Developing Businesses Around Regulations For Platforms Like Airbnb
Cofounder at Upperkey. Passionate about property, tech and driving international business growth.
When Airbnb launched in 2008, travelers worldwide were delighted by the opportunity for cheaper rents in single rooms or entire homes. Property owners were similarly intrigued by a vast new marketplace and this new way to fill their short-term lets.
However, not everybody is happy with how companies like Airbnb and Vrbo have affected existing markets and culture, damaging residential letting in some of the most popular cities. The resulting regulations have made it so you have to be purposeful and knowledgeable when investing in this sector.
Why Many Authorities Are Fighting Vacation Rental Platforms
The changes that Airbnb and other vacation rental platforms brought to the rental market meant property owners could charge far higher rentals from what were once riskier and harder to fulfill short-term opportunities. It didn’t take long for many landlords to switch away from lower long-term rentals to take advantage of this opportunity.
It’s created a real issue with residential lets, drastically reducing the number of homes available for workers and residents in popular tourist cities. It’s also reduced the number of visitors staying in licensed, tax-paying hospitality accommodations.
The critical problem for the authorities (of which there are many) was that residential markets were shrinking—not only that, but with them, the city’s culture and a crucial share of its income through taxes and licensing.
Local authorities are consistently concerned that their capitals and most popular cities will become more akin to theme parks or museums than cultural havens if they lose the character their residents create from within.
Which Cities Are Strictly Against These Platforms?
The headline battles come largely from popular European cities with abundant tourism. However, the conflict is growing worldwide, with locations in Japan, Brazil and Turkey also imposing strict new restrictions.
Paris, Barcelona and Amsterdam hold some of the most stringent European policies so far, with Miami and Santa Monica heading the charge in the U.S.
However, there’s further movement from Berlin, Bologna, London and Prague—to name a small selection of the many European cities following suit and lobbying against the platform to protect local citizens and their city’s cultures.
Regulations vary from location to location. For example, in Paris, landlords must register each listing individually, and Barcelona rentals require a Tourist Use House Licence. I believe you can expect such trends to gather momentum with more local governments implementing plans to combat changes.
Outside Europe, Singapore has some of the strictest Airbnb policies in the world, and renting a property in New York is illegal if you don’t live in the property. Los Angeles is trying to ban Airbnb rentals used as party houses while adding further restrictions to non-party properties.
Paris Has Led The Charge From Day One
It’s no surprise that Airbnb’s most popular city has been fighting the platform the longest. Implementing registration regulations that require a compulsory, trackable ID number and an annual cap of 120 nights per year, one Paris court found the platform guilty of illegal listings, fining them over $9 million for failing to comply.
The 90 Days Rule In London
Paris isn’t the only city to establish a limit on short-stay rentals. London amended its legislation allowing short-term rentals in the city for only 90 days each year—as has Manchester—and a 140-day limit outside the Greater London area.
Changes to Airbnb regulations have seen plenty of support. Reykjavík followed suit at 90 days, while Amsterdam only allows a maximum of 30 days, with it banned in some parts of the city altogether.
Barcelona Bans Room Rentals
Barcelona recently became the first city to ban short-term private-room rentals—the type of let that initially gave rise to platforms like Airbnb and Vrbo.
They’ve also introduced more burdensome license requirements for short-term and holiday rental opportunities to counter professional takeovers by businesses buying up and letting multiple apartments while dodging the rules and costs incurred by hotels and private rentals.
Vienna Tightened Tax Laws Resulting In Airbnb Court Action
In 2017, Vienna changed its tourism tax laws to contend with how Airbnb landlords consistently evaded local regulations and taxes. With scores of listings visible on Airbnb, its low tax income simply didn’t make sense.
Which Cities Are Still Relaxed With Regulations?
Outside the main tourist traps and capital cities, there are still plenty of opportunities to invest in Airbnb rentals.
For every website warning you against the regulation issues, there are still a dozen more projecting high occupancies in solid rental-rate areas. A quick search should determine if those areas are free from regulation and a suitable “easy” investment for your capital.
A few areas I recommend for low-regulation regions and high returns in the U.S. include Dallas, Milwaukee, Cincinnati, Maui and Charleston.
Which Cities Are Flourishing Thanks To Apps Like Airbnb?
Despite legislation providing stumbling blocks for landlords throughout Europe, the most prosperous are still those making all the headlines. This includes London, Paris, Munich and Dublin—but for how long? I recommend keeping a close eye on how current legislation and its enforcement transpires.
However, moving away from the biggest European cities and capitals, I think there are plenty of French tourist towns, Swiss ski resorts and Spanish regions that will always offer a healthy return without the hassle.
The changes to rules and regulations regarding platforms like Airbnb change frequently and locally, so if you’re planning to invest in significant cities or elsewhere, it’s vital to do due diligence.
The savvy investor should have strategies on, for example, how to get around Airbnb’s maximum stay rules and when they need to apply for the relevant legislation. You’ll also need to be aware of how many more markets are available without getting tied up in paperwork and licensing.