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Cities turning to technology to enforce Airbnb rules

  • Jul 19, 2018 | Jennifer Sokolowsky

making deals

The regulation of short-term rentals is a hot topic in cities across the United States. As the popularity of online short-term rental platforms such as Airbnb, VRBO, and HomeAway has grown, conflicts have increased as well — with disgruntled neighbors objecting to vacation party houses, the hotel industry seeking a level playing field, and cