Using Airbnb, a short-term rental service that enables homeowners or tenants to rent out properties for side income, is a huge hit with budget-conscious travelers. For regulatory boards around the world, however, it can be a challenge.
Among the problems that city governments and state regulators foresee with Airbnb is the potential to upend landlord-tenant relations (for example, a landlord could try to evict a tenant to charge higher short-term rents to vacationers). Regulators also fear a potential influx of travelers who will transform quiet residential neighborhoods into revolving hotel districts. There are also concerns about a current lack of oversight and accountability over Airbnb-related tax collection and adherence to zoning bylaws.
Therefore, individuals who are considering using Airbnb (either to find a room or to rent out an apartment) should conduct due diligence to check that the city in question fosters a supportive environment for Airbnb. Moreover, the listing should comply with the city’s current municipal codes.
- Paris; Barcelona, Spain; Amsterdam; Miami; and Santa Monica, Calif., have some of the strictest policies regarding who can and cannot rent out Airbnbs.
- Berlin, London, San Francisco, and New York have looser requirements but are still regulated.
- Local regulations about short-term rentals are constantly in flux, so check with both Airbnb and your city’s statutes before listing your property.
In 2018, a Paris official, Ian Brossat, criticized home rental services because he believes they displace local people from the main city. Paris is the largest market in the world for Airbnb, which has more than 60,000 apartments on offer.
Other cities such as Barcelona, Spain; New York; and Santa Monica, Calif., share the sentiments of Brossart. In 2015, there were government crackdowns on secondary apartments in Paris set up specifically as short-term rental units, with officials fining violators up to 25,000 euros (€25,000).
As of 2017, Airbnb landlords in France are required to register their home and display the registration number in their ad under the ELAN Law. Paris Mayor Anne Hidalgo, citing concerns that the proliferation of Airbnb listings in the city threatened to turn it into an “open-air museum,” announced in 2019 her plans to enforce the law’s €12.5 million fine for unregistered ads.
In May 2018, Barcelona continued its tough stance on Airbnb and other similar sites. The city instructed the site to remove 2,577 listings that it found to be operating without a city-approved license, or face substantial fines. Then, on June 1, 2018, Airbnb and the city initiated an agreement giving Barcelona officials access to listings data. According to Bloomberg, “For the first time, city officials will be able to refer to host data that details specifically where apartments are located and who their registered hosts are, something that could previously require substantial investigation.”
Host ID numbers will verify if linked apartments do indeed have permission. In 2016, Airbnb was hit with a (still unpaid and contested) €600,000 fine for listing unlicensed apartments, following a more modest €30,000 fine the year before (that same fine was also levied against the website HomeAway). Locals say that Airbnb rentals have made it even harder to find accommodation in the city, and the Catalonian government has gone as far as to start a social media campaign urging tourists to rat out illegal or suspected illegal short-term rentals.
Despite challenges from some cities, there have been more than 400 million Airbnb check-ins around the world in the last decade.
German officials, placing some blame on Airbnb for Berlin’s increasing rents and housing shortages, passed a law in 2014 banning short-term rentals that have not received explicit permission from the Berlin Senate. Prospective landlords could apply for a permit to rent out their properties for periods shorter than 60 days, but officials vowed to reject 95% of those applications under the 2014 law.
However, in March 2018, the city’s assembly overturned that law. The ruling means that owner-occupiers can rent out their primary homes without time restrictions after obtaining a permit from city officials, and can rent out second homes for up to 90 days each year.
In February 2015, Amsterdam announced a cooperative effort with Airbnb in which the city would levy a tourist tax on rentals while Airbnb informed potential hosts of all rules and regulations. However, in 2018, Amsterdam limited short-term rentals to 30 days a year, halving its previous limit.
Since April 1, 2021, an Airbnb host must obtain both a registration number and a permit for a vacation rental in Amsterdam. There are also strict rules about how you can operate your property, subject to stiff fines for violating them.
Londoners interested in renting out their properties on Airbnb have benefited from an amendment to the city’s housing legislation (which passed Parliament in March 2015), allowing homeowners to rent out their house, flat, or spare rooms for up to three months a year. Those living outside the Greater London area may rent their primary or secondary properties for up to 140 days a year.
Airbnb is booming in London. A study from property services company Colliers suggested that Airbnb’s market share in London jumped nearly threefold in 2017, from 2.8% to 7.6% of overnight stays.
New York has passed laws making it illegal to rent in New York City for less than 30 days without the host present. What this means for Airbnbs is that home shares, apartment shares, or room shares are still allowed, but anyone looking to follow the law and book and entire unit would have to stay for more than 30 days.
San Francisco adopted a similar policy as New York: Airbnb rentals are allowed only if hosts are full-time residents, rentals are capped at 90 days, and all hosts must register with the city. Violators are subject to a fine of $484 a day for first-time offenders and $968 a day for repeat offenders. However, despite these stipulations, the San Francisco Chronicle reported that only a fraction of Airbnb hosts have actually complied with the new law.
Investigations in 2019 found that as many as half those applying for a short-term rental permit in San Francisco were found to have lied on their applications, mostly about claiming falsely to be a resident of the home they’re renting. Furthermore, as in other cities, Airbnb faces mounting criticism from housing activists who blame the site for reducing the already-scant supply of housing.
Santa Monica, Calif.
This city has effectively wiped out 80% of its Airbnb listings by instituting the toughest regulations on short-term rentals in the United States. The Southern California city said it was spurred by overall increases in housing prices and dwindling housing supply.
The new regulations, which have been in effect since June 2015, require anyone putting a listing on Airbnb in Santa Monica to live on the property during the renter’s stay, register for a business license, and collect a 14% occupancy tax from users that will be payable to the city.
In 2019, the City of Santa Monica reached an agreement with Airbnb in which the company agreed to remove illegal short-term listings from its website. As of 2019, the city has only 351 short-term rental properties, most of which are listed on Airbnb.
The number of cities with Airbnb listings, spread throughout 191 countries.
Why is Airbnb illegal or restricted in certain places?
Some localities have outlawed or put restrictions on Airbnb hosting for several reasons. One is that it takes away tax revenues normally paid to lodgers (although now Airbnb works with cities to collect such taxes), or takes away business from traditional hotels or bed-and-breakfast inns. Other places argue that Airbnb locations are not regulated like hotels and therefore may not be up to health and safety codes. Yet others complain that short-term guests disrespect common areas in multi-dwelling buildings, create noise, and bother residents.
How does Airbnb make money?
Airbnb’s primary sources of revenue are charges taken from both guests and hosts for bookings.
Is Airbnb a public company?
Yes. Airbnb had an initial public offering in December 2020 and trades on Nasdaq under the ticker symbol ABNB.
The Bottom Line
Airbnb is no stranger to controversy. Supporters argue that the service allows travelers to rent more affordable lodging, while opponents accuse Airbnb of being a detriment to housing prices, supply, and neighborhood quality of life.
Cities have a wide range of approaches in dealing with the service, so any prospective Airbnb host needs to know where their city lies on this spectrum. Otherwise, they have a possible chance of being slapped with a harsh penalty or, if a tenant, even evicted from their residence.