Maintaining the Rental Housing Market: Regulating Short Term Rentals

Left unchecked, there is concern that online rental platforms, like Airbnb and VRBO, just might provide enough financial incentives to cause homeowners to switch long-term rentals to short-term vacation rentals. The number of short-term rentals available through these platforms has been rapidly increasing and there are now spin-off businesses that make it easier for individuals to manage short-term rentals. At a time when we face a shortage of affordable rental housing, this issue deserves a closer look.

In the coming months, my City Council committee will explore a regulatory framework for short-term vacation rentals. This work aligns with the Council’s work plan issued in response to the Mayor’s Housing Affordability and Livability Agenda recommendations.

On the other side of the coin, however, short-term rentals can boost incomes for those struggling with their own home payments. Airbnb, one of the major players in this arena, recently released data about their users and emphasized that the vast majority of their hosts live in the unit they rent; they either share their home or rent it while out of town themselves.

The City has a regulatory role to play here, with three potential policy goals as I see it:

1. Ensure a level playing field for individuals and companies in the short-term rental market.
2. Balance the economic opportunity created by short-term rentals with the need to maintain supply of long-term rental housing stock available at a range of prices.
3. Protect the rights and safety of owners, guests and neighbors of these units.

There are also important distinctions to make between the different types of short term rentals. Here are five of the more important distinguishing questions:

1. Unit type: Is the short-term rental for an entire unit or a shared space?
2. Rental frequency: Is the unit rented commercially (frequently) or casually (infrequently)?
3. Host presence: Does the owner live on-site or off-site?
4. Building type: Is the short-term rental in a single-family or multi-family building?
5. Location: What type of land use zone is the short-term rental in?

I will soon advance a set of regulations for short-term rentals. While there are many details to work out, here are some of my guiding principles:

• All short-term rentals must pay applicable taxes.
• The type of short-term rental that will require the highest level of regulation is: entire units rented frequently that are not the primary residence of the owner. We might consider restricting short-term rentals where the host does not live on-site in residential zones.
• Primary residences rented infrequently may require a lesser level of regulation.
• We must ensure we have a regulatory system that works on the ground. This may require cooperation from the major short-term rental market platforms like Airbnb or VRBO.

Other cities have taken a wide variety of regulatory approaches to short term rentals. I look forward to working on a Seattle-specific solution with my Council colleagues, the Mayor, and community and industry stakeholders.