Airbnb Proving Problematic for Local Residents of Prague

Airbnb accounted for 14.9% of overnight stays in Prague last year, up from 10.2% in 2016. There are currently between 3500 and 5000 Airbnb flats in Prague 1 alone. It’s estimated that there are 20,000 throughout the entire city. Like other parts of the ‘shared economy’, Airbnb has come under criticism for a lack of regulation. There are concerns over its effect on local rent prices, damage to the hotel industry, changes to the local culture and users failing to correctly pay tax.

Airbnb is an online marketplace that allows users to both lease and rent short-term lodgings. It simply acts as a broker and takes a commission of the fees payed by the guest to the renter. The service was widely praised by users I spoke to for it’s ease of use and reasonable prices.

Rent prices in Prague have increased by nearly 13% each year since 2013 according to HB Index. The rapid growth in the popularity of Airbnb in Prague has led to more apartments in the city being rented for short-term periods, reducing the availability of apartments to live in and partially contributing to this increase in rent prices.

Airbnb is subjected to little in regulation in Prague, although it is regulated more heavily in other European cities. Other accommodation services such as hotels and hostels are subjected to much stricter regulation. The occupancy rate of Prague’s hotels declined by 4.4% last year. A survey of members of the Association of Hotels and Restaurants by press agency ČTK news showed they hold the rise in use of Airbnb and similar services responsible. Such sites pose a serious risk to the established hotel industry. Local councillors in Prague 1 are now starting to look at ways of regulating Airbnb. The mayor of Prague 1 has said he supports the idea of limiting the sharing of homes to 60 days.

The Czech Financial Administration has gathered data on individuals who let their flats through Airbnb, in an attempt to crackdown on those who are not paying the full amount of tax that they should be. They will then seek to attain back-payments as well as imposing penalties of up to 40%. Tax avoidance is a common issue with the sharing economy; Uber agreed to share data on its drivers with the tax authorities in mid-June.

Airbnb and similar services also raise problems for people who live permanently in apartment complexes where some other residents have decided to let their flats through Airbnb. Strangers having access to such a building poses a security risk and could lead to an increased risk of crime. Although against Airbnb’s rules, it is not uncommon for guests to understate how many are staying in a flat in order to save money. This leads to overuse use of the building’s infrastructure such as plumbing, electricity and garbage receptacles. Many are also used for parties which leads to excess noise and disturbance.

Not everyone takes issue with Airbnb though. I spoke to tourists in the centre of Prague; most were staying with Airbnb and they were all happy with the platform. “It’s so easy to use” claimed Sam, a Swiss tourist staying in Prague for four days. “It takes like two minutes and I have a place to stay.” Max and Jack, two Australian men who let their apartments with Airbnb claimed they were aware of the complaints levelled at Airbnb but thought that people ought to embrace change. “We hear that it floods the market and that’s bad for rent prices but technology changes and people need to accept that” claimed Max. “Young people are very comfortable with the shared economy and very happy. I think it’s the future.”