Property rights include the right to rent it out — even if others don't like it

Property rights include the right to rent it out — even if others don't like it
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There are a thousand different ways we measure cultural and technological change, whether it’s comparing a smartphone to a Commodore 64 or remembering how expensive it used to be to phone Grandma. But if you want a true snapshot of the constant tension inherent in our technological revolution, take a look at property rights.

In his “Second Treatise of Civil Government,” John Locke wrote, “The reason why men enter into society is the preservation of their property.” And much to the frustration of every Marxist reformer of the last century on, that fierce belief in preservation of property seems intrinsic to the American character.

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The history of property law is the history of fights over trespass, zoning, HOA rules, waste, squatting, eminent domain, water rights, mineral rights, environmental conservation and even the intrusion of airplanes and radio signals.

 

At the heart of the conflict is the age-old question of where one right begins and another ends. If one man’s use of his property threatens the value of mine, who prevails? And when is it permissible for the state to reduce my control over my own property?

As society has changed, so has the application of those questions. In its modern incarnation, that tension is at the heart of the conflict over vacation rental services like Airbnb.

Critics of Airbnb have a long list of reasons to explain why they wish to curb short-term rentals. In Hawaii, some complain that vacation rental properties are disruptive, use up neighborhood parking and disturb community harmony. More commonly, it’s claimed that Airbnb reduces rental properties and affordable housing in locations that draw tourists and visitors.

Various studies have tried to show that Airbnb and similar businesses have contributed to housing shortages in places like Miami, Los Angeles and New York City. Airbnb and its defenders generally take issue with these claims and the methodology behind the studies.

In fairness, blaming Airbnb for housing shortages is simplistic at best. These cities were famously expensive long before Airbnb and the internet came along. The difficulty of finding an affordable apartment in New York is such common knowledge that there’s a TV trope to explain it away.

In Hawaii, where lack of housing and sky-high real estate prices have been a regular feature of island life for years, legislators vacillate between trying to stamp out vacation rentals and trying to create revenue from them. The 2018 Hawaii legislative session has seen a raft of proposals attempting to simultaneously punish operators of unlicensed vacation rentals while collecting taxes from them — preferably by making Airbnb a tax-collecting intermediary.

At the heart of the problem, however, remains the tension between property rights and property values. The landowner feels he has the right to do what he wants with his own home, including renting it to vacationers for short periods of time. On the other hand, his neighbors and community say his exercise of property rights diminishes theirs — that the short-term rentals lower their property’s value or make it impossible for them to obtain property of their own (e.g. drive up costs and reduce the pool of available housing).

So what can be done to balance those rights?

Because balance is both the practical and functional approach to managing these interests in a working society. Tip too far in either direction and you undermine property rights until they’re meaningless or you create a society so hemmed in by radical individualism that it ceases to function. (For example, a radical approach would make it difficult to build sewage lines, fly over people’s homes, or build roads — all things that have been the subject of litigation as infringements on property rights.) However, given that such rights tend to erode over time, it makes sense to make it tougher — not easier — for the state to intrude on property rights.

A good model may be found in Arizona’s Private Property Rights Protection Act, which with certain common-sense exceptions requires the government to reimburse land owners when regulations cause a decrease in property value.

The Arizona law and others like it don’t prevent efforts to end short-term rentals, but they do force policymakers to think about the cost to the property owner when an element of the right to control one’s property is removed. Rather than allowing legislators to pursue a popular agenda, regardless of its impact on a deeply held right, it requires them to balance property rights and value.

Not only is this a reasonable approach that protects rights and the community interest, it’s the definition of responsible law-making.

Malia Hill is the policy director of the Grassroot Institute of Hawaii (@GrassrootHawaii), a public policy think tank dedicated to the principles of individual liberty, free markets and limited, accountable government