explained Teo. "When a host is listed on our site, they don't go live immediately. They go through a quality control and validation process. We have a team that will call the host and ask for utility bills and ID. We do due diligence."
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