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When the industry is growing as fast as short-term rentals, it’s no wonder there are growing pains.


Main points:

  • Local governments are trying to regulate the number of short-term rental units that are changing the landscape of their cities.
  • Owners of short-term rental units may soon be forced to change the way they do business or be unable to rent out their units.
  • Complying with local laws or selling their property while the market remains hot are two options.

Airbnb is the leader in short-term apartment rentals. And back in 2008, when the company first dropped, it was all rainbows and unicorns. If city leaders were concerned about what would happen if the industry got too big, they weren’t complaining. After all, short-term rentals give tourists a place to stay while they visit a new city.

The rumblings of concern did not become loud enough to be picked up by the media for several years. By 2016, cities around the world were actively looking for ways to curb short-term rentals. There were many problems. from the lack of safety and security regulations to local residents angry that their neighborhoods had been turned into quasi-hotel districts.

If you’re an Airbnb host who relies on short-term rentals to supplement your income, you may find yourself caught up in new laws affecting hosts around the world.

A growing concern

In addition to the problems of taxation, noise and safety regulations, cities are concerned about the number of apartments purchased by individuals and investment companies for short-term rental purposes.

To put that into perspective, Airbnb hosts now manage more than 6 million listings in more than 100,000 cities around the world, and shopping isn’t slowing down. Vacation home sales are up 44% year-over-year in 2020 alone, and real estate investment firms in the U.S. are planning to spend billions of dollars on additional properties.

If you have an Airbnb rental unit in a city where dangerous housing inventory and high rents collide, you could be dealing with entirely new rental laws or not being able to rent it at all. Here’s a sample of cities violating Airbnb’s practices:

  • New York City
  • Paris
  • Berlin:
  • Barcelona
  • Santa Monica
  • Charleston, SC
  • San Francisco
  • Los Angeles
  • Las Vegas

Whether managing your Airbnb property is a full-time job or a side hustle, it might be a good idea to make contingency plans for the day the local government in your area implements new laws.

Emergency options

If things are going your way right now, and hosting Airbnb means more money in your bank account, change can be hard to swallow. However, having a plan in your back pocket can reduce the level of stress you experience.

1. Keep your ear to the ground

Don’t wait for new rules, regulations or laws to surprise you. Let’s say you have an Airbnb near Lake Place. No matter where you live full-time, keep up with what’s happening at city council meetings. Stay tuned for any updates on short term rentals.

The idea is to get ahead of problems so they don’t catch you off guard. For example, if your rental currently has three smoke detectors and the city requires four, add a fourth before you’re told.

2. Follow new rules and regulations

It is possible to maintain compliance even if you do not like the changes introduced by the local authority. While it may seem intrusive when you’re presented with a laundry list of items that need to be replaced, there’s no reason to fight the inevitable. Make it easy on yourself by doing what is asked of you.

The good news. Business-related expenses are usually tax-deductible.

3. Sell the property while the market is hot

Although the market has cooled a bit due to rising interest rates, it is still a good time to take profits. If you have an attractive property in a beautiful area, consider it for sale. If the new rules make it difficult or impossible for you to continue using the property as an Airbnb, then selling while prices remain high may make the most sense.

The current issue appears to be a conflict between the rights of business owners and the needs of local residents. While there aren’t necessarily good guys or bad guys, compromises will need to be made on all sides.

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