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Short-Term Rental News From Spain

Association De Apartmentos Madrid Madrid by Night

The Asociación de Empresarios de Apartamentos Turísticos de Madrid is an association that seeks to protect the short-term rental industry in Madrid. This association was established on April 15, 2013 and currently has 15 members.

What is this association?

The Asociación de Empresarios de Apartamentos Turísticos de Madrid was founded to find a solution to regulate the business model of short-term rentals in Madrid.

The 2 main objectives of the association are:

1: To collaborate in drafting new legislation to regulate short term rentals with the local agencies in Madrid (Comunidad de Madrid, Delegacion de Gobierno, and the City Hall).

2: To defend and protect our members by providing legal assistance.

In the following informative video, the President of the Asociación de Empresarios de Apartamentos Turísticos de Madrid, D. Joaquin A. Gorrachategui explains his motivations behind the creation of this association and the objectives that it aims to achieve.

Changes to short-term rental laws in Spain:

A legislation was recently introduced in the Spanish parliament to regulate vacation rentals. Under this legislation, renters would be required to obtain licenses and conform to the same health, safety, and quality regulations as hotels.

In the coming weeks, the Asociación de Empresarios will be updating us on the developments taking place. For more information on the proposed legislation to limit short-term rentals in Spain, please visit http://www.telegraph.co.uk/news/worldnews/europe/spain/10038701/Spain-to-clamp-down-on-private-holiday-rentals.html.

For more information about this association, please visit http://www.aptur-madrid.org. They can also be contacted at info@aptur-madrid.org.

What do you think about this proposed legislation?

The Infamous Nigel Warren Case

New York CityIs Airbnb on the verge of being declared illegal in New York City?

Most individuals and organizations with a stake in the short-term rental industry have heard by now that an Environmental Control Board (“ECB”) Judge, Clive Morrick, has held that the renting of a room or rooms in a New York City apartment for less than 30 days is illegal.   Several media sources, reporting the ruling, interpreted it as outlawing the vacation rental website, Airbnb, in New York City. [1]

What is the ECB?

As stated on the ECB’s website, the ECB “is a type of court called an administrative tribunal. It is like a court, but is not part of the state court system. ECB judges hear cases on potential violations of the laws that protect the City’s quality of life.” [2]

Background

In September 2012, Nigel Warren rented out his room in his New York City two bedroom apartment for a few days via the vacation rental website Airbnb.   An important fact that we cannot emphasize enough is that Nigel Warren’s housemate remained in the apartment while the Airbnb guest was there.

Nigel Warren was slapped with a fine of a few thousand dollars by a City’s inspector for having allegedly violated various provisions of the Housing Maintenance Code, Zoning Regulations and Building Code.

In May 2013, ECB Judge Morrick found Nigel Warren to have operated an illegal hotel in September 2012. (See decision at
http://www.scribd.com/doc/142650911/Decision-and-Order-for-NOV-35006622J).

 

Judge Morrick’s ruling explained?

Chapter 225 of 2010 (commonly referred to by the media as the illegal hotels law) provides that boarders or roomers may still rent for less than thirty days provided that they live within the household of the permanent occupant(s) (Section 27-2004 (a) (8) of the Housing Maintenance Code).

What does “living within the household of the permanent occupant” mean?

Judge Morrick’s decision is confused and confusing.   He appears to have read a new requirement into Chapter 225 of 2010 — a requirement conflicting with the plain language of the statute, unsupported by the original legislative expectations and inconsistent with the agency’s precedents.

According to ECB Judge Morrick, one must have or intend to have a relationship with the permanent occupant if one is to be said “to live within the household of the permanent occupant.”    He declared that the terms boarders and roomers in Chapter 225 of 2010 — specifically in Section 27-2004 (a) (8) of the Housing Maintenance Code–  “refer to occupants sharing the life of the dwelling with its permanent occupant.  It does not apply to complete strangers who have no, and are not intended to have any relationship with the permanent occupants.”  In other words, according to ECB Judge Morrick, sharing a bathroom and a kitchen is not enough to qualify as sharing the life of a dwelling, the occupants must also “mingle” and intend to connect in meaningful ways.

Unfortunately, ECB Judge Morrick does not specify how intimate a boarder should be or should intend to be with the permanent occupant to qualify for the exception spelled in Section 27-2004(a)(8) of the Housing Maintenance Code?

