The rise of online short-term vacation rental sites like Airbnb and VRBO has been a boon to property owners looking for easy ways to turn their rental properties into cash cows. But like many new trends that take off and spread like wildfire, the Airbnb boom is now facing a widespread backlash as cities across the U.S. and around the world are cracking down on short-term rentals, leaving many owners and real estate investors with a lot of questions about where to go from here.
If you’re a property owner who’s worried about the prospects of your short-term rental, here’s a brief overview of the current landscape:
In 2015, Santa Monica instituted some tough restrictions on short-term rentals, which require hosts to register for a business license, collect the city’s 14 percent hotel tax, and mandates that they stay on the property during the renter’s visit. Last year, New York Governor Andrew Cuomo signed a bill which makes it illegal to advertise unoccupied apartments on sites like Airbnb for any stay lasting less than 30 days. In March of this year, San Diego City Attorney Mara Elliott put out a memo declaring that short-term rentals are not permitted in residential or commercial areas within the city. And restrictions and prohibitions like this are expected to continue popping up in cities throughout the country.
Why are cities lashing out?
The reasons for the backlash are varied. In Santa Monica, mayor Kevin McKeown cited adverse effects on local housing markets and quality of life in short-term rental heavy neighborhoods as the impetus for the ban. In many cases (New York City, for instance), the restrictions are due in large part to heavy lobbying from the hotel industry, who have seen services like Airbnb as a threat since their inception.
What can property owners do about it?
The answer to this questions depends on the specific laws in your area. For example, in Santa Monica, the laws are so restrictive that they have effectively eliminated 80 percent of the city’s short-term rentals. And they now have a full-time task force dedicated to enforcing the new restrictions. Last year, they made their first conviction, fining a local Airbnb host $3,500 for listing his property on a vacation rental site. He was also given a sentence of two years’ probation, and of course prohibited from further short-term rental activity. In Santa Monica, if short-term renting is a major part of your income, your only option—for the time being anyway—might be to go ahead and follow their new rules (i.e. apply for a business license, pay the hotel tax to the city, and make it a home-share, rather than a strict vacation rental). However, if your particular circumstances make sticking to these rules untenable, you might be better off seeking outside help.
Where to seek help
Given the wide variety of different laws regarding short-term rentals, it’s understandable if you’re left scratching your head about how to proceed. That’s why it could be extremely helpful to look into a property management company to help oversee your rental property. They will have up-to-the-minute knowledge of the legal intricacies regarding short-term rentals in your area, and they will be able to offer advice on any legal loopholes you might be able to take advantage of in order to keep making money on your property, even as the landscape continues to change and evolve.
Since many of these bans and restrictions are currently being challenged in court, it is still unclear how things will shake out regarding the legalities of short-term vacation rentals in U.S. cities. But in the meantime, you might not want to risk the fines and legal fees. If you’re a short-term rental property owner, and you want to be absolutely sure about how to proceed, contact a professional property manager today.