Cities crack down on illegal home-sharing operators

(Opened Door)

While some hotel operators are investing in home-sharing rivals to Airbnb, the short-term rental industry may run into a snag in the near future as more towns are revisiting legislation on their operations.

The city council of Jackson, Wyo., is looking to ratify a new law to crack down on illegal home rentals, according to the Jackson Hole News & Guide. The new ordinance has been approved twice by the town but a third approval is required for the law to be ratified. If it takes, there will likely be a grace period for operators to slow their businesses.

The law will create a permitting system for legal home vacation retails, allowing homeowners to advertise legal units and make it easier for the town to crack down on illegal rentals. The goal, politicians say, is to make sure homes in residential areas are occupied by residents and not short-term vacationers, arguing that illegal vacation rentals cut into the available housing for those trying to live and work in a community. Jackson's law is expected to be enforced Jan. 1.

The regulation of short-term rentals has been going on for some time, but is just now ramping up elsewhere. Santa Fe, N.M., has some 350 permitted short-term rental properties that pay a fee to cover annual inspections, but many illegal rentals in the city are advertised online. City Councilor Joseph Maestas told the Santa Fe New Mexican that those who advertise these rentals often do not follow safety codes and are breaking the law.

"We need to get a handle on it," Maestas said.

Along with Councilor Peter Ives, Maestas sponsored a measure to research potential changes in the city's short-term rental law, looking into the affect Internet sites such as Craigslist, VRBO and Airbnb have had on the city since the law was passed in 2008. 

One impetus for cataloguing legal and illegal hotel rooms is lost tax revenue. In Santa Fe, a 7-percent lodging tax is collected each night on hotel room stays, and vacation rentals are mandated by law to pay such a tax even if they represent only a single unit. These taxes pay for local law enforcement, promotion of the city and more, but illegal vacation rentals sidestep these taxes.

According to Business Insider, that represents a lot of lost money. The website reported that the number of guests staying with Airbnb hosts during the summer is rising exponentially, from roughly 47,000 in 2010 to 17 million in 2015. That is 353 times what it was five years ago.

"It is not something we can eliminate," Randy Randall, executive director of the city of Santa Fe’s tourism bureau, told the Santa Fe New Mexican, "but something we must harness to allow this segment of our tourism business to properly support the overall city tourism efforts."