Current Developments In The Hospitality Industry & The Risks And Affects Of Daily House Rental Services

Current Developments In The Hospitality Industry & The Risks And Affects Of Daily House Rental Services

Introduction

Daily house lease and rental services, which have become widespread in the recent years and are getting more popular each day all over the world, especially with the suitable accommodation opportunities, may create some serious legal issues in exchange for the convenience it offers. It is crucial to take into account the disadvantages and risks that these services bring along, for the evaluations to become more accurate and clear, since they cause legal issues quite often –especially in certain jurisdictions not well-regulated.

Author's Note

Daily houses rental services are usually managed though online smart phone applications or websites. Houses and apartments are listed for rent in exchange for a daily or weekly fee, when the landlord or main tenant is not staying there personally– or even when the person is still there if there is a separate empty room - just like a hotel room. Although it may seem as a practical and rational option at first glance, these services often times cause forfeiture of rights by the user as many legal and basic risks are disregarded. This article will address the effects of daily house and room rental services' on the future of the lodging industry and the investments drawn into this market, as well as the legal issues that may arise during service delivery.

1) TAXATION

National taxes are one of the most important matters which should be taken into consideration by the homeowners who generate an income by using daily house or room rental services through renting their houses/rooms. It should be noted that rental tax, income tax and value-added tax are imposed for those citizens who earn an income through the usage of these services.

It is important to work with a financial consultant in order to determine the tax liabilities since these liabilities and obligations may differ for each individual depending on the jurisdiction and personal circumstances.

Apart from this, provisions and permissions on private lease contracts may impose restrictions on the rental process. If one is a tenant renting the property himself, the person should then make sure that the landlord does allow such daily rental services. Most of the time, this should be clear in the main rental contract.

In addition, if there is a mortgage (or any form of debt) on the real estate, it should be ensured that there are no restrictions on subleasing or home ownership. In a case where there is a debt left on the property, penalties might come into question. (airbnb.com)

2) CLEANING AND HYGENE

Considering the recent global impact of the novel Corona Virus (COVID-19), daily house rental services pose a greater amount of risk at these times, since one basically has to abide by another person's standards of cleanliness and hygiene.

Notwithstanding the importance of the hygiene factor in the lodging industry, it cannot ever be compared the standards of daily house rental services, especially during the time of a pandemic. Compared to hotels that provide cleaning services via professional service providers that sterilize each room every day within the parameters according to health inspections, the hygiene service that an individual may offer at their own property is quite limited. The guest, who rents a room or a house, subjects one's self to the standards of a foreign person in terms of health, safety and cleanliness. Of course, during these times, it comes with the increased risk of the spread of COVID-19 and health problems which may lead to legal disputes such as whether the amount spent for healthcare services accordingly can be claimed from the landlord. Compared to the professional cleaning services provided in hotels, it is not possible to measure the standard and quality of the service given in individual's houses. This being the case, uncertainty in terms of hygiene standards and the risk of developing healthcare problems increase.

3) SECURITY, CRIMINAL AND CIVIL LIABILITIES

Perhaps one of the most fatal handicaps of daily home rental services is that these services usually cannot provide the assurances offered by hotels in the face of security deficits that result in forfeitures. Facilities such as security, reception services, monitoring and alarm systems that hotels can offer are of course not available in many homes.

This situation may cause important legal problems. For example, in the event of a burglary, it is highly important but also difficult to prove whether the landlord has created a security deficit or risk. It is another question of proof whether the security deficit was existing or whether actions of the guest contributed to the situation.  Many houses do not even have alarm systems, and this creates a serious security gap for the daily guest.

Camera systems and security measures such as guards and other personnel at hotels prevent these types of risks that may arise in hotels. When burglary incidents exceptionally happen in hotels, in addition to insurance companies that take care of the matter, hotels also compensate their customers' losses experienced as a result of insufficient measures. Especially in jurisdictions such as the United States, hotels have a very high threshold of liability; they owe to their guests the highest level of the duty of care.

