$ABNB and $EXPE are Facing Cities Around World Cracking Down on Short-Term Rentals.

Cities Are Cracking Down on Short-Term Rentals. Here’s How.

“Cities around the world are imposing stricter rules for short-term rentals offered as vacation properties by the likes of Airbnb and Vrbo. Short-term bookings, often defined as stays shorter than a month, reduce the supply of long-term rentals in local markets and are frequently blamed for exacerbating housing shortages, inflating rents and threatening hospitality jobs.”

“Many city governments see short-term rentals as an obstacle to affordable housing. When a large swath of the local housing supply is carved out for tourists, there’s less inventory for full-time residents. The New York City comptroller’s office found that roughly 9.2% of the rent increases imposed by landlords from 2009 to 2016 were attributable to the effect of Airbnb alone.”

“Vancouver, one of the latest cities to place limits on short-term rentals, offers an example. Last year, full-home Airbnb listings there earned an average of C$222 (US$163) per night, according to data from short-term rental watchdog Inside Airbnb, while long-term rentals brought in about C$99 per night. So it would take only 15 days of short-term rentals to exceed a full month’s rent in a long-term lease.”

“In Barcelona, which has more than 10,000 vacation-property listings registered with the city, rents have soared 68% in the last decade, in part because high interest rates are pushing more would-be homeowners into the rental market and also because of reduced rental inventory.”

What kinds of regulations are cities imposing?

  • Principal residence requirement:

  • Vancouver, Canada:

    • Requires short-term rentals to be listed only for primary residences, aiming to preserve housing availability.
  • Santa Monica, California:

    • Permits “home shares” where homeowners must reside during rentals, distinguishing them from vacation rentals to maintain residential integrity.
  • Maximum number of listings:

  • Seattle, Washington:

    • Allows owners to list their primary residence and one additional unit in a secondary investment property for short-term rentals, balancing economic opportunities with housing concerns.
  • Nights per year maximum:

  • London, Vienna, San Francisco, Washington, D.C.:

    • Impose a cap of 90 nights per year on short-term rentals to manage tourist impact and maintain residential stability.
  • Paris, France:

    • Sets a maximum of 120 nights per year for short-term rentals to regulate the tourism impact on housing availability.
  • Consecutive nights minimum:

  • Honolulu, Hawaii:

    • Requires a minimum stay of 90 consecutive days for short-term rentals, discouraging short-term occupancy and promoting longer-term residency.
  • Singapore:

    • Implements a minimum booking period of half a year (approximately 180 days) for short-term rentals to manage housing availability and community impact.
  • “Whitelist” neighborhoods:

  • Montreal, Canada:

    • Enforces varied regulations across different neighborhoods; some completely ban short-term rentals while others restrict them to principal residences or allow them without such restrictions, aiming to balance economic benefits with local community concerns.

Are the regulations working?

The effectiveness of short-term rental regulations often hinges on robust enforcement mechanisms and data-sharing agreements between cities and booking platforms.

For instance, New York City's stringent host registration process in September 2023 led to a significant reduction in Airbnb listings by 89%, emphasizing the impact of enforcement on compliance.

Meanwhile, the hotel industry in cities like New York has seen increased occupancy and higher rates as tourists seek alternatives due to stricter regulations.

Conversely, Berlin initially struggled to enforce a ban on short-term rentals in 2016, facing challenges from defiant hosts and eventually relaxing restrictions to allow primary residences to be rented indefinitely and second homes for up to 90 days annually.

How are cities overcoming the difficulty with enforcing regulations?

“Denmark’s policy allows hosts to rent out their entire homes for 30 nights per year as a baseline. However, the cap rises to 70 nights if the rental is booked through any platform that shares booking logs and host revenue data with the government. Officials say it’s a win for everyone — platforms get more bookings, hosts earn more income, and the government knows how much tax to charge hosts.”

“Japan’s data-sharing agreement with rental platforms allows the country to enforce its 180-night cap. And earlier this year, the European Union presented a blanket policy that will require booking platforms to share host activity data with all member states starting in 2026.”

What do the platforms say?

The landscape of short-term rental regulation is evolving with platforms like Airbnb increasingly embracing cooperation with cities to manage the impact of their services.

Airbnb, through its updated City Portal, facilitates data-sharing and enforcement of local laws, signaling a proactive stance towards addressing housing affordability concerns.

In contrast, Vrbo, TripAdvisor, and Booking.com have not disclosed their approaches to working with municipalities, highlighting potential differences in transparency and engagement.

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