The practice of renting properties out on a short-term basis has been on the rise for several years. This fast and cheap alternative to hotels has been changing the traditional way that individuals live and vacation. But it’s also changing the real estate industry.
Agents and Airbnb
Real estate professionals around the country have found adding short-term rentals to their business profiles to be a good business move. “A lot of us work with people who are looking to do Airbnb,” Randal Lautzenheiser, managing broker at Atlanta Intown Real Estate Services, told Atlanta Agent magazine. “People can get more income by renting by the night or fully furnished short-term rentals through Airbnb than by doing a regular 12-month lease.”
Lautzenheiser said Airbnb has really taken out the guesswork for real estate professionals. Airbnb requires that individuals looking to rent from their site follow strict guidelines presented on their site. “Airbnb is really the gold standard for short-term rentals,” he said. “You can require that the tenant have a government issued photo ID on file with Airbnb and each tenant is rated by all of the previous hosts. If someone doesn’t have any reviews, has bad reviews, or doesn’t have a government issued ID on file with Airbnb, the landlord can refuse to rent to them.”
The trend of real estate professionals looking to online short-term rental marketplaces has become more common. That holds especially true in major markets, such as Atlanta, Los Angeles, New York and Chicago. “I don’t know of anyone who charges a security deposit through Airbnb but I know that if there is damage, the landlord can report it to Airbnb and they will charge the guest’s credit card for it and reimburse the landlord for the damage,” said Lautzenheiser. Property managers can also charge for extra beds or other accommodations, similar to a hotel, which is something that is not possible in a standard yearly lease.
Atlanta does not have a short-term rental ordinance in effect. As long as real estate professionals and property managers are following the basic requirements, highlighted on the Airbnb site, then they are allowed to operate the way they see fit. “To help create comfortable, reliable stays for guests, we ask all hosts to meet basic requirements for each listing,” Samuel Randall, Airbnb senior communications manager for the eastern U.S., told Atlanta Agent magazine. “This applies to all listings, around the world.”
According to Airbnb’s site, basic requirements include: Be responsive, accept reservation requests, avoid cancellations and maintain a high overall rating. They also offer tips specifically for real estate professionals looking to grow their portfolios. Hosts “are responsible for identifying, understanding, and complying with all laws, rules and regulations that apply to their listings,” said Randall. “This ranges from obtaining any required licenses or permits to facing any penalties of enforcement.”
The affordability question
Online hospitality marketplaces like Homeplace, VRBO, and — most popular — Airbnb, have changed the hospitality market, but housing affordability advocates and economists alike have also argued the ethics of the booming business practice.
Short-term rentals mean that fewer homes are available for regular leases and cause pressure on the housing market. The low-inventory market drives up costs, which can cause tenants to be displaced. Several cities — including San Francisco, Washington, D.C., and New York City — have introduced legislation to address this concern.
The city of Seattle has put legislation in place to regulate short-term rental properties. It was one of the first to created stricter boundaries for marketplaces like Airbnb. During a recent media call for the National League of Cities Summit in San Antonio, former mayor and city councilmember Tim Burgess noted that the ordinance that the city passed in 2017 caps the number of short-term rental units for a property at two. “One can be a primary residence, plus one more,” he said. “If you live outside the city, as an outside investor, you would only be able to have one.” According to Burgess, short-term rentals have a space in the hospitality market, but a lawmaker’s job is to make sure its balanced and fairly regulated.
Due to these perceptions, the industry is fighting back with data. “Vacation rentals are a really important part of the accommodations mix. They’re not going away, and yes, they create challenges for local communities, and so we’re really here to say we hear your concerns and we want to help solve them with real, effective regulatory solutions,” Amanada Pedigo, vice president of government and corporate affairs for Expedia, owner of short-term rental site VRBO, said during the media call.
Expedia partnered with Oxford Economics to examine what role short-term rentals play in housing affordability. Their recent study found that vacation and short-term rentals are not the key contributors to affordable housing challenges that the United States is facing. “We find that the major drivers of the rental side and homeowner side is really just economic growth,” Alice Gambarin, researcher at Oxford Economics, told Atlanta Agent magazine. According to Gambarin, the growing economy contributes to home and rental prices rising. She also referenced labor market conditions that have been improving. “Unemployment has dropped dramatically recently, so that has had a major impact on home prices and rent as well.”
Pedigo emphasized the idea that Expedia is working to address the concerns of the public, even if their data showed their industry isn’t necessarily responsible for the affordability crisis. “Despite the findings,” she said, “Expedia wants to work collaboratively with local communities to find fair and effective regulation of the short-term rental market.”
Airbnb also said they are in support of common-sense home-sharing regulations. They claim to have built more than 500 regulatory relationships with jurisdictions throughout the world. “Through this partnership, we have found paths forward for short-term rentals,” said Randall, “addressing local concerns while protecting residents who rely on home sharing for extra income, as well as small businesses that benefit from visitors.”