In emergency situations such as injuries occurring at daily rental services, lawsuits under tort liability may generate quite often. Since many measures are generally taken to prevent these types of issues and accidents in hotels, the potential risk factor and the danger is eliminated to a great degree. Furthermore, even when they occur, the hotels' insurance usually easily covers the damages and the parties never get involved in a lawsuit. As aforementioned, hotels are under great obligations to avoid risky situations for their guest according to the standard of care they are expected to provide as a result of their expertise in the sector. Therefore, importance is already attributed to security measures to be taken in creating convenient designs that provide the utmost safety for guests. Accordingly, while these measures prevent many potential slip and fall cases from occurring, when such scenarios do happen occasionally, the hotel companies compensate their customers for their losses at least in the financial sense, by paying damages.

Houses, on the other hand, have high risk factors when it comes to broken or not functioning furniture, exposed cables, ladders and handrails that are not secured sufficiently etc. that may pose great danger to guests. These matters and many other seemingly unthinkable scenarios may cause serious health problems or injuries and accidents for the guests while causing the Landlord to face serious tort liability.

Besides the aforementioned potentially dangerous but very common house interior design factors which may cause tort liability, the guests should also take into consideration whether there house they are renting has a fire insurance in place at the building.

Relating to such and many other situations, perhaps the most problematic situation in daily house rental services is that the contact number/ customer service that is listed is often insufficient. Additionally, in case of a situation that requires repairs at the house or in a case where the house is not the same as specified in the add (or dramatically different), problems regarding refund usually occupy guests.

4) THE RIGHT TO PRIVACY

Another legal issue that deserves some discussion in an article like this is how daily house rental services can lead to violations of the right to privacy. In a case where imagery data is recorded through surveillance devices in the house may cause well founded legal complaints. However, there is currently no settled specific law that regulates the claims about such recordings when guests realize the existence of such devices and ask for the recordings to be deleted, since the house is someone else's private property and the landlords almost always resort to safety reasons. On the other hand, the guest may never even realize being filmed in the property at all.

Insurance and warranty are other important risk factors that may cause problems for the guests since these issues are not regulated through the daily house rental sites and apps. Daily house rental platforms provide basic insurances such as host guarantee and protection insurance. However, these insurances do not cover rent insurance or liability insurance.

If the guest leaves the property damaged, it is often difficult to prove whether the damage was caused by improper use by the guest or whether it was existent before the guest arrived as the previous condition of the house is generally not listed for proof in the records. In addition, in cases where the property was already damaged or the damage increased, if there is no deposit paid by the guest, the situation could easily escalate to a scenario where the landlord sues the guest for reimbursement and these lead to long and often tiring and even unwarranted legal processes.

In many legal relationships where the legal responsibility of the parties are not clearly and specifically determined by a contract, the issues of compensation lead to legal disputes. This issue arises especially in long-term property leases that exceed a few days.

In addition, companies that offer daily house rental services clearly state that they have no control over the behavior of their hosts, unlike hotel staff, and that they reject any and all responsibilities, thus leaving all the risk on the customer.

Even though these services have become so popular lately, the legal regulation of daily home rental services is not fully adequate yet. Most of the time, the relationship between the parties is subject to contractual provisions in the form of general transaction conditions (shrink-wrap contract terms) that are often legally problematic, as they are more protective of the company performing the service) and are agreed to by the guest by clicking an "I accept" button. Therefore, legal problems frequently arise where the terms are often created by the service provider and are heavily one sided.

In daily room or house rental services where inspection and regulation cannot be fully achieved, as mentioned before, there myriad risks spread across many different areas that the guests should always look out for, based on the standards of the landlord.

In such a system, it is quite expected for risks to take over the place of stability. Although there are situations that can be prevented by regulations and the development of warranty obligations for companies that offer room or house rental services, it is unlikely that the system entrusted to individuals will develop as needed in the near future.

Conclusion:

Daily house rental service applications and sites bring along many legal problems, especially in the context of the issues and examples mentioned in this article. Although daily rental services are preferred because of the affordable prices they provide in comparison to hotels, the risks are relatively high in these services, which we believe should play a key role in a cost benefit analysis by the customer. In fact, in comparison to the daily house rental services, an essential aspect that should not be ignored when choosing, is that hotels bring along many legal guarantees that make up for their higher costs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should always be sought about the specific circumstances