Why Short-Term Rental Regulations Aren’t Necessarily a Bad Thing

Posted on September 27, 2018

If you look at industry news, you see it almost every day: Municipalities are looking into -or enacting – restrictions and regulation on short-term rentals (STRs) across the country.

New Orleans, San Diego, New York and Boston are just a few of the many cities and towns that are battling over short-term rental issues. The issues that are at the forefront include:

  • Collection of taxes on short-term rentals
  • Impact on neighborhoods
  • Safety standards.

There’s a lot of emotion on both sides, pro and con. On one hand stories about short-term rentals like this one from a small city in New Hampshire draw attention:

“There’s been profanity, outdoor urination, fireworks, a variety of mechanical noises, air horns, car horns well into the evening, music, use of karaoke machines, which of course we all love at 2 a.m.,” [a neighbor] said. “Burning embers have been dumped over the fence into the next lot’s yard. There’s been huge accumulations of trash. Young tenants go onto other properties.”

Then, stories like this one from Massachusetts where a STR bill is on hold, draws attention for another reason: 

“With the fate of an Airbnb taxation bill still in limbo, new data from the online home and apartment rental website reveals that Massachusetts may have left at least $2.28 million in tax revenue on the table this summer season — from rentals on the Cape and Islands alone.”

The proposals for STR regulations range from requiring a license to run a STR to a limit to how many nights per year a home can be rented short-term to outright bans in some districts. Here are a few examples of legislation affecting STRs that have are being considered or have passed:

  • A study commissioned by the New Orleans City Council recommends a ban of non-owner-occupied short-term rentals in all non-commercial districts.
  • A referendum petition received enou
    gh signatures to force a public vote on whether to overturn a San Diego bill that effectively banned second-home vacation rentals.
  • In Honolulu the mayor has proposed a bill that would ban non-owner transient vacation units in residential zones.
STR bill

Some Short-term Rental Regulation Isn’t Bad

While you may think the short-term rental industry opposes all regulation of STRs, that’s not the case. Even industry leaders recognize that some regulation is necessary. Philip Minardi, Head of Public Affairs for Expedia Group wrote in a recent piece in VRM Intel, an industry publication:

“To be clear, most of the vacation rental industry does not oppose regulations. Across the country, managers support reasonable regulations that protect property rights while addressing community concerns.”

At GoNitely we agree. We understand that in some cases restrictions are necessary and we support them because our belief is that the priority should be on the long-term residents of an area.

An example would be New York City. There, officials are looking to significantly restrict Airbnb and other short-term rentals that they say have aggravated an existing affordable housing crisis because short-term rentals can be more profitable for homeowners than long-term leases.

But New York is in a much different situation than the one GoNitely sought to address. The company was created after CEO Markus Scharnowski and his wife Judith were traveling the world on their honeymoon. They noticed there were dozens of empty, unused properties in prime locations in a variety of different countries; places where there clearly was no housing crisis.

In those areas, houses sat empty because the homeowner simply didn’t want to be bothered with the hassle of managing a short-term rental. GoNitely’s goal was to take the hassle out of STRs everywhere.

GoNitely wants to make money for homeowners, but only if it adds value to the community. GoNitely does that in several ways: When we sign on a new property, for instance, a community member gets a part-time job as a manager of the property. And because that manager is nearby, homeowners feel more comfortable renting their homes out. And when they rent their homes out, they make money and tourist money comes into the community.

Those are the places GoNitely wants to be: the places that welcome us with open arms. And there are plenty of those places across the globe.

It’s About Good Business, too

There’s a business reason for that philosophy as well.

As Scharnowski points out, investing in properties in big cities can be non-sustainable as a business practice. Everyone is competing for a tiny piece of a pie that’s not going to get any bigger because the area is already built out. Focusing on other areas where there’s less competition and more opportunity – and where short-term rentals are welcomed – makes more sense.

And stats tend to support that. Just this week AirDNA published a piece that listed the best places to buy a short-term vacation rental. The conclusion:

“Although the temptation might be to buy or lease a property in your local area, or in the closest big city popular with tourists, our analysis reveals that sometimes the most unexpected towns are goldmines of high returns.”

AirDNA Chart

Back to Minardi: While he says that he supports reasonable regulation, ha also says “in too many of these cities, reasonable regulations have never been the goal.”

What we’ve seen so far seem to be reasonable regulation. But to be clear, we’re talking about people buying up homes for short-term rentals, not people who – in the true Airbnb tradition – rent out a room or part of their home for extra income, or those who have a second home they don’t live in year-round. Seniors, for instance, are a growing segment of the short-term rental industry. The income they generate can help them not only have a better life but can also help pay bills that will allow them to age in place. To regulate those cases for the sake of regulation is unnecessary and unfair.

If a community proposes unfair restrictions, homeowners need to become advocates for themselves and for the industry. They need to follow the progress of proposed legislation in their area, join an advocacy group and make their voice heard.

Short-term vacation rentals can be a profitable business, but there are cases where it may not be best for the community. At GoNitely we work to strike a balance between what’s good for our homeowners and what’s good for the communities we work in.

 

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