New York imposed new rules on short-term rentals in the first week of September. According to the revised regulations, property owners are prohibited from renting out an entire apartment to guests staying for less than 30 days. Hosts have to register with the city and they must be present and share the living space with guests throughout their stay. These rules also capped the number of guests to a maximum of two at a time thus preventing families from renting out such accommodations.
Florence, Italy shares a similar situation. In June 2023, authorities in Florence put in place a ban on new short-term private rentals within the historic centre of the city. This decision was implemented as a part of an initiative to encourage full-time residents to return to Florence, which is one of Italy’s most popular tourist destinations. One may question as to why the need for such regulations arose. It was because students in various cities including Milan, Florence and Rome protested and camped out in tents on campuses to bring to attention the scarcity of affordable housing. Florence was already home to 8,000 short-term private rentals. Therefore, Mayor Dario Nardella promised that these existing rentals would be left untouched by the new regulations. Instead, property owners were offered tax incentives to encourage them to convert their properties back into long-term rentals, to increase the availability of housing for local residents.
These are just two of more than a dozen cities around the globe that have gone ahead with imposing bans and strict regulations on short-term rentals. If one does extensive research on cities such as London, UK; San Francisco, USA; Amsterdam, Netherlands; Toronto, Canada; Singapore; Berlin, Germany; Paris, France and Barcelona, Spain, one can notice how short-term holiday rentals such as Airbnb and Stayz have being subjected to backlash because they were partially held responsible for the unprecedented spikes in rents and the worsening of the situation of housing shortages. The global short-term rental market had a value of USD 10.8 billion in 2022, and it is anticipated to grow to a value of USD 228.9 billion by the year 2030. This growth is expected to occur at a Compound Annual Growth Rate (CAGR) of 10.8% during the forecast period spanning from 2023 to 2030. Even though they have had a massive positive impact on how people travel, as of recently they have been accused of harming the housing market in general.
Will short-term rentals be outlawed?
The response to this question is mostly indefinite. Short-term rentals play such a huge part in the world of travel and tourism, therefore getting rid of them entirely may give birth to an entirely new gamut of problems. However, they have caused quite a controversy on a global scale. Especially because it is claimed that there is a link between the rise of short-stay accommodations and the crisis in the housing market. Nicole Gurran, a professor of urban and regional planning at the University of Sydney, who has been studying the sector for almost a decade, speaking to Nadi Daly writing for ABC News, explains how:
“There is robust research evidence now internationally that the more short-term rentals in an area, the tighter a rental market, and you see that tight rental market flows on in terms of higher rents and higher house prices. The research evidence shows, too, that when you take short-term rentals out of the market and return them back to the long-term rental supply, that rents also fall in an area.”
However, she further delineates how regulating short-term rentals alone will not magically solve the housing crisis. She notes that short-term rentals do play a part in exacerbating the rental housing crisis but it is not the crux of the problem nor is it the entire problem. From the perspective of short-stay companies, they believe that they are being used as a fall guy of sorts to take the blame for the grave long-term issues that contribute to housing availability. Opinions of individuals such as the Corporate Affairs Director at Stayz and the Head of Public Policy of Airbnb Australia and New Zealand were quoted by Daly in the same article where both posit how they should not be used as the scapegoat because they do not align themselves with the premise that they are either the cause or the solution to the housing affordability and availability problem.
Despite this back and forth where one party is playing the blame game and the other is rebutting, the major concerns that are tied to short-term rentals are how an increasing number of property owners are catering to travellers rather than long-term tenants, the adverse effects that it has on the local neighbourhood and how they can lead to gentrification of local communities. For instance, platforms such as Airbnb often bring in visitors from outside the community who may not be familiar with or considerate of local norms and customs. This can result in conflicts and complaints within the community. Addressing these temporary interventions can be regulated via law enforcement and communication. However, short-term rentals can have enduring effects on neighbourhoods, potentially altering their character and dynamics in the long run.
Additionally, there is a growing trend where homeowners are readily converting their properties into short-term rentals because of different socio-economic factors (the aftermath of COVID-19 being one). Doing this can result in a decrease in the availability of long-term rentals in the neighbourhood, where the scarcity may lead to higher rental prices, which could, in turn, strain the budgets of lower-income families. The short-term rental market might also attract more investment in housing for rentals, intensifying competition among local families for available properties. Eventually, economic pressures may push these families out of their neighbourhoods, leaving behind a wealthier population. As vacated homes are occupied by wealthier newcomers who can afford higher prices, property values may rise. Over time, this transformation of the neighbourhood with an influx of wealthier residents is how gentrification will occur leaving behind irreversible changes in the process.
Mixed feelings about short-term rentals
The social impact of short-term rentals is clearly up for debate. On one hand, there is proof that suggests that they contribute to higher rental costs, but on the other hand, it is considered as a source of income for many homeowners, stimulate local economies and bring in a flow of diverse people to the neighbourhood that gives rise to a vibrant atmosphere. Yet even amidst such benefits, affordable housing is a basic need for everyone in our society and that is why it is necessary to tightly regulate short-term rentals either via limiting the number of days one can stay at a short-term rental, a code of conduct for hosts and guests, an annual fee, the need to register the property or imposing a tourist tax to strike a balance between short-term rentals and long-term housing. However, none of these measures should be implemented arbitrarily or without consultation because that will do more damage than good to the industry of short-term rentals.
(Sandunlekha Ekanayake)