Sharing economy proving controversial in Calgary and beyond
Share and share alike: for better or worse, it might be Calgary’s new unofficial slogan.
Whether it’s a home, room, or even a parking spot, Calgarians are proving to be big believers in divvying up their assets, with the controversial Uber car-sharing app and several other share-based service-providers gaining footholds in the local market.
Yet despite offering revenue-generating opportunities, services like AirBnB and Uber, also present some risks to providers, warn legal experts.
“I would definitely make sure that if I wanted to make money via those sites that I have proper insurance as fully disclosed to the insurance company,” said Calgary lawyer Jeff Kahane, who specializes in real estate and commercial litigation.
Kahane says that while he hasn’t seen the contracts used by either company and it is in their best interests to fully back their providers, the possibility remains that drivers and hosts could find themselves in hot water should something go wrong.
“I imagine both companies refer their hosts to insurance companies that will cover them,” he said. “Without insurance, then the host may be personally liable for problems.”
In real estate, AirBnB is helping homeowners “monetize their extra space” by renting it out via the company’s website. Founded in 2008, the San Francisco-based service is in more than 34,000 cities worldwide, providing rental options that range from single rooms to entire homes.
AirBnB received some unwanted publicity earlier this year when a Calgary couple saw their home seriously damaged after renting it out through the company’s website. The company did cover the repair costs and offered the homeowners a place to stay while their home was being renovated.
Prompted in part by the incident, AirBnB recently made changed to its policies to provide Canadian hosts with access of up to $1 million in liability coverage.
“Should something happen, the program will provide compensation if a guest is injured at a property listed on Airbnb and brings a claim against the host,” said the company in a release. “Moreover, the program will provide coverage in the case of accidental damage to the host’s room or home.”
Despite the incident, a quick search of the Airbnb website reveals more than 300 Calgarians who are still willing to share their extra space.
Last month, Ontario politician Tim Hudak introduced a bill that would provide provincewide guidelines for the “sharing economy,” including AirBnB. Hudak’s bill would see the time homeowners could rent their home on sites such as AirBnB without a licence limited to 120 days a year.
“We should have a provincewide framework on these areas to help set the rules of the game, encourage investment, but at the heart of it to give people an opportunity to earn more money from assets they already own,” said Hudak.
Similar legislation has also been proposed in Quebec, where AirBnB operators would be forced to respect the same bylaws and obtain the same government authorization as hotel and bed-and-breakfast operators in the province.
Violators would face fines between $500 and $100,000, with the amount rising to more than $200,000, while users of the site would be charged the same provincial hospitality taxes paid in hotels.
The legislation follows complaints made by the province’s hotel industry, which claims the home-sharing site allows for an unfair advantage.
AirBnB recently announced its worldwide bookings are expected to reach more than 80 million in 2015.
San Francisco, the city where AirBnB was founded, recently saw proposed legislation that would see the number of days homeowners could list share their homes on the site limited to just 75 days a year defeated in a narrow vote.
The proposition would have also allowed city residents to sue each other for illegal Airbnb rentals.
Controversy surrounding the bill saw protesters occupying AirBnB’s San Francisco headquarters claiming the site has contributed to a shortage of affordable housing, while opponents of the bill claimed the site increases affordability.
According to real estate data company RealFacts, the average rent for a studio apartment in San Francisco sat at $2,828 through the first eight months of 2015, while the average home price topped $1 million.
In Quebec, Hudak’s bill also calls for increased regulation for Uber, a sentiment echoed by Calgary Mayor Naheed Nenshi, who has gone on record with a call for tougher laws for the ride-sharing app.
“I strongly suggest that you don’t drive for Uber and that you don’t use Uber until the insurance and regulatory issues are sorted out. If you drive for Uber, you should be aware that you are breaking the law,” he said.
Earlier this week, council approved a regulatory framework that would allow for a hybrid “open/controlled entry system” that levels the playing field for driver share programs such as Uber and the taxi and limousine industry.
Under the new system, private for-hire vehicles would be able operate if there was appropriate vehicle insurance as required by the province and drivers met specified training, security and licencing requirements.
At a recent funding announcement, Alberta Transportation Minister Brian Mason expressed a need for a level playing field for all involved.
“How do we apply (regulations) in a fair and level way so that all drivers for hire operate on a level playing field? These are difficult questions to resolve,” he said.
Currently, Uber drivers in Calgary face possible fines of up to $4,500, with the City launching a “covert operation” to catch drivers in the act.
The City is also moving ahead with an application for a temporary injunction to halt private for-hire vehicle services until safety, insurance and regulatory requirements are met. A hearing is scheduled in Court of Queen’s Bench Nov. 20.
While Kahane says things he’s fielded no calls lately regarding AirBnB and Uber, the increasing demand for similar sites will likely make increased legislation a necessity.
“These sites are growing because they meet a need. It is like arbitraging,” he said. “There is a gap in the market and people are making the most of it as hosts and as using the systems.
“Legislation is a good idea so that there are set rules and minimum requirements. Also, there should be penalties for those who do not meet those minimum standards.”