A borrower and a lender be

Danish cities have for the most part escaped the sometimes nasty fights between sharing-economy firms and the traditional companies they compete with. That’s unlikely to change in a country where consumers have long been accustomed to sharing

Sharing is nothing new. We’ve all been hearing we should do it ever since we were children.

But while altruism and courtesy have their own rewards, people – and businesses – are finding that there is money in sharing. Big money. In the US alone, sharing economy businesses are estimated to have generated $26 billion in 2013 by helping people make money on their spare rooms, their cars, or even their free time.

Denmark is no stranger to the trend. Over 8,000 people in Copenhagen alone are registered on various home-letting platforms. MinbilDinbil, a service allowing people to hire out their car, and whose name translates to ‘my car, your car’, says that since starting last year, it has 4,500 members and 1,000 cars for hire. Earnings vary, but members can make up to 5,000 kroner per month by hiring their cars out “every once and a while”, says Milad Avaz, a company spokesperson.

But whereas other cities in Europe and America have seen heated debates over the legality of such services, the discussion – and even the existence of such services – in the city has been muted.

That the person2person trend has taken root in Denmark, observers say, is not surprising.

Back in 2012, when home letting platforms first began to establish themselves in Denmark, Søren Have, of PA Consulting Group, predicted that “the trend would spread quickly here”.

Confidence commerce
At that time, there were 800 registered rental locations. Two years later, not only has the number of letters increased ten-fold, the sheer number of services has mushroomed. Need a ride? There’s a place for that. Looking for a companion at dinner? Got you covered. Musical instrument? Well, not yet, but it’s coming.

Have’s logic was that Denmark already had a history of similar arrangements, be they allotment gardens, car-sharing programmes, or community-supported agriculture, and that those transactions were made possible because Danes have, by and large, a high level of confidence in each other.

Avaz agreed that confidence plays a significant role.

“Sharing suits Danish consumer behaviour very well. Compared with other nationalities, it’s harder to get Danes to change their habits, but once they do, they are much more likely to make use of sharing services.”

In trying to win customers, MinbilDinbil makes use of testimonials and other marketing tactics, and gets a boost from the city’s focus on sustainable initiatives. It also makes sure to point out that their business model has been approved by insurance firms, which gives it a seal of approval as both a viable venture and a safe operation.

Have, again back in 2012, recommended that the national government take steps to ensure that regulations could keep up with developments in the trend.

Since then, the government has reiterated that national regulations already allow you to lend your things, and even to make money on them, without having to register as a business, provided your earnings remain under certain levels.

House rules
Avaz admits there is the “theoretical possibility” of a grey zone in which people renting out a car using person2person services risk getting dinged for operating as a firm.

“In practice, though, the line is pretty clear. The Justice Ministry has said that as long as you aren’t doing is as a business – for example by buying a car simply for the sake of hiring it out – you’re okay.”

The Housing Ministry has also made it clear that it is legal to rent out your home (or part of it), as long as you abide by a few rules of thumb, mostly having to do with how frequently you do it.

As with cars, purchasing a flat or home specifically for the purpose of letting it out using person2person services is a no-no. If you already own (and live in) the residence, the Housing Ministry’s guideline for rentals is “fewer than seven times a year.”

Copenhagen officials declined to contribute to this article, but Aarhus residents are permitted to rent out a room in their home to guests for shorter periods of time. They may also rent out their entire residence while they are on holiday.

For the greater good
Things start getting problematic, however, when you have too many people paying to stay in your home one after another.

According to the city’s guidelines, if you rent out several periods in a row within a short amount of time, then you can be considered to be operating a hotel, which requires a permit.

The fear, of course, is that allowing people to let out their own property would undermine the formal hotel industry. Firms that help people let out their properties admit that some travellers might forego formal (and pricier) lodging options, but they also argue that they benefit the tourism industry as a whole, by giving travellers affordable options.

In connection with the recent Eurovision Song Contest, for example, the effect such services had on traditional hotels was minimal, according to Horesta, the lobby group for the hospitality industry.

In its comments about the rise of person2person letting, Horesta appears to be trying to strike a balance between seeming to welcome the new tourism trend, and protecting the interests of its members.

On balance, their line is that person2person letting is a net gain for the economy, as well as for hotels themselves.

“It attracts more travellers to the city, and they, in turn, spend money in restaurants,” Katja Østergaard, the head of Horesta, said in a statement. “Once they get back home they then spread the work about Copenhagen as a good place to visit, which can result in more hotel stays.”


By Kevin McGwin

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