Top Cities Where Airbnb Is Legal Or Illegal

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. Regulatory boards around the world, however, are proving to be a far different story. (For more, see: How To Make Money With Airbnb: Risks & Rewards.)

Among the problems that city governments and state regulators foresee with Airbnb: the potential to upend landlord-tenant relations (for example, a landlord could try to throw out a tenant in order to charge higher short-term rents to vacationers), potential influxes of travelers who will transform quiet residential neighborhoods into revolving hotel districts, and a current lack of oversight and accountability over Airbnb-related tax collection and adherence to zoning by-laws.

So if you're planning to use Airbnb (either to find a room or to rent out your apartment), you should run some due diligence to make sure that the city in question fosters a supportive environment of Airbnb. Even more important, be sure the listing complies with the city's current municipal codes. (See also: Is Airbnb Safe? Here Is What You Need To Know.)

  • Paris. While the City of Light is currently Airbnb's most popular vacation destination, with an estimated 40,000 listings, Parisian regulators haven't exactly rolled out the red carpet for the service. Earlier this year, 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. Paris Mayor Anne Hidalgo, who appointed the 20-person team running the crackdowns, is also considering levying a charge of 1.50 euros per night on person-to-person housing transactions. The mayor’s housing advisor told Bloomberg, “We can’t have entire neighborhoods or buildings turned into tourist homes…that’s why we’re fighting to keep Parisians inside Paris and we won’t let tourist rentals eat up their space.”
  • Barcelona. Authorities in Spain’s second most populous city followed in the path of their Parisian counterparts when they levied heavy fines against Airbnb (24,000 euros) for “serious” breaches of local laws. Violations stemmed from hosts allegedly failing to register rental units with the Tourism Registry of Catalonia and also attempting to circumvent regional laws that prohibit renting out rooms in private residences.
  • Berlin. German officials, placing some blame on Airbnb for Berlin's increasing rents and housing shortages, passed a law banning short-term rentals that haven't received explicit permission from the Berlin Senate. Furthermore, in February 2015, Berlin's state court reinforced earlier rulings against subletting, granting landlords the power to evict tenants they catch subletting their apartments to Airbnb users.
  • Amsterdam and London. These two cities have been far more receptive to Airbnb than other European destinations. In February 2015, Amsterdam announced a cooperative effort with Airbnb in which the city will levy a tourist tax on rentals, while Airbnb will work to ensure potential hosts are aware of all pertinent rules and regulations. And Londoners interested in renting out their properties on Airbnb should benefit from a new amendment to the city’s housing legislation (which passed Parliament in March 2015), which will allow homeowners to rent out their house, flat or spare rooms for up to three months a year.
  • New York. The biggest tourist destination in the U.S. is naturally no stranger to Airbnb, with over 16,000 listings in the NYC area. However, city officials have attempted to take a bite out of Airbnb’s presence in the Big Apple (see: Hotels vs. Airbnb For New York City Visitors). One notable case was that of Nigel Warren, who was fined $7,000 by an administrative court for violating New York City regulations on short-term rentals. Although the verdict was overturned on appeal, it was just one of several legal battles between Airbnb users and city regulators. Moreover, Airbnb took a hard blow last year, when a report by the state attorney general found that 75% of the city’s rentals over a four-year period were illegal rentals, with property owners evading millions of dollars in annual hotel taxes. Legislation proposed in June 2015 would increase fines for violators of New York’s temporary rental policies; it's expected to pass the city council. As it stands, current NYC law only allows a permanent resident to sublet their property for less than 30 days, and then only if they're still residing at the property.
  • San Francisco. San Francisco has adopted a similar policy as New York's: 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. However, despite these stipulations, the "San Francisco Chronicle" reported that only a fraction of Airbnb hosts have actually done the latter. 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 has effectively wiped out 80% of its Airbnb listings by instituting the toughest regulations on short-term rentals in the U.S. The southern California city said it was spurred by overall increases in housing prices and a dwindling housing supply. The new regulations, which have been effective since June 15, 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.

The Bottom Line

Airbnb is far from a stranger to controversy (for more, see: The Pros And Cons Of Using Airbnb). 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, from stringent Santa Monica to fairly laissez-faire Amsterdam. Given this situation, 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 they're a tenant, even being evicted from their residence.