At the end of last year, VRBO sent a warning that we needed to register our San Francisco condo as a short-term rental. We knew our condo didn’t meet the city’s definition of a “short-term rental” because we have a minimum stay of 30 days, so I ignored the message. Then I got one that said VRBO had made our listing inactive. Ah, I thought. That’s why we haven’t been getting inquiries.
It took several emails, a phone call, and some paperwork before VRBO finally reinstated the listing. Now we’re finally hearing from potential guests again.
San Francisco, where Airbnb was born, is no outlier. Cities, counties, towns, and even states all across the country (and elsewhere in the world) now tax, regulate, limit, or even ban short-term rentals. In some places, hosts who fail to comply risk racking up huge fines, along with losing their right to rent out their home to travelers.
But doing the right thing can be tricky. The rules, laws, and regulations vary from place to place. Worse, they’re changing rapidly as local and state governments confront what are often very controversial issues. To be safe, learn what you need to do to make sure your short-term rental is in compliance.
The Definition: What is a “short-term rental”?
In most places, a rental for less than 30 days is considered “short-term rental.” That means your home would be subject to short-term rental regulations if you rent it out for only a few nights or a week at a time. But different localities define “short-term” rental differently. Don’t take it for granted that you’re okay if you, like us, have a 30-day minimum. Check to be sure.
The Reasons: Why governments regulate short-term rentals
Until recently, few local governments put much effort into regulating short-term rentals or enforcing whatever rules were already on the books unless they received complaints. But with the proliferation of short-term rentals in communities all over the country, the issue has risen like cream to the top of many government agendas. The reasons typically include:
- A noticeable uptick in complaints from residents who are concerned about strangers coming and going in their neighborhood or who have been bothered by increased noise and traffic. In some communities, residents are being confronted with short-term rentals that are being used as party pads, and worse.
- The real or assumed impact on housing of large numbers of homes and apartments being turned into short-term rentals by people who buy up or rent multiple properties for the sole purpose of renting them to short-term guests.
- Competition with hotels, bed and breakfast establishments, and other registered, tax-paying “transient” housing.
The Problem: No one place to go for information
Learning about the ins and outs of short-term rental compliance is a research project. While you can visit a U.S. government web site for information about the income taxes due on rental income, information about local regulations nearly always lives in a number of different places. You will probably have to check with several agencies to find out what rules, laws, and regulations apply to your situation.
You might find that you have to register your short-term rental as a business. You might need a separate permit – or permits, each of which has its own fees. You’ll undoubtedly have to comply with safety regulations (smoke alarms, fire extinguishers, and the like). You might even discover that zoning restrictions make it illegal for you to rent your home to short-term guests.
Enforcement: What if you fail to comply
Even when a town or city has short-term regulations on the books, enforcement might not be a priority unless the governing agencies receive too many complaints. The chances of that happening increase exponentially with the increase in commercial short-term rentals owned or managed not by individual homeowners but by “hosts” who rent out multiple properties.
If you list your home on Airbnb or VRBO, and perhaps on some other popular sites as well, you won’t have a choice about getting a permit and paying the applicable fees and taxes. If you do have the choice and decide to keep your short-term rental under the radar, you risk being hit with hefty fines, and you might even be banned from taking paying guests altogether. It’s safer to follow the rules.
The Process: What you need to do
First, learn as much as you can about the rules, regulations, and laws that impact short-term rentals in your city, town, county, or state. Airbnb, VRBO, and Trip Advisor have summaries of and links to regulations for some U.S. cities. But mostly you’ll be on your own to figure out what you need to do to make sure your short-term rental is in compliance.
Search for “short-term rentals” or “vacation rentals” on government web sites and in your local newspapers. Look for:
- Zoning regulations
- Business licenses and permit requirements
- Safety requirements and health code regulations
- Sales and business tax requirements
- Agendas for governing entities such as a city council or board of supervisors
- Relevant articles, editorials, and letters that have made the news
If you’re in a large city, there is likely to be a ton of information. In fact, the city of San Francisco even has its own Office of Short-Term Rentals that gave me the information I needed to determine whether our short-term rental was legal. But when I searched our county’s web site to determine whether our suburban home is in compliance, I found only a press release saying that the Board of Supervisors is about to consider a new ordinance. A search of the State of California site returned mostly links to news articles from various places about the state. All I can do is keep checking back.
Have you experienced any compliance issues with your short-term rental? Have local rules, laws, and regulations impacted your ability to rent out your home? Let us know in the comments or on our Facebook page.