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When an industry grows as fast as short-term rentals, it’s no surprise that there are growing pains.

Key Point

  • Local governments are trying to figure out how many short-term rental units are changing the landscape of the city.
  • Owners of short-term rental units may soon be forced to change the way they do business or be unable to rent their units.
  • You have two options: comply with local laws or sell your property while the market is hot.

Airbnb is the leader in short-term rental housing. When the company first took off in 2008, it was all about rainbows and unicorns. Even when city leaders worried about what would happen if the industry got too big, they didn’t complain. Short-term rentals, after all, offer tourists a place to stay when they visit a new city.

The surge of concern did not swell 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. Problems abounded, from lack of safety and security regulations to locals angry that their neighborhood had become a quasi-hotel district.

For Airbnb hosts who rely on short-term rentals to supplement their income, they could be caught up in new laws affecting hosts around the world.

growing concern

Apart from taxation, noise and safety regulation issues, cities are concerned with the number of residential units purchased by individuals and investment firms for use as short-term rentals.

To put this in perspective, Airbnb hosts currently manage over 6 million listings in over 100,000 cities around the world, and buying isn’t slowing down. In 2020 alone, vacation home sales are up 44% year-over-year, and real estate firms across the country plan to spend billions on additional holdings.

If you own an Airbnb rental unit in a city with dangerously low housing inventory and extremely high rents, you may be dealing with a whole new set of rental laws, or you may not be able to rent at all. Here are some examples of cities cracking down on Airbnb practices.

  • new york city
  • Paris
  • Berlin
  • Barcelona
  • santa monica
  • Charleston, South Carolina
  • San Francisco
  • Los Angeles
  • Las Vegas

Whether managing Airbnb properties is a full-time job or a side job, we recommend that you have a contingency plan for the day your local government enacts new legislation.

emergency options

If things are going well for you right now and hosting an Airbnb puts more money in your bank account, change can be a tough pill to swallow. However, having a plan in your back pocket can reduce the level of stress you experience.

1. With your ears on the ground

Don’t wait for new rules, regulations or laws to surprise you. For example, he owns an Airbnb near Lake Placid. No matter where you live full-time, you’ll know what’s going on at City Council. Follow the latest information about short term rentals.

The idea is to stay ahead of problems and not be caught off guard. For example, if the rental currently has 3 smoke detectors and the city wants him to have 4, he will add a 4th before being instructed.

2. Comply with new rules and regulations

Even if you don’t like the changes made by your local government, you can still stay compliant. It can feel intrusive to be presented with a long list of things you need to change, but there’s no reason to fight the inevitable.

Good news? Business-related expenses are generally depreciable through taxes.

3. Sell your property while the market is hot

Rising interest rates have cooled the market a bit, but it’s still a good time to turn a profit. If you have an attractive property in a nice area, consider putting it up for sale. If new rules make it difficult or impossible to continue using a property as an Airbnb, it may make the most sense to sell it at a higher price.

The current problem appears to be a conflict between the rights of business owners and the needs of local residents. There aren’t necessarily good guys or bad guys here, but compromises have to be made on all sides.

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