ECB judges have consistently held that occupants of a residential apartment must maintain a common household to comply with the law.    A “common household” is defined in Section 27-2004 (4) of the Housing Maintenance Code as follows: ““[a] common household is deemed to exist if every member of the family has access to all parts of the dwelling unit” [emphasis added].

In the Nigel Warren case, it is unclear whether the Airbnb guest had access to all parts of the apartment.  In other words, we do not know whether any of the rooms were locked and inaccessible to her.   We are merely told that the she had her own room and that she did not enter the roommate’s bedroom.

Evidence that ECB judges have looked at to determine whether occupants are occupying a residential apartment according to the law include:

– Whether there are locks on any of the rooms?
– Whether the occupants share a bathroom or a kitchen?

Some ECB judges have inferred from the existence of locks on individual rooms that the apartment or house was illegally altered for occupancy (in other words, some ECB judges have considered individually locked rooms as separate residences/apartments).

It should be noted that to the best of our knowledge, no ECB judge has ruled that an apartment was not occupied according to the law because the occupants had no intention to have a relationship with each other or to connect in meaningful ways.

[1]  http://valleywag.gawker.com/airbnb-is-illegal-in-nyc-509032767?utm_cam
http://www.businessinsider.com/airbnb-illegal-in-new-york-city-2013-5
http://www.foxnews.com/travel/2013/05/21/airbnb-illegal-in-new-york-city/
[2] http://www.nyc.gov/html/ecb/html/home/home.shtml

NYC Mayoral Candidates Discuss Their Views on Vacation Rental Legislation

NYC Mayoral Candidates Discuss Their Views on Vacation Rental Legislation (Credit: NY Post, Daniel Shapiro)

NYC Mayoral Candidates Discuss Their Views on Vacation Rental Legislation
(Credit: NY Post, Daniel Shapiro)

On April 26, 2013, Manhattan Borough President, Scott Stringer hosted a “Start-Up City” Conference. This conference included a Mayoral Forum on the Future of NYC’s Entrepreneurial Economy. At this event, the Democratic Mayoral candidates were asked their opinions on the short term rental ban and its impact on the vacation rental industry. Here is the video recording of the Forum.

The Mayoral Panel begins at 4 hours and 24 minutes into the video. The question regarding short-term rentals is posed at 5 hours and 11 minutes into the video.

http://nyls.mediasite.com/mediasite/Play/75c42aa7b9c2473898189c7ecda29a911d

Here is a transcription of the question regarding legislation on short-term rentals.

Mayoral Forum on Future of NYC’s Entrepreneurial Economy
April 26, 2013

Moderator: Ben Smith, Editor in Chief of Buzzfeed

Participants:

Saul Albanese, former City Council member
Bill de Blasio, Public Advocate
Adolfo Carrión, former Bronx Borough President
John Liu, NYC Comptroller
Christine Quinn, City Council Speaker
Bill Thompson, former NYC Comptroller

Ben Smith: To bring it back to some of those companies, what Fred Wilson was talking about this morning, something a lot of tech entrepreneurs find incomprehensible- Are regulations that get in the way of, I guess Airbnb was the business he mentioned, he sort of vilified the hotel lobby, but I think actually, critically for the folks on this stage, he should probably be vilifying the hotel workers union, who is probably somebody you guys talk to more, I mean should, and I wonder in the specific case of Airbnb, should, you know should they be allowed, which is technically illegal in the city, despite being huge and despite providing a kind of affordable rental that you know you can’t get from hotel, Comptroller Liu- do you think they should be allowed to kind of dive into this market, should the government be putting up barriers?

John Liu: Should who? You’re saying…

Ben Smith: The company Airbnb- I don’t know does anybody want to jump in on this who had stronger feelings on Airbnb?

Bill de Blasio: Look I think it is not a question in that case of just access to a service I think this is a different matter when you talk about the fact that we have laws to ensure the quality of any habitation, whether it’s residential or it’s a hotel habitation, the problem with mixing the 2 in an open market is you are exposing folks who live in a building who you know it may be a rental it may be a co-op whatever it is, who live by a set of ground rules about safety and security to folks who are not part of that system and may be only passing through for a few days and that’s not what the residents of the building signed up for, and that’s the court issue.

