Airbnb, short term rental regulations and the future

11 Replies

After recent research, I have noticed that a lot of states, counties or cities have already or will be pushing out regulations stating that:

  • You have to own and live in your property to be able to list only part of your property as short term rental on Airbnb or other sites, and that part you list can not be something that can be used as a long term rental such as an English or mother-in-law basement.
  • Host must also notify the neighbours and apply for a special licence and renew it every year.
  • Such regulations will take effect in Montgomery county Maryland July 2018, State of Virginia and District of Columbia are also thinking about putting similar regulations in place.
  • In this case, an absent owner or a renter who wishes to sublet won't be able to go around that since they won't even be able to get a licence required to legally list their room on short term rental websites.

What does this mean for people who are planning to start an Airbnb business? Game over? Moving to an Airbnb friendly state, which might still be regulated in the future? Or what else???

I recommend looking at the airbnb regulations like in Miami and doing whatever you can to run your business within the confines of those laws. They are strict, but very ethical. I operate my hosting business here in Tampa within these laws and I am active in our local Facebook groups. It is imperative to talk with other hosts in your area and get them to unite. A single voice will not go far against the hotel lobby.

I think regulations will vary wildly from place to place, so a custom strategy is probably necessary. There's one thing that is always good to do, though, which is HAVE AN EXIT STRATEGY. If sudden STR regs come on your city it might get bumpy anyway, but you don't have to lose your shirt.

Personally, I'm focusing on markets that have strong tourism and established STR history (pre-dating AirBNB etc), that have occupancy taxes in place already. Then, the issue has already been addressed by the state/county/city, I know what the deal is, and it's unlikely to change (or at least change dramatically) - the gov't is already getting their cut so they aren't likely to mess with a good thing.

It seems that urban areas are the riskier ones from a regulation standpoint, but from a cash-flow perspective they can be more reliable because of the variety of travelers they cater to, not just tourists.  

So, do your research for your market, know that everything is a calculated risk, and have an exit strategy.  That's my recommendation. :) 

@Renee Zhang , I wonder whether these regulations against use of personal property will be challenged in the courts.  Not surprising that MD is leading the attack in this case.

@Julie McCoy @Dan Bernstein @Jared Higginbotham

Thank you, guys. Very good advice. I know Montgomery County MD has just passed these regulations I mentioned in a hearing happened in mid-October, which was just last month. Before that, all Airbnb listings in the county were deemed illegal. Although illegal, the county had been taxing the hosts. And those listings will continue be deemed illegal until July 2018 and will continue to be taxed up until then. After the regulations take effect in July 2018, any listing not in compliance will be fined or taken off or something. 

I will continue with my research and of course comply with any regulations in my area. But I do wonder what the future will be like though, since the regulations will push a lot of people out of Airbnb business 

Renee,

I agree with the other posters that Air BnB short term rentals may be regulated but definitely not eliminated. I can guarantee you that Ocean City, MD will continue to allow them. They have to!

The regulations are being pushed by the hotel lobby. I agree with Jared that cities have put regulations in place, but always stay very active. I do think there will be court cases coming soon especially in places that will be ******** down the STR industry. There will be a common ground found very soon.

All that being said make sure to attend groups and think tanks set up to address these ordinances. The hotel lobby is huge and they are trying to go down the route of “saving long term rentals for the unfortunate” which is complete BS. Follow the money and you will see who’s funding these activities.

Best Regards,
Eric

I was going to comment but @Julie McCoy said everything I was going to say...

Those laws are trying to eliminate the investor altogether. 

The problem here is that we are a new industry segment.. or at least one that hasn't had any power until now.. which is why we are so threatening. There WILL be legal precedence set that keeps states from regulating entrepreneurship like this. It just hasn't happened yet. 

The hotel industry is powerful, but they look to me like the taxi industry did when Uber came along. They used their money/lobby clout to try and control and limit.. when what they FAILED to do is fix their problems; adjust their rates; offer more. The hotels will fail just like the taxis have. Neither will ever be gone, but they'll lose so much ground that we won't have to worry. 

Believe that the Sharing Economy is real, and this is a true "market disruption." It's waay early in the game. Just hope you're operating in a market where the laws haven't been passed quite yet. Let the rest of the markets do the squabbling.

@J-Ryan Stewart

You are absolutely right. They directly says that the regulations are to prevent developers from building an apartment building and run it like a hotel or prevent an investor from buying a bunch of single family houses just to rent them out and disturb the neighbourhood. Neighbours are also concerned that their neighbourhood traffic would be crowded by short term rental guests... It also hurt affordable housing since your mother in law basement could have been rented out to a long term tenant....  Anyway, I'm not sure how much the licence will cost and how much MORE Airbnb hosts would be taxed after the new regulations take effect. I think the goal is to make it harder for short term rental owners to run their business maybe hopefully hard enough that they will give up...

@Renee Zhang - the license in FL is under $200, with another $10 for each property after. They're not trying to kill us. I'm sure other states are/ will be along those lines. 

The irony with this"fear of disturbing the neighborhood" nonsense is that hundreds of folks are already doing STR locally and no one realizes it! Local parking & noise restrictions take care of literally all the issues neighbors have a right to care about. Easy, & those don't attempt to crush the spirit of entrepreneurship on behalf of the failing hotel industry!

I get that buying a whole apartment bldg for STR takes away valuable affordable housing, which technically damages the economy, so if any regulation sounds fair, limit the number of DOORS you can list on a single property to 3 or 4.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here