Short-term rentals are the perfect solution for many travelers. Family trips are exponentially more relaxing with access to multiple adjoining bedrooms, a kitchen and laundry facilities. Large celebrations and corporate travel retreats are better where no one has to prepare and provide their own home as accommodation, and more cost-effective than hotels. The proliferation of the short-term rental industry over the past 15+ years meets these needs and addresses rising costs and scarcity of hotel rooms in many popular locations. However, the growing number of short-terms rentals has not been so perfect for the people who live full-time in those locations.

Following the 2023 wildfires in Hawaii, efforts to restrict short-term rentals offered by companies such as Airbnb and VRBO in that state resulted in a new bill recently passed by the Hawaii Senate and House (SB2919). That bill is expected to be signed by Hawaii Governor Josh Green and to go into effect on January 1, 2025, and would give individual counties in Hawaii the ability to rezone rentals from short-term to long-term, paving the way for a potential elimination of short-term rentals as a whole.

Hawaii is not unique in these efforts, as many favorite domestic travel destinations have implemented measures to restrict short-terms rentals, including New York City, San Francisco, CA, Santa Monica, CA, New Orleans, LA and Durango, CO. The rationale behind those cities' determinations that the proliferation of short-term rentals is disadvantageous to their interests is similar, most often centering on how they negatively impact housing affordability and availability for their local populations. While different cities' efforts to restrict short-term rentals have been ongoing for a decade, enforcement of local regulations has proved challenging. For example, despite a 2022 New York City ban prohibiting people from renting their homes for fewer than 30 days unless the host stayed in the home with guests, there remained tens of thousands of rentals listed with short-term rental platforms. Additionally, the lobbying arm of short-term rental platforms is reportedly very active and well-funded.1

Increased enforcement efforts along with legislation on short-term rentals is allowing affected cities to maintain a firmer grip on the problem. Below is a sampling of the types of measures that have proved successful:

Platform Accountability: Regulations providing that a short-term rental platform (Airbnb/VRBO/Flipkey) can list or rent anything it wants, but it can only collect a booking fee on rentals that are legal.2

Zoning: Regulations outright banning short-term rentals in designated areas.

Certification: Regulations requiring that short-term rental owners register and pay fees on their properties before listing them with rental sites.

City-Wide Planning: Regulations limiting overall percentage of properties in a city that are utilized as short-term rentals.

Non-Primary Residence Restrictions: Regulations providing that property owners may only list their primary residence as a short-term rental, i.e. restriction against listings that are exclusively for renting out.

Taxation: Extending hotel taxes to include short-term rentals.

Use Restriction: Regulations restricting what activities are allowed at short-term rentals, i.e. no parties, no events charging fees to attend, no “business” events, etc.

The issues presented by growing short-term rental restrictions impact both property owners and guests. Whereas the landscape of the short-term rental industry since Airbedandbreakfast.com officially launched in 2008 has been likened to the Wild Wild West3 where virtually anything goes, individuals now seeking to make money from hosting and those seeking to utilize short-term rentals must now have a plan for how to navigate the restrictions in place in their location of choice.

Hosts must first determine whether short-term rentals are even permitted where their property exists and what regulations are in place for their location if they are, and then consider how their rental agreements must be structured to comply with the restrictions in place. While many online short-term rental platforms provide pre-populated form contracts, given how rapidly regulations are evolving from location to location it would behoove property owners to get sound legal advice to ensure the contracts in question are in fact in compliance with local law. The main issues for potential renters going forward will likely be a drastic reduction in the number of rentals being offered for their travels, as well as increased restriction on what they are allowed to do with their rentals once they have rented them. Again, it is advisable for travelers to confirm that the agreements in place for their rentals comply with local regulations.

Footnotes

1. “Airbnb Spends Record Amount on Lobbying Amid Attempts at Regulation” by Harshawn Ratanpal. December 17, 2023. Truthout.org.

2. “The Towns Outsmarting Airbnb” by Corey Buhay. April 2, 2024. Reasons to be Cheerful.

3. “Curtain Call for Wild Wild West of Short-Term Rentals in Lafayette” by Andrew Capps. October 26, 2023. The Current LA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Allison N. Bell
Crivello, Nichols & Hall
7 South Dewey Street
Suite 120
Eau Claire
Wisconsin
WI 54701
UNITED STATES
URL: www.crivellolaw.com

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