Christine Quinn: Ben, let me just jump in here, I mean the Public Advocate [Bill de Blasio] is right, you know the issue of Airbnb isn’t really one about technology at its core, I mean we are having across this city, loss of affordable rental units to landlords who are, and this is not necessarily the folks who are on Airbnb, but this is happening simultaneously, to landlords who are converting their residential units into tourist hotels, the night of Hurricane Sandy, there was a building collapse on 8th Avenue in Chelsea, every person who was in the building that night was a tourist, all who came to NYC through one travel company, now that building wasn’t up to code, in part I think because the landlord didn’t have the same urgency because people weren’t living there, two, it was 15 or 20 units of affordable housing that were gone in Chelsea, that’s not allowed, by law you are not allowed to take rental apartments and make them hotel units, now the issue.

Ben Smith: right but the issue is, this is an incredibly popular company and service and operated globally.

Christine Quinn: Wait, wait, wait, but the issue we should take from this isn’t that laws on housing and safety get trumped by the potential of entrepreneurship , but what we do need to take from this is that we need to add tech entrepreneurs more into the conversation about government, because had Airbnb entered the conversation earlier, there might have been different relief that could be offered to them in Albany, and in fact, my office is in conversation with them now to see if there is some way to thread the needle differently for them and others, so I think what we have to take from this is not a good idea overrides fundamental laws of NY but we need to have this sector more front and center in the conversations as other stake holders have been.

Ben Smith: Mr. Carrion, I mean this isn’t, it’s not like this is a theoretical question, I mean Airbnb is all over the place, people use it all the time, I mean, can the city catch up?

Adolfo Carrión: I’m not entirely convinced it is a gigantic issue, it is an important issue though, but it speaks to something else that is happening around the world and that we have to catch up with here in NYC, my daughter is doing her Spring Semester Junior year in Barcelona, so we went to visit her, and guess what we used a service to find a room, to find an affordable room in a European city and if you’re buying hotel space in any city, any major city in the world, you know one- it’s priced very competitively, so it speaks to some larger issues, we have a very high occupancy rate or a very low vacancy rate of hotel rooms in NYC, people want to come here, I think we have to take a public policy posture, we grew to 52 million tourists last year, that industry generates 350,000 jobs, 90,000 of those jobs are in the hotel sector, that sector can continue to grow, we need to figure out ways to make NYC much more user friendly, so that people are not exploiting those opportunities to take a unit that we need for affordable housing for a NY family, and turning it into an unsafe situation and a for profit situation for them, the rules don’t even apply, obviously they are defying every rule, every law, they are making the building unsafe.

The State Of The Short-Term Rental Market in Paris

Paris Furnished Rental AssociationAs some of you may know, the City of Paris has been cracking down on owners renting their apartments on a short-term basis. According to the City of Paris, an owner cannot let his or her apartment for less than a year unless he or she has previously been granted an authorization. This authorization can only be obtained by having the property reclassified as a commercially-zoned property (a very costly, if not impossible undertaking).

Penalties for owners renting for less than a year are severe and a fine of up to 25,000 Euros ($31,240) can be imposed.

The APLM was formed in March 2010 by a group of rental professionals partly in response to the new challenges facing the short-term and vacation rental industry in Paris. We recently conducted an interview with a member of the APLM, Alexandre Mony.

Q: Can you introduce APLM to our readers?

A: “The APLM (Paris Furnished Rental Association) was created in March 2010 and is a non profit organization. It was formed by a group of professional rental agencies mainly based in Paris who felt a need to work together toward establishing common business practices and ideals for the betterment of the long and short term furnished rental industry in France and in particular in Paris.”

Q: What are the APLM’s goals?

A: “Our main goals are:

– Promoting and defending the interests of the members of the association.
– Promoting the furnished rental business to the public.
– Developing a charter of good business practices, thereby providing our members with a code of ethics and endeavor to assist our clients to the best of our abilities.”

News from the New York State Senate: The Golden Bill Was Amended On May 7, 2012

New York State Capitol in Albany, Chambers of the State Legislature

The former version of the Golden Bill

The former version of the Golden Bill created a vacation licensure structure (an owner to rent a unit for less than thirty days had to obtain a ‘vacation rental license’). This vacation rental license had to be renewed every two years for a fee of $200. For further information about the prior version of the bill, see our article dedicated to bill S4263-A.

The amended version of the Golden Bill

* The term “vacation rental unit” is replaced by the term “short-term rental unit”.

* The new version of the Golden Bill merely requires a “short-term rental unit” (a unit rented for less than thirty days) to be registered with the New York City Department of Buildings (“DOB”) for a fee of $200.  The new version of the bill does not require this registration to be renewed.

