Online car park broker Parkhound is giving Australian councils plenty to think about when it comes to trying to regulate the digital economy and their own backyards.

As residents increasingly go online to rent out their driveways, apartment block parking spaces or even onstreet parking by the day, week, month or year, Parkhound co-founder Rob Crocitti says he’s had a mixed reception from various town halls to his venture.

For decades local governments have turned a tidy buck through their regulation of parking through fees and fines. But what was once an easy stream of revenue could conceivably take a hit if a flood of competing ‘crowdsourced’ spaces hit a previously closed and drive down prices, transforming councils from price makers to price takers.

Having started trading in March this year, Parkhound turns a buck by offering free listings, and then extracting a 10 per cent booking fee when a buyer pays for a parking spot with a credit card or PayPal through the app.

Some councils – like City of Melbourne and City of Sydney – are relaxed about residents renting out their driveways but will not allow them to sell or transfer their resident parking permits. But other councils, such as Brisbane City and the City of Perth, are vociferous opponents of Parkhound.

A Melbourne City Council spokesperson said that leasing private car parks and spaces was “not regulated by Council and is a matter for the parties” but added that it would clamp down hard on people abusing the council’s residents’ permit system.

“We have clear instructions on what is required to apply for a permit. This includes proof of identification and residency,” the spokesperson said.

“If we found a permit had been issued based on incorrect information or was being provided to someone else for a fee, it would be cancelled and the matter reported to police.”

City of Sydney Council said residents were free to lease parking spaces on their property using any online matching or classified service they wanted but underlined that residents’ permits could not be transferred,  in order to ensure people could park near their homes.

The council had some concerns around Parkhound users parking in some apartment blocks.

“Planning conditions and strata by-laws prevent spaces in some apartment buildings from being leased out to non-residents. This ensures private buildings cannot be used as defacto public car parks and maintains basement security for residents. These rules apply equally to renters and owner-occupiers,” the council spokesperson said.

Mr Crocitti said that councils appeared to have different rules about resident parking permits, especially in regards to visitors parking permits issued to residents, and they did not make these rules clear. He believed such parking permits were transferable in some council areas.

Part of the challenge for Parkhound is that operates in a bit of a legislative vacuum, largely because its existence was not been foreseen by the law. This echoes the experiences of similar, burgeoning peer-to-peer websites in the sharing economy, such as Airbnb and Uber.

The so-called ‘sharing economy’ has already stirred up controversy because of concerns around safety, lack of regulation and tax evasion, as well as igniting industry passions.

A car lift-sharing service Uber has been declared illegal in NSW.  So far, only a handful of NSW motorists offering lifts on Uber have been issued penalty notices of $2500 and threatened with legal action. And while taxi drivers, who are slugged with hefty license fees, might hate the idea of networked private car sharing, that hasn’t stopped them embracing Uber for the ‘for hire’ market.

Parkhound, in contrast, is still yet to be directly challenged by regulators in states or territories; although Perth City Council wrote to the company earlier this year telling them they had breached the WA Planning & Development Act 1995 and could be liable for penalties applicable to corporations of up to $1 million.

City of Perth Council has defended its actions and maintained it is illegal for people to rent out their driveways, transfer or sell their resident’s parking permits or let a car space attached to an apartment block.

Perth’s CBD council warned against what it said was ‘the unauthorised practice of on-selling residential parking to third-party customers’.

“Any parking arrangements on private property in the City of Perth requires planning approval.  The leasing of the bays by a third party within a residential property would not be supported.  Similarly leasing of car bays on a non-residential properties are generally not supported. In either case it is illegal to lease a bay without the City’s approval,” the spokesperson said.

The council spokesman said registered parking providers had to pay a state government annual levy of more than $800 per year for each bay they provided and this affected parking charges. Operators avoiding this charge were unfairly advantaged.

Mr Crocitti labelled Perth  City Council as being ‘hypercritically upset’.

“They’re trying to say that someone renting their driveway is, in effect, a commercial car park without a permit,” he said.

“Publicly they have said that we shouldn’t exist but privately there has been no official move to do anything. They’ve never gone through with it and they’ve never contacted any of our customers.

“The legal advice that we’ve been provided is that the law is not up-to-date and doesn’t legislate for or against our service. Council planning laws are not really written for the scenario that we’re dealing with.”

He said that some councils had complained about Parkhound listings and the company had removed these listings.

Mr Crocitti said that some Melbourne and Sydney councillors had been working with the company to find ways of improving parking and congestion.

“Melbourne and Sydney (councils) look at us as a way to reduce congestion because quite a lot of congestion is caused by people circling around looking for parking – up to 30 per cent in some studies,” Mr Crocitti said.

And as urban pressures increase, so too do the drivers for better capacity utilisation.

“What we’re looking for from councils is public support. We’re actually helping them do their job by connecting the people that have spare (parking) space with the people that need to rent a space for a day or a year. We’re increasing the efficiency of the use of that space, helping congestion and helping people earn an extra income.”

While some of their elected representatives may be on board – Mr Crocitti has promised some ‘exciting announcements in collaboration with the councils’ – both councils have officially denied any relationship or joint projects with Parkhound.