Seattle to regulate Airbnb, HomeAway operations starting in 2019

Seattle's regulations could act as a template for future cities in the effort to curb home sharing.

Earlier this week, Seattle’s City Council voted 7-0 to approve new regulations on short-term home rentals, including rentals listed on platforms such as Airbnb and HomeAway. These regulations, which will go into effect Jan. 1, 2019, will require all short-term rental operators to secure licenses and will limit new operators to listing only their primary residence and one additional unit. 

“I’m proud of where we’ve gone today,” Councilmember Mike O’Brien said in a statement. “I think we’ve created a path for people to continue to operate successful businesses. There will be some changes, for sure, and I think those changes overall will be better for the community.”

There is much to unpack from this decision. First, these regulations will take another full year to go into effect, meaning the hotel market in Seattle will still have to compete with multiunit owners in the region. In addition, an exception in the two-unit limit exists for home-sharing operators who plan on listing their primary residence at a later date—they will be allowed to operate three units.

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Existing home-sharing operators with short-term rentals in Seattle’s downtown and in small buildings constructed after 2012 on First Hill and Capitol Hill will be grandfathered into their listings. These operators will be able to continue listing the number of units they do today, as well as their primary residence and one additional unit. 

Council members also clarified that the regulations will not affect bed-and-breakfast operations. They said these new rules have been put in place to deter businesses from taking large numbers of housing units out of the housing markets, converting neighborhoods into makeshift hotels. 

This seems in line with what the American Hotel & Lodging Industry demands of the home-sharing market, but it remains to be seen if it will be fully satisfied with Seattle’s decision. These regulations could serve as a framework upon which other cities could borrow from in the future, and at the very least limiting the number of units operated by individuals and businesses could help to stabilize supply in major cities in the near future. 

The effectiveness of these regulations remains to be tested, however, and Seattle will have to wait more than a year to see how well they do. The year-long wait is necessary, however, to ensure home-sharing operators have enough time to secure licenses and comply with the regulations. After all, many of these operators are citizens and not businesses.

Airbnb weighed in with its own statement, counting the decision in Seattle as a win for all parties:

"Today’s vote is a landmark win for Airbnb hosts and guests. These rules ensure the overwhelming majority of our hosts can continue to share their homes and earn extra money. Airbnb applauds the City of Seattle for developing a model regulatory framework and we look forward to continuing to work with the city as this new law is implemented."

Local hotel associations seem to be on the same side as Airbnb on this one. Shannon Sheron, president of the Seattle Hotel Association, said in a statement that the group is happy short-term rental operators will now be licensed and tracked.

These regulations are the result of two years of work on behalf of Seattle’s City Council. Puget Sound Sage, a nonprofit organization whose efforts are focused on short-term rentals and their affect on gentrification, claims 2,000 housing units have been traded to the short-term rental market in recent years. For this reason, Seattle recently defined short-term rentals as a unit offered for fewer than 30 nights, and the city also adopted a tax on these rentals of $14 a night for homes and $8 per night for rooms.

These definitions are necessary steps to take for forming regulations, and something that cities such as New York have struggled with as Airbnb and its competitors rose to prominence. Now, these cities could potentially borrow from Seattle’s template.

The City Council’s decision was not without its detractors. Some short-term rental operators who are operating several units warned of potential job losses. Many of them claimed they have been paying taxes on these units since before Airbnb was a factor in the home-sharing space, and now claim they are being punished for the outlet’s success. With a year until the new rules take effect, they will have the time to air grievances, and possible changes might take place.