Sensible Regulation Is the Solution

Sensible Regulation

The travel industry (like the taxi industry) has changed forever whether we like it or not. Airbnb is the new normal and more and more people are putting their properties up as short term rentals for other families traveling to their area. Those who think no regulation can or should come are wrong. Regulation is coming, the only question is what kind. All responsible and fair-minded citizens should think about this issue and consider the situations of Steve and Erica.

Steve

Steve has lived in his neighborhood for 25 years. He knows his neighbors, they all raised families together. As time has passed, several of the neighbors moved away and sold their homes to people who are now renting them on Airbnb. His residential neighborhood now feels more like a hotel district with people coming and going and constant parking issues. Last week one of the homes had people out drinking in the back yard until 2 a.m. Steve thought he was in a residential neighborhood (as did his newest neighbor Jared, who just moved in). They now are having conversations about going to city hall with their complaints to seek a solution. After all, residential neighborhoods are for neighbors, not tourists.

Erica

Erica lives in Southern California and has grand kids who live in Reno, Nevada. They love Reno and decided to buy a property they could stay in or rent out to other travelers. It’s in a neighborhood where the homes are spaced well, pretty private, and most people are renting anyway. No one seems to mind. No one has ever complained about it. Travelers write all sorts of great reviews about how nice it was to have a house to stay in with their families and how much they enjoyed spending money at local shops and restaurants. Erica makes enough to cover all the property expenses and now is able to visit her grand kids more often. Erica pays her accommodation taxes to the city for each stay and employs a local mom to clean the home (which supplements her family’s income). However, last week she got a notice from the city saying that they are banning vacation rentals. Erica thinks to herself, “Why? No one has ever complained about my property, what have I done wrong? It’s my property, do I not have a right to rent it if I am not harming anyone?”

Perhaps you know a person like them. You probably could see yourself in either of their shoes. Like Erica, you probably have stayed in an Airbnb or would love to own one in a place that is special to you. You also probably would be upset if the house next door to your personal residence was having parties all the time and changing the character of your street. Let’s take a moment to reflect on the fact that there are no “bad guys” in this scenario, just legitimate interests that need to be considered. We need to be objective and consider both sides and do our best to find a sensible solution for both parties.

But what does that look like?

What Sensible Regulation Looks Like

Principle 1: Keep it as local as possible.

Principle 2: No nuisance, no problem.

The main idea is that if a rental is not bothering the people who live near it, then it’s not a problem. On the other hand, if it is an annoyance to those around it, then there should be recourse. Ideally, cities would leave the matter to HOAs and treat nuisance short term rentals just like they treat nuisance long term rentals. After all, long term renters throw parties and cause problems from time to time, too. Still, regulation can be done in a reasonable way. Here is an example of sensible regulation which could be enacted at either a city or HOA level.

  1. Allow any property to be permitted for a small annual fee that goes to either the city or HOA thus helping them raise funds.

  2. Allow permits to be revoked or not issued if…

a. Two or more nuisance complaints are validated by police.

b. At least 4 Neighbor's within 1 block (500 ft) of the property sign a petition to ban them on their street.

Again, all of these measures allow for Erica to continue operating as long as her property is not a nuisance, but allows Steve the ability to protect his home from nuisance or to keep rentals out all together.

What Bad Regulation Looks Like

Any regulation at the state level

This is clearly a local issue. It should be handled ideally at the HOA or at the very most, city level.

Banning Rentals

The problem is that this does not work. Airbnb has transformed how people travel and people will do it under the radar if they are not provided a reasonable path that allows them to operate. A vacation rental black market prevents oversight, loses potential sources of city or HOA revenue, leads to conflict/litigation and creates an environment of illegal/unhealthy activity.

Any regulation that does not grandfather in existing units

If a property has been operating without any complaints it should be allowed to continue operating.

Any regulation that seeks to control price

Owning a home is a way for people to achieve financial stability. Artificially trying to push down property values harms people’s biggest investment, their home. Also there is no evidence that exists that shows vacation rentals significantly change housing prices. Is it government's responsibility to set or fix prices?

Only allowing a certain number in a geographical area

While this one sounds good, it is a “blanket solution”. Why not allow the people on the actual streets that are the ones affected by the problem decide if it’s a problem or not. Provide citizens with recourse, not blanket solutions that affect properties that are not bothering anyone.

In Summary

In the end, there is no “perfect solution”. There always will be someone who doesn't like the regulation, but don’t forget about Erica and Steve. They both are good people and neither is doing something wrong. Any solution we come up with should keep them in mind and be creative enough to serve both of them with a reasonable middle ground. It may be easy to just jump on one side of this debate, but that only leads to increased partisanship and missed economic opportunities. The world is changing because of technology and we are more partisan than ever. Let’s seek a solution that satisfies both sides, avoids partisanship, and takes advantage of the technology and the new innovations changing our world.