For many political pundits, “regulation” is a four-letter word. But the prevalence of short-term rental properties and their impact on the local housing supply demonstrate the need for the gentle hand of government to influence markets.
Online sites such as Airbnb and Vrbo — which connect property owners with people seeking lodging for a night or longer — have transformed not only the hospitality industry but housing markets throughout the country. In Vancouver, according to The Columbian, there are between 250 and 379 short-term rentals at any given moment in Vancouver, charging a median price of $118 a night.
Now, the Vancouver City Council is debating the best way to regulate the industry. Short-term rentals have both a macro impact — housing supply and the hospitality industry — and a micro impact in the way they affect residential areas and the neighbors of Airbnb rentals.
This week, for example, Airbnb executives made permanent a ban on “party houses.” Customers had quickly figured out that renting a house for a night and throwing a party was an effective self-serving use of short-term rentals; neighbors of those houses had quickly figured out the practice was a nightmare to them.
But aside from a neighborhood-rocking party, the attraction of short-term rentals is obvious, both for visitors and for landlords. A family can rent an entire home for a week when visiting an area; a business traveler can find a room in a quiet neighborhood for a night or two; a landlord can generate revenue from an unused room or an accessory dwelling unit.
Now, cities everywhere are grappling with how best to deal with this disruptive innovation.
As one resident told the City Council on Monday: “Vancouver has a housing crisis. . . . However, despite desperately needing more housing, we have been neglectful in taking steps to prevent these new forms of housing from simply becoming more short-term rentals. The majority of our Airbnb’s in Vancouver rent out the entire single-family home, thus taking away from our city’s housing stock.”
Among the questions: Should Airbnb landlords be required to live on site? In many cases, investors purchase a home or a condominium to rent out, using the dwelling as a short-term rental when it could be used as housing.
Properties become de facto hotels, and Business Insider has reported: “The few surveys that have looked at the issue suggest Airbnb is affecting prices of both rent and purchases, mainly in the center of large cities where tourists visit.”
Vancouver is not a large city, but its proximity to one suggests that the Airbnb effect spills over to this side of the Columbia River.
In the process, short-term rentals contribute to the homelessness crisis found in many locales, including Vancouver. A study published in the Harvard Law & Policy Review determined that the industry reduces the affordable housing supply and distorts the housing market.
Requiring Airbnb owners to live onsite would help mitigate that problem. It would restore short-term rentals to the role of minor revenue generator rather than a major investment for large corporations.
Other proposals, such as requiring business licenses for renters and charging a lodging tax, also are worthy of consideration. The council and city planners are mulling those possibilities, although no decisions are likely before fall.
It is clear, however, that regulation is necessary to help ensure that short-term rentals are a blessing for the city instead of a curse.