Innovation, Startups and Venture Capital in Iceland

The Memo: The Airbnb bill – Good or Bad?

Another week, another Memo.

Yesterday, Iceland’s former Prime Minister, Davíð Oddsson, announced his candidacy for the presidency. He was also the Mayor of Reykjavik and Chair of the Central Bank. Nothing much to add, except my favorite pundit theory. The theory says that Davíð is running for president to sabotage sitting president Ólafur to get revenge.

This week, we look at changes in regulation due to tech.

Viðskiptablaðið ran a story last week on a bill known as the Airbnb bill. The bill means to simplify the process of legally renting out an apartment or room. The current system requires landlords to apply for several permits from several institutions. Compared to the ease of creating an Airbnb account, that hassle is too much. The hassle drives people to rent out their rooms illegally (not paying tax, not adhering to safety rules etc.). When the ministry announced the bill in 2013, it promised to simplify the process.

The framing of the VB article bothers me. The heading they chose is “Minister’s bill limits homestay.” While that may in some cases be true, I don’t think it’s a good representation of the bill.

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The biggest change with the bill is a simplified process of legally renting out a room or an apartment. The bill’s commentary says:

If an individual wants to offer homestay […] he needs to register with the local sheriff (is. Sýslumaður). This does not entail a formal review and application process, like for other forms of lodging. It is expected that registration will be electronic …

As I understand it, once Alþingi passes the bill, people will be able to go online, fill out a form, and voila. They’re legal.

The bill limits access to the simple registration form. What VB is referring to, is that if you want to qualify for the online registration, you can only rent out your property for 90 days per year.

If you rent the property more than 90 days, you’ll need to get the permits and apply for the license. Which, in my opinion, is reasonable.

While the 90 days number itself can be up for debate, having a limit is sensible. Once you’ve rented out your property for more than 90 days the government sees the operation as a business.

I quite like the bill, and think it’s fair that the speedy, online registration is only offered to small-time renters. Based on what I read in the commentary, the 90 day window is quite big, compared to similar laws elsewhere. This decisive move towards simple, self-service to regulate new ways of doing business are a good initiative.

Ship it!

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