Vacation rental regulatory news for the week of May 6, 2018
New York City
From the Article: A new study from the New York City Comptroller’s office claims that Airbnb has contributed to higher rents in the city. The study has been picked up by several news outlets who have repeated this claim, even though the study doesn’t establish a causal relationship between more Airbnb units and higher average rents.
Takeaway: There is an ongoing debate over the causal relationship between short-term renting and housing affordability. This week the New York City Comptroller released an in-house study claiming that “Airbnb’s” caused over $600 million in rent increases in the city.
This study has numerous flaws including misusing AirDNA statistics and sloppy methodology. The authors of an academic study, widely cited as “proof” that short-term rentals cause increase rental costs on long-term rentals, have stated that there is a “zero effect on rental rates” (The Sharing Economy and Housing Affordability: Evidence from Airbnb). This New York City report appears to be nothing more than a political tool for a politician considering running for higher office.
Pacific Grove, California
From the Article: “There’s no pleasing everyone on this topic for sure – and we know from our research that we’re somewhat pioneers in this area as far as trying to make the reforms and looking at different ways to do that – we’ve spent a lot of time and effort on it.”- City Manager Ben Harvey
Takeaway: In February, the pioneering efforts of the Pacific Grove municipal government decided to implement a lottery system on licenses. This proposal sped through the local government and passed in a matter of weeks to the surprise of many local property managers and owners. Constant changes to ordinances, especially when stakeholders are not part of the conversation, lead to negative results.
This new ordinance rightly caused local property owners and managers to file a lawsuit against the city. In the meantime, local residents angered by bad actors in the community, have filed petitions to place a question before voters that would ban vacation homes in Pacific Grove.
Cities must create sensible laws and give those laws time to work. Changes year after year and in some cases month by month only confuse the process and do not provide adequate time to see what works and what doesn’t work. In the end, both the pro and con groups in the community are angered and are losing trust in the local government.
Kauai County, Hawaii
From the Article: Last week Kauai Mayor Bernard Carvalho enacted an emergency rule to prohibit transient vacation rental homes from operating in Wainiha and Haena until May 31. Ravaged by a dozen landslides, the only access road into these isolated communities remains closed to nonresidents.
Takeaway: A new trend is beginning to emerge. Local officials are using natural disasters as a means to ban vacation homes. Kauai placed a temporary moratorium on renting a vacation home due to flooding that occurred. However, state law requires a non-conforming use certificate to operate a vacation rental and there is an annual renewal process for this certificate. To obtain a renewal you must rent your home for a least once a year. The moratorium will make it impossible for some to obtain this renewal and therefore will lose their ability to rent their homes.
In California, a county used wildfires as a reason to prohibit vacation homes in certain areas of the county. They considered it too dangerous for vacationers, yet somehow it was safe for long-term residents.
In Orange Beach, Alabama the city tried to revoke property owners rental licenses if a home was “substantially damaged”, a term they never defined. Orange Beach is located on the Gulf Coast of Alabama, if a tropical storm or hurricane were to hit the community many property owners would have lost their right to rent their vacation home.
Professional property managers must continue to be proactive in building relationships with local government officials, become resources for city staff, and keep up with what happens at city council meetings. In most communities, rules can be proposed and voted on in only 72 hours. There is often not a lot of time to react unless you are being proactive.
VRMA’s thoughts are with all of those affected by the recent natural disasters and wish those affected a speedy recovery.