- Ziggurat Realestatecorp
- Apr 14
- 5 min read
The temptation to ban short-term rentals is strong. But cities would do better to step up regulation.
The Predicament
Talk to any resident of a world city popular with visitors, and two complaints inevitably come up: Rents are too high, and there are too many tourists.
It’s tempting (and, data suggest, not unjustified) to place some of the blame for these woes on Airbnb Inc., Vrbo and other websites that facilitate short-term rentals. Critics accuse them of reducing the supply of available homes and saturating popular neighborhoods with wild partygoers. Shops catering to these visitors end up elbowing out other smaller businesses, making daily life even harder for locals.
In response, many cities have already introduced restrictions on short-term rentals, with some moving toward total bans. Barcelona requires property owners to apply for a tourist license for rentals of fewer than 31 days. Earlier this year, authorities there announced they would stop issuing licenses and not renew existing ones until after November 2028. Others are following suit: In September, residents in Budapest’s sixth district narrowly voted in favor of a total ban that would take effect in 2026.
But bans also penalize city residents and visitors, including short-stay hosts conscientiously trying to follow rules and be good neighbors and guests who mind their manners. Is there a compromise that enshrines the benefits of short-term stays without driving up costs and frustrations for year-round residents?
The Case For
Because renting out homes by the day is often more profitable than by the month, Airbnb and its ilk are an irresistible draw for landlords. Critics say the proliferation of short-stay listings leaves prospective tenants chasing a dwindling number of long-term rentals, jacking up prices and pushing out those who can no longer afford them.
A 2018 study by New York City’s comptroller found that whenever the number of short-stay listings in a given area increased 1%, average rents in that neighborhood rose 1.6%. The spread of Airbnb and competitors, the study said, was responsible for 9.2% of all annual NYC rent increases from 2009 to 2016.
The Booming Short-Stay Market
To limit this impact, cities including New York have placed restrictions on short-term stays. But enforcement is a challenge. A 2017 study of publicly available agreements found that Airbnb and other platforms rarely provided exact addresses for dwellings to cities seeking to monitor locations. Even in cases where rule-breaking can be proven, hosts often go unpunished. According to a 2022 study, the city of Los Angeles fined or sent warning letters to only a third of the illegal listings detectable within the city that year.
City governments might be more tolerant of short-term rentals if there were a clear economic case. But studies cited by the Economic Policy Institute found they jeopardize revenue flowing into municipal coffers because the recording and implementing of tax obligations from short-stay hosts are less comprehensive than for hotels, partly because some local agreements cede responsibility in this area to the short-stay platforms themselves.
There are also concerns that short-term rentals leave travelers more exposed to scams and other types of harm, compared with hotel stays. Then there’s the nuisance factor: Barcelona’s Airbnb ban comes after widespread public protest in the city against antisocial behavior from tourists, notably late-night noise from tenants of short-stay lettings. Add it all up, and it’s no surprise that many city leaders are contemplating wholesale bans, rather than more stringent regulations.
The Case Against
Airbnb and its competitors may be unfairly taking heat for housing crises that are largely not of their own making. When a country such as the UK would need to build another city the size of London to satisfy its current housing needs, it’s clearly insufficient home-building, rather than tourism trends, that’s to blame. There are also tentative signs that curbs on short-term stays may not be having the desired effect on easing long-term rental costs—and not just because of a lack of enforcement. In September 2023, New York City banned the renting of entire units for fewer than 30 days. (Spare rooms within homes permanently occupied by hosts were exempted from the rule.) One year on, many apartments previously offered for short stays have simply shifted to medium-length stays of more than 30 days, a market that’s even less regulated, while the modest rent decreases observed since then have been attributed to other factors.
“As we have seen in New York City, short-term rental bans do not alleviate housing challenges,” Theo Yedinsky, Airbnb’s vice president for public policy, said in a statement, “only benefitting large hotel chains that rapidly increase their rates. Airbnb has always welcomed reasonable regulations that balance the needs of communities with the ability of residents to earn additional income.”
It’s also important to note that not all Airbnb listings are suitable, or even viable, for full-time rental. Beach or winter sports resorts, for example, commonly have apartment buildings that were always intended as seasonal housing. Additionally, even if most vacation apartments are run by hosts with multiple listings, comprehensive bans penalize single-listing hosts who rely on the platforms to supplement their income.
The Common Ground
Although no city appears to have cracked the code on controlling short-term stays, most could do a better job of regulating them. Making sure hosts register their dwellings through a licensing system can make for a safer service, where tax revenue is also easier to collect.
Some city authorities say that for full enforcement of existing rules, they would need access to a more robust database that allows cities to click on a short-stay listing, trace it to a specific address and owner, then see how much it has been occupied across all platforms.
Airbnb has been working more closely with cities to address these concerns, moving in the direction of greater transparency. For instance, the company introduced the Airbnb City Portal in 2020, which makes it easier to check listings against licenses.
Airbnb is also involved in projects such as the Airbnb Housing Council that promote affordable housing in urban communities. “We have successfully worked with governments around the world to enforce proportionate local STR regulations,” Yedinsky said in his statement, “and believe cities should address the needs of their individual neighborhoods prescriptively as a more effective way to regulate.”
There are city leaders who say that Airbnb has been a benefit and that current restrictions are working. Rui Moreira, mayor of Porto, Portugal’s second-biggest city and a popular tourist destination, says recent constraints placed on the number of Airbnbs permitted in its most popular neighborhoods have proved effective, encouraging hosted apartments to spread out from the city core. That’s helped spur the economic revival of run-down areas that might otherwise struggle to find funding, he says.
Source: Bloomberg
