A years-long effort to regulate short-term home rentals across the U.S. is likely to intensify in 2019 after crackdowns in popular tourist destinations such as Washington, D.C., and New York City.
Along with San Francisco, Chicago and New Orleans, the cities have also implemented measures to limit the types of property that can be rented through services such as Airbnb and HomeAway, restrict the duration of stays and require residents who use the platforms to disclose rental information to local governments. Supporters of the bills — including the lodging industry and local lawmakers hearing complaints from voters about disruptions in their apartment buildings and neighborhoods — charge that some home-owners are essentially operating illegal hotels.
The quick repeal in October of a San Diego measure banning the use of second homes as short-term rental properties, passed just months before, illustrates both the bitterness and the high stakes in the battle between local governments, the hotel lobby and businesses over how to regulate the ballooning industry.
“This is one of those rare issues that didn’t just pop up in one or two coastal, progressive cities,” said Troy Flanagan, vice president of government affairs at the American Hotel & Lodging Association, a group that is advocating for more restrictive statutes. “This is something that’s on the front-burner from Maine to Honolulu.”
Even areas that have already implemented an initial regulatory framework may seek next year to stiffen those laws. “There’s still a lot of push out there to restrict this, driven of course by the hotel industry,” Jacob Huebert, senior attorney at the Goldwater Institute, said in a recent interview.
The latest skirmish in D.C. is over a bill the City Council passed in November that would, among other things, prohibit owners from renting secondary properties for fewer than 30 days. At press time, Mayor Muriel Bowser had yet to sign the measure into law.
Opponents, meanwhile, are already considering a ballot initiative to try to overturn it, a person familiar with the effort told the Washington Examiner. The bill and others like it have spurred concerns that the hotel industry will seek to duplicate its recent victories on a broader scale.
Hoteliers now know “that a big money campaign can deceive people into regulating their competition away, and I would expect to see them try to replicate that,” said Michael Hayes, senior manager of government affairs at the Consumer Technology Association. The trade group represents more than 2,000 companies including Airbnb, which didn’t respond to an interview request for this article.
The various measures differ slightly, and some metropolitan areas like New York City have pursued more prohibitive regulations on Airbnb and its competitors. Baltimore, Los Angeles and downtown Las Vegas are trying to advance their own legislation, and states like Texas may introduce measures during next year’s legislative sessions.
Enforcement efforts have been stepped up, too. Officers last month issued 27 citations against a Manhattan condominium in what Mayor Bill de Blasio said was the largest raid of its kind. And San Francisco recently charged a couple $2.25 million for turning 14 apartments buildings into short-term rentals.
Other sharing-economy upstarts faced less of a struggle: It was easier for cities to retrofit the existing legal framework for taxis to include Uber and Lyft, but housing laws are more complex and aren’t equipped to handle the growth of mixed-use real estate, says Arun Sundararajan, a professor at New York University’s Stern School of Business.
“Airbnb was always far more sophisticated in thinking about regulatory changes than their counterparts in other economy-sharing sectors,” he said in a recent interview. “There was a realization very early on within Airbnb that the path to regulatory change” was not only complex but would be central to the business model.
Given Airbnb’s size — it operates in over 81,000 cities — any new regulations are unlikely to significantly impede operations. The company’s earnings rose above $1 billion in the third quarter.
That hasn’t stopped it from working aggressively to block any restrictions. It’s pursuing legal action in places like New York City and Boston to stop the implementation of laws requiring hosts to disclose information to local governments.
“Whether it’s appealing it to the ballot or filing litigation, it’s just one of the tools that Airbnb has used in multiple cities to try to change the rules when they don’t get what they want,” Flanagan said.
Lawmakers that push legislation say they’re responding to constituents who complain about the growing number of apartments and houses that owners use strictly for short-term rentals, which can hurt property values. Opponents of the industry also charge that it’s exacerbating housing shortages in cities like Washington.
Airbnb’s supporters, on the other hand, argue the opportunity to earn extra income has benefited groups like the elderly who are financially strapped. On average, Americans over the age of 65 earn $8,350 per year in additional income for a single listing, according to a 2016 study from the company.
“This supplemental income can be used to help make mortgage payments or fund essential maintenance and improvements,” Airbnb said in its report.
