The attack on short-term rentals begins to impact…

Bloomberg – Legal and regulatory difficulties The challenges faced by people listing their properties for short-term rentals on portals like Airbnb Inc. (ABNB) and Vrbo are disrupting the vacation real estate market.

From New York to California, there it is Cities cracking down on short-term rentals With bans, licensing requirements, or restrictions on the ability to stay for thirty days or less. Airbnb and the landlords are defending themselves in court, but so far their lawsuit has had little success.

Many restrictions were imposed specifically when cities were recovering as a result of the pandemic. In some places, they make it difficult for owners to list their properties, depriving them of a steady stream of additional income.

“It’s supposed that only the wealthy make money from Airbnb, but it’s ordinary people like me who rely on short-term rental profits to survive,” explains Lisa Cameron, the owner of Airbnb, who was fined $500. “It’s unfair, and there has to be a compromise.”

Cameron showed off a 400-square-foot studio he’s owned in Santa Rosa, California, for more than a decade. city ​​recently Permits are required for those offering a stay of 30 days or less and a limited number of permits. Cameron says she was not properly notified about the new rules and received a violation notice in February. In addition to the fine, the city banned him from making new reservations until he obtained the proper permit.

Not only was it expensive to obtain a permit, it was also difficult to obtain because the city placed a limit on the amount that could be issued, Cameron said, adding that the income he was using to help build his chef business was down from $5,500 per year. The month is at zero.

Greater organization

Cities want more rules because they say unregulated short-term rentals reduce the availability of affordable housing, raise local rents and create unnecessary risks for guests and neighbors.

the The owners are responding to the courtArguing that the regulations violate their constitutional rights. The new rules are being challenged by hosts across the country, including cases filed in Kansas City, Santa Fe, New Mexico, and Fort Worth, Texas. These lawsuits can take years to resolve.

Airbnb and three local hosts tried to fight New York in court, arguing that a city law requiring operating licenses places “enormous burdens” on booking services and forces hosts to navigate “labyrinthine” city regulations. A judge dismissed the New York case in August The law, which Airbnb described as a “de facto ban” on short-term rentals, will go into effect in September.

Airbnb said that about 80% of its 200 revenue markets around the world already have some form of regulation, and that Internal company data does not show a decline in profits Typical or on reserved nights after regulations are implemented in Santa Rosa. Frbo did not immediately respond to a request for comment.

Demand for short-term rentals has fallen in many major cities during the pandemic, with offices closed, travel restricted and workers sheltering remotely at home. While demand is recovering, some cities that imposed stricter rules are still lower than they were before Covid-19, according to AirDNA, which tracks data from Airbnb and Vrbo.

in New York, Prices fell 39% in JulyCompared to the same month in 2018, according to AirDNA. Boston, which imposed stricter rules in 2019, saw a similar decline. In San Francisco, short-term rentals fell 19%, data show.

Meanwhile, hosts in cities with fewer regulations are exceeding pre-pandemic levels. Short-term listings in July doubled in San Antonio, compared to the same month in 2018, while the Phoenix-Scottsdale area saw a 91% increase, and Indianapolis jumped 76%, AirDNA research showed.

Longer stay

Many hosts who are concerned about the risk of penalties or legal costs turn their backs on short-term vacationers to focus on month-to-month rentals. Longer stays can be much less profitable, but are not regulated.

“People can’t afford the fines,” he said. Kazemin Thibault, Airbnb has been hosting for more than a decade in Burlington, Vermont, which last year passed stricter rules for short-term rentals that include city permits and a 9% tax.

Thibault started renting out his apartment in 2012 to earn extra money on weekends, when he could stay with his parents. Now, it has moved away from tourists to focus on longer stays.

Thibault said soYour monthly income has been cut in half, From around US$6,000 for mostly short-term stays to around US$3,100 for stays between three and six months. He said that if he continued longer, he would earn on average about $2,000 per month.

Medium-term demand

Airbnb says listings are active for all periods Worldwide it rose 19% in the second quarter from the previous year to more than 7 millionadding more net active listings than any quarter in the company’s history.

While short-term stays still account for the majority of Airbnb bookings, demand has increased for medium-term bookings that last more than a month but less than a year, the company said in a note.

In Q4 2022, stays of 28 nights or more were Airbnb’s fastest-growing category by trip length and accounted for 22% of total nights booked, up from 16% in Q4 2019, according to Airbnb.

He said month-to-month rentals are not new, but have traditionally been at the lower end of the market with low-quality housing aimed at people with uncertain jobs or low incomes. Edward Coulson Director of Research at the Center for Real Estate at the University of California, Irvine. This is changing.

“Moving into the medium-term market means you will have units across the quality spectrum that will be available for month-to-month rentals,” Coulson said.

To be sure, extended stays also carry the risk of local eviction laws being applied to landlords they previously didn’t have to worry about. In New York and Kansas, anyone staying more than 30 days is considered a renter and not a guest.

With assistance from Natalie Ling.

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