This article was updated on Sept. 10, 2019 to include the latest news of the short-term rental law enforcement in Boston and Denver.
Airbnb is one of the most-anticipated upcoming IPOs. In March 2019, the home-rental startup sold common shares at a price that values the company at roughly $35 billion.
Since its launch back in 2008, the home-sharing model has flipped the hospitality industry on its head. Travel industry experts Skift estimated that the global vacation rental market would reach a market valuation of $169 billion through 2018.
But the short-term rental industry is not without controversy. Hanging in the balance is the ever-present question: Whether to regulate it more strictly to preserve local culture and keep local residents from being priced out, or allow it to thrive and reap the benefits of booming tourism?
City after city, restrictions on short-term rentals pop up across the country, to keep its rapid growth in healthy check. These laws are very local in nature and vary from state to state, even town to town. Here is a summary of short-term rental restrictions in major U.S. cities:
Quick links to short-term rental laws in each city:
New York City, the biggest tourism magnet in the world, has some of the strictest short-term rental laws. Back in 2011, even before Airbnb’s widespread popularity, the New York State Multiple Dwelling Law made it illegal in most apartment buildings for an apartment to be rented out for less than 30 days, unless the permanent tenant is present at the same time.
In fact, even advertising such a rental is illegal, as mandated by the state law. Illegal advertising of apartments—defined as a building with three or more units—on is subject to fines up to $7,500.
Technically this rule doesn’t apply to single-family homes—which, granted, are few and far between in New York.
Airbnb hosts can rent out a spare room in their apartments as long as they are also living at home. But there’s a catch: They can’t install any locks at home because guests need to have free access to all rooms.
Last year, the New York City Council went a step further in cracking down short-term rentals by introducing a bill, requiring Airbnb and other home-sharing sites to disclose details about their listings, and the identities and addresses of their hosts every month. The bill was recently blocked by a federal judge in January 2019.
San Francisco, where Airbnb’s headquarter is located, was among the first cities to regulate short-term rentals. As early as 2014, the city imposed a limitation on the number of days a property can be rented out for short stays.
Starting from 2015, hosts were required to register as both a business and as a short-term rental, according to the city’s Office of Short Term Rentalslegal battle between Airbnb and the city that stretched for over a year, before both parties finally settled in court in May 2017. As a result, the number of Airbnb listings plunged overnight last January, upon the final deadline to ditch unregistered hosts.
Today, San Francisco maintains a list of all registered hosts, who report every quarter on occupancy. If they want to rent out the entire property, they can only do so for up to 90 nights a year. They can rent out a spare room for an unlimited number of nights as long as they are also staying at the property.
Certain types of housing are off-limits for such rentals, which include Income-restricted affordable housing and student housing. Unique homes that add the most fun to vacation rentals—such as treehouses, teepees, and RVs—are also not permitted. Despite the regulation, a search for San Francisco treehouse on Airbnb yields some results.
3. Los Angeles
After a three-year-long debate in Los Angeles, short-term rental rules were passed in last December. Effective July 2019, property owners can only rent out their primary residence, not a second home or investment property for stays of fewer than 30 days, according to the city ordinance. Violation is subject to a daily fine of at least $500.
Hosts must register with the city, pay hotel taxes, and keep records for city inspection. They can legally rent out for short stays for no more than 120 days a year. Exceeding the limit will result in a daily fine of at least $2,000.
If a property is rent-controlled, it can’t operate as a short-term rental at all.
The nation’s capital recently joined the list of cities that enact strict Airbnb regulations. Starting from October 2019, property owners in Washington DC can only rent out one home—their primary residence—according to a city regulation act.
To legally operate short-term rental, all hosts must register with the city. For those who wish to rent out an entire property, they must obtain an additional “vacation rental” endorsement. The maximum nights they can rent out an entire property is 90 nights a year.
Fines vary, but start at $500 and can go up to as much as $6,000 for a repeat offense.
Three years after Chicago enacted its short-term rental regulation, it requires a license for short-term rental platforms as well as hosts.
The city ordinance classifies short-term rental platforms into two categories: 1) “Short-term rental intermediary” refers to platforms that primarily list shared housing units, like Airbnb; 2) “advertising platform” refers to sites that primarily list vacation rental or bed and breakfast, such as VRBO and HomeAway.
