The Easiest Way to Regulate airbnb ?

Editor’s Note

For the past 3 years I have been tracking the growth of airbnb and the attempts by various cities to appropriately regulate it. My thinking has evolved over time. The recent political activist tactics used by airbnb to defeat Proposition F in San Francisco caused me to re-think my assumptions.

I recommend approach below because I have watched Austin, TX, Portland, OR,  and San Francisco (among other cities) adopt reasonable but more complex regulations only to have them fail due to reluctance of airbnb hosts to become licensed, lack of any meaningful support from airbnb, and the difficulty of enforcement.

So here is my current thinking on how to most effectively control airbnb.

  • Adopt an ordinance to legalize host-resident short-term rentals at a low cost for hosts offering 1 or 2 “bedrooms in a home” that is their primary residence. Be clear the host must reside in the house and/or unit during the guest’s stay – hosting and supervising the guest and the property.

Rationale:  Host-resident short-term rentals are really mini-B&Bs and do not create horror stories, irritaneighbors or deplete housing stock. They do help hosts pay their mortgage or rent and stay in their homes. These rentals frequently offer a true bargain to travelers. Permitting these will satisfy the needs of many airbnb hosts and keep the initiative from being characterized as “anti-airbnb”.

If a host owns a 2- or 3-flat building, the guest must reside in the same unit that the host resides. Otherwise, you will be converting month-to-month rental units into short-term rentals. This also applies to accessory dwelling units (ADUs) that could otherwise be rented month-to-month.

  • Limit the number of listings a host can have to one per listing service.

Rationale:  Since the property listed must be the host’s primary residence and a person can only have one primary residence, this is really a given. However, it make clear that those who list multiple properties are out of compliance.

  • Require the host’s permit number to appear in all online listings.

Rationale: This seemingly innocuous requirement is critical because it provides a simple way to determine legal and illegal short-term rentals.  Any short-term rental listing without a permit number is by definition illegal.

  • Fine airbnb (or any other listing service) $100 to $500 per day for any listing that does not display a permit number. And then take the listing service to court to collect.

Rationale: While a $100 per day fine might seem small, it would essentially make the listing unprofitable for airbnb who normally receives about 12% of the value of the listing. While it is possible to also fine airbnb hosts, this can be difficult to enforce and will increase airbnb host-resistance. Fining the listing service and taking them to court to collect is probably the simplest and most cost-effective  approach.

  • Refer to all host-absent short-term rentals as “illegal vacation rentals” or “illegal hotels”

Ratinale: For many years host-absent vacation rentals have been heavily regulated in resort areas to maintain the residential nature of resort towns. The concept of “urban vacation rentals” is what’s new.  It is airbnb host-absent rentals that generate airbnb horror stories, irritate neighbors and deplete long-term rental housing stock. airbnb host-absent rentals do not keep people in their homes or help support the “middle class”. They exist because if the location is right the property owner can make more money renting short-term than month-to-month. 

To some degree this is a “divide and conquer” strategy.  Divide the airbnb host-resident “private room” rental hosts (who are permitted) from the airbnb host-absent “entire place” rental hosts (who are prohibited). Also, by directing fines primarily to the listing service rather than the hosts, local citizens cannot complain they are being treated unfairly.

Will this approach work in all cases? Only time will tell. But is may work better than the first round of regulatory initiatives.