On today’s show we’re talking about the war on short term rentals. Communities around North America have been establishing new regulations designed to reduce the number and scope of short term rentals in their communities. Many communities are facing a shortage of affordable housing and the perception exists that homes are being removed from the rental market and put into the more lucrative short term rental market, putting an even greater strain on housing affordability.
By making these investment properties illegal, the hope is that many of these rental properties would be returned to the long term rental market, or sold outright into the owner occupied market.
A widely accepted definition of a short term rental is one where you rent to the same person for less than 30 days.
Many cities have put restrictions on short term rentals and limited them to owner occupied properties. So if you have a spare bedroom in your principal residence, you can rent it out.
Some cities have introduced licensing as a way of regulating the industry and keeping tabs on which properties are in the short term rental market. On today’s show we’re looking at some of the activity across several cities in North America.
The City of Vancouver says its efforts to regulate short-term rental units and bring more long-term rental options back into the pricey housing market are working. Active short-term listings are down to around 5,000, compared to more than 6,600 before the regulations took full effect last September, the city said. More than 2,000 unauthorized units that were taken offline have not been re-listed.
In Austin, whether renting out an entire home, an apartment or a bedroom for a single day or all 365 days of the year, local law requires the owner to register and license the property as a short-term rental with the city. The city counts 2,500 licensed units throughout the city; however, a third-party firm working with the city has reported over 10,000 properties advertising as a short-term rentals.
The City of Nashville is undergoing tremendous growth with about 120 people a day moving into the city. This is putting a strain on housing supply and on housing affordability. They implement new regulations at the city level, which were then subsequently blocked at the state level.
One year after state lawmakers blocked the city’s plan to phase out non-owner-occupied short-term rentals by 2021, Metro Nashville officials are revisiting not only where rentals can operate through their zoning ordinance, but they also increased the annual permit fee by more than 600%.
In San Francisco, new rules governing short term rentals were implemented a couple of years ago.
Any home rented out in San Francisco for less than 30 days must be registered with the city, and someone must live there at least 275 nights per year. An NBC News report suggests that about 45 percent of short-term rental applications are now being denied for what appear to be false residency claims, in which the applicants falsely state they are the “primary resident” of the home, which is a requirement for all short-term rentals.
If you’re noticing a trend here, that’s no accident. Cities around North America are actively trying to remove short term rentals from residential zones, and they’re making sure that they don’t lose hotel tax in the process. If you’re contemplating making an investment in short term rentals, you definitely want to know that the city has completed their regulatory process. If not, you’re taking a huge risk of the rules changing after you’ve made a significant investment.