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The Evolving World of Short-Term Rentals

short-term rentals

The rise of home-sharing platforms like Airbnb has been a boon to property owners, especially owners of smaller income properties, but it has also prompted municipalities to introduce regulations on short-term rentals (STRs). Many places impose restrictions, such as requiring permits or licensing, limiting occupancy, and restricting the number of days permitted.

Regulations vary widely from state to state, city to city, and perhaps even within neighborhoods. For example, California provides a statewide definition of what constitutes a short-term rental — a residential dwelling rented out for a period of fewer than 30 consecutive days — but also has a matrix of local regulations and nuances. 

Some areas of the State may prohibit STRs entirely, while others impose a variety of restrictions. Los Angeles, for example imposes a 120-day annual cap. San Diego has a tiered licensing system. San Jose has a 180-day cap but is more lenient toward owner-occupied properties. Clearly, one size does not fit all

New York City imposed new rules in September, 2023 requiring hosts who list their properties as STRs to register with the city or face fines of up to $5,000.  

This apparently augments their underlying law (known as the “Short-Term Rental Registration Law”) which provides

  • “You cannot rent out an entire apartment or home to visitors for less than 30 days, even if you own or live in the building.
  • You must be present during your guests’ stay if it is for less than 30 days.
  • You may have up to two paying guests staying in your household for fewer than 30 days, only if every guest has free and unobstructed access to every room, and each exit within the apartment.
  • Internal doors cannot have key locks that allow guests to leave and lock their room behind them. All occupants need to maintain a common household, which means, among other things, that every member of the family and all guests have access to all parts of the dwelling unit.”

Critics of the law say that it amounts to a de facto ban on STRs, protecting the city’s hotel industry. 

Chicago also has restrictions on STRs, perhaps the most notable being that one-night rentals are prohibited. Apparently, this may have been driven by the desire to curb the use of one-rentals parties for loud parties.   

If there is one thing we can safely say about STR regulations is that there is a lack of consensus. They may even be related to specific neighborhood. 

The demand for STRs seems to grow unabated. They can provide extra income for property owners, and affordable accommodations for visitors. But at the same time, restrictions try to ensure public safety, limit noise and disturbance, and maintain adherence to zoning ordinances in order to protect the interests of owners, renters, and neighbors.

As the STR industry continues to evolve, it is essential for property owners and managers to stay informed about current and changing regulations, so as to ensure both their compliance and success.

Do you own or operate short-term rental property? Share your experience navigating the opportunities and restrictions.

— Frank Gallinelli

 

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Copyright 2024, Frank Gallinelli and RealData® Inc. All Rights Reserved
The information presented in this article represents the opinions of the author and does not necessarily reflect the opinions of RealData® Inc. The material contained in articles that appear on realdata.com is not intended to provide legal, tax or other professional advice or to substitute for proper professional advice and/or due diligence. We urge you to consult an attorney, CPA or other appropriate professional before taking any action in regard to matters discussed in any article or posting. The posting of any article and of any link back to the author and/or the author’s company does not constitute an endorsement or recommendation of the author’s products or services. Photo by Sonnie Hiles on Unsplash

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