* The new version of the bill limits how many units in a residential building can be rented out for less than 30 days:
Building with 5-10 units: no more than 50% may be used as short-term rentals;
Building with 11-20 units: no more than 49% may be used as short-term rentals;
Building with 21+ units: no more than 10% may be used as short-term rentals.

* The new version of the bill provides for increased penalties:
Fines (for not registering with the DOB or for making fraudulent or misleading statements on the registration application) range from $1000 to $2000. The fines in the former version of the bill ranged from $500 to $1000.

* Rent-controlled, rent-stabilized and other subsidized housing units cannot be registered as “short-term rental units.”

What do you think of the new version of the Golden Bill? It is more likely to pass in the Senate? Are the requirements laid out in the amended version of the bill more likely to be followed by individuals renting their units for less than thirty days (registering one’s unit as a short-term rental as opposed to obtaining a ‘vacation rental license’)?

The Assembly Committee on Housing To Evaluate The Implementation Of The Vacation Rental Ban in New York City

New York City Hall
Chambers of the City Council

A public hearing will be held on April 27, 2012 regarding the implementation and impact of the Short-Term Rental Ban in New York City (“Chapter 225 of 2010”).

Where: 250 Broadway
Room 1923, 19th Floor
Assembly Hearing Room
New York, NY 10007

When:  Friday, April 27, 2012 at 11:30 AM

We encourage all of you to attend this hearing whether you would like to testify or not.  Please note that testimonies will be limited to 10 minutes per person.

Mark your calendar and make your voice heard on April 27th!

If you would like to testify, you should email your public hearing reply form as soon as possible to kergara@assembly.state.ny.us

Proposed Regulation for Short-Term Rentals in NYC: A Gleam of Hope for Tourists and Small Businesses?

Senator Golden
who sponsored the new bill

Bill S4263A-2011, sponsored by Senator Martin J. Golden, advanced to third reading in February 2012.

When a bill advances to third reading, it becomes ready for a final vote.  However, a bill advancing to third reading does not guarantee that it will be voted on: it could be laid aside, or returned to committee for further study by the bill’s sponsor or it could be placed in an inactive file by the Majority Leader.

Will the Golden Bill be voted on or remain in limbo?

Recap on Bill S4263A-2011

Bill S4263A-2011 seeks to narrow the scope of the recent Short-Term Rental Ban in New York City.

The purpose of the bill is said “to provide an exemption for a specific class of good actors” who rent residential apartments on a short-term basis.

Under this proposed legislation, owners or leaseholders of a residential unit are allowed to rent for less than 30 days provided that:

(1)  The unit is not a SRO (Single Room Occupancy)
(2)  The unit has at least one bathroom and one kitchen
(3)  The unit has smoke detectors in each room
(4)  The unit carries sufficient fire, hazard and liability insurance and
(5)  The unit has a valid vacation rental license.

Chicago implemented a unique vacation rental license system in 2011

Vacation Rental License Regulatory Framework

Other communities across the US and Europe have adopted a similar regulatory framework.  For example,  Amsterdam’s short stay accommodations have been regulated since 2009 and Chicago’s vacation rentals since January 2011.

Proposed Vacation Rental License for the City of New York

– Application Fee: $ 200 (renewable every two years).
– The license is good for one unit only.
– A license is not be required if the owner rents his unit(s) less than 15 days per year.
– Licensee must rent for at least 48 consecutive hours.
– Licensee must keep guest registration records etc.

In April 2011, we posted an article about a former version of this bill regulating vacation rentals in New York City. What version do you prefer?

A potential flaw in Bill S4263A-2011?

Please note that if the licensee operates its own website, the license registration must be posted on the website. However there appears to be no such requirement if the licensee advertises his/her property on an online rental marketplace or a classified ads website.

All would benefit from such requirement to be imposed on online rental marketplaces/classified ads websites – as it would make it harder for tourists and business travelers to be scammed (a proper license registration number would need to be posted along the advertisement) and it would further “help to eliminate the type of illegal short-term use of class A units that the 2010 law sought” (one of the bill’s stated objective).

Moreover, there is no doubt that the New York legislature might be more amenable to authorize the operation of short-term rentals in residential apartment buildings in New York City if there was a system in place ensuring that owners collect the appropriate taxes from their guests.

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What role(s), if any, should an online rental marketplace/classified ads website play in the implementation of such a system? Give us your opinion