Hosts on Airbnb who only has one listing can register with the platform, which then collects data of all hosts and submits them to the city. Hosts on Airbnb with more than one listings need to obtain a license directly from the city for a fee of $250.
A city license is also required for VRBO and HomeAway hosts or vacation rental owners who operate offline.
All hosts are required to provide soap, clean linen, sanitized utensils, and other living necessities.
Chicago imposes steep fines against illegal short-term rentals, from $1,500 to $3,000 per day.
Starting January 2019, the city of Boston opened registration from hosts who want to rent out their properties for fewer than 28 nights, after a city ordinance was passed last June.
Hosts who want to rent out a spare room while living under the same roof can apply for a license for $25 per year. Those who want to rent out an entire unit can only do so for their primary residence or a secondary unit (such as an in-law unit) in their primary residence. The license fee for renting an entire unit is $200.
Hosts who fail to register face a $100 fine per violation per day. Those who rent out units that are ineligible, like a below-market-rate unit, face $300 fine per violation per day.
Under a new state law signed last December, short-term rental hosts will have to pay the same 5.7 percent state tax as hotels.
Airbnb had been battling with Boston in court over the short-term regulations in the past year.
Latest update on August 29, 2019:
Airbnb and the city of Boston finally reached a settlement. By December 1, 2019, all short-term rental listings will be required to display a city-formatted registration number, or the listings will be removed. Airbnb also agreed to share data about listings with the city, including the listing’s URL, registration number, host ID, information, and zip code.
In May 2019, just four months after the new law took effect, a federal judge temporarily blocked Boston from imposing parts of the ordinance. The judge declared that the city can’t ban a short-term rental service because it posted listings in violation of the ordinance. He also concluded that the city couldn’t force Airbnb to report how many days a week rental units are occupied.
In Seattle, both short-term rental platforms and individual hosts need to obtain licenses from the city. Platforms like Airbnb and VRBO are obligated to report all licensed operators and their listed units every month, according to the city code.
A host must apply for both a business license and a short-term rental license. The city granted an extension of the compliance grace period to September 1, 2019, due to technical difficulties.
With a valid license, a host may rent out up to two units as short-term rentals. It the host has two units, one must be his or her primary residence. Violations are subject to $500 fine for the first offense and $1,000 for a repeat offense.
Short-term rental hosts must pay retail sales tax and applicable lodging taxes on the rental charges. They also owe business and occupation (B&O) tax, but could qualify for the small business B&O tax credit, according to the Washington state department of revenue.
In Denver, the rules for short-term rentals were established by the Denver City Council in 2016. According to the ordinance, property owners can rent out individual rooms or garage apartments on quiet residential blocks for less than 30 days. The homes can be rented out when the owner is away, but it must be the owner’s primary residence. Short-term rental hosts pay the Denver Lodger’s tax of 10.75% of the entire amount charged for the lodging.
To legally do so, property hosts need to apply for a license from the city, which costs $25 dollars, as of January 1, 2017. If the city has reason to believe the rental property is not the owner’s main residence, it launches investigations into the situation. The enforcement action can range from warnings to fines to felony charges.
Latest update on September 4, 2019:
The Denver Post reported that the city now asks license holders suspected of cheating to sign affidavits—the only city in the country to do so. As a result, hundreds of property owners are shutting down short-term rentals to avoid legal implications.
The tourist-dense Miami is another battleground between Airbnb and strict short-term rental regulations. According to the Miami-Dade County Code of Ordinances, a vacation home must live in the same unit for more than six months a year.
The maximum overnight occupancy for vacation rentals is up to a maximum of 2 persons per bedroom, plus 2 additional persons per property, up to a maximum of 12 persons.
The unit must be licensed by the State of Florida, including registration with the Florida Department of Revenue for tax purposes. The unit has to pass a property inspection to get the license as a vacation rental, which is valid for one year.
Fines for violation is $100 for the first offense, $1,000 for the second, and $2,500 for the third.
The city of Miami Beach enforced even stricter regulations on short-term rentals. Rentals for less than six months and one day are prohibited in the city unless the property is in a legally permissible zone, such as most of tourist-dense South Beach. Steep fines—$20,000 for the first violation, $40,000 for the second, and so on—are in place to prevent owners from renting apartments to tourists.