Will Airbnb Restrictions Save Renters?

Technology Policy Brief #100 | By: Mindy Spatt | October 31, 2023

Photo taken from: kcur.org


Policy Summary

As Airbnb vacation rentals have proliferated in cities across the globe, local renters have seen rapidly rising prices and far fewer housing units available.   Advocates are pushing back and winning restrictions.  Whether or not the trend can be reserved may depend on how vigorously those restrictions can be enforced.

Policy Analysis

In the face of rising rents for fewer apartments, New York recently joined the list of cities restricting apartment owners from using their properties for short term rentals alone.  New York’s new rules will limit short term rentals to no more than two guests at a time, and require hosts to reside in the unit they are offering.  Under the regulations, owners must be able to prove residency or face fines of up to $5,000.

The change is expected to dramatically decrease the number of short term vacation rentals available in New York and consequently increase the very limited number of rentals available for people to live in, especially in the more popular neighborhoods.  Neighbors hope for fewer problems with the noise, mess and disruptions that often come along with vacation rentals.

While Airbnb fought hard against the rules, claiming its’ presence in the city was purely beneficial, studies by the Harvard Business Review (HBR) and others confirm that an “increase in Airbnb listings is causally associated with an….increase in rental rates….and negatively correlated with the share of homes in the market for long-term rentals.”  Other studies by the HBR found that racial discrimination was rampant on the platform, with fewer owners willing to rent to African Americans and African American hosts earning less money.

Here in the Bay Area, Oakland is considering new restrictions and city leaders are consulting major housing organizations including East Bay for Everyone, the Homeless Advocacy Working Group and the Oakland Tenant’s Union to hammer out the details.  Limitations on renting out multiple properties similar to the New York rules are under consideration, including only allowing hosts to use their own residences for short term rentals.  Also likely are limits on the number of nights a host can rent their property out.   Advocates want Airbnb and other platforms held accountable for requiring hosts to be licensed.  They also want a 24-hour hotline for neighbors to be able to report any issues related to short term rentals.  For the rules to have the desired impact, they will have to be enforced.

In Los Angeles, where commercial hosts owning multiple properties is common, a Home Sharing Ordinance imposed similar restrictions on landlord hosts in 2019.  However, three years after the restrictions were put in place, Better Neighbors LA released a study concluding “there remains an extraordinarily high rate of non-compliance by hosts and platforms. In the past year, an average of 4,272 STRs were advertised for rent each month, and, according to the City’s own data, more than half failed to comply” with the requirements of the ordinance.

According to the group, “The City exerted little effort to enforce the Ordinance, issuing only 27 fines and collecting a mere $9,827 for the entire year.”  They conclude “the high level of illegal STR activity in LA is largely the result of the City’s failure to fully utilize certain enforcement measures…..”

Renters in New York and Oakland are surely hoping for better outcomes in their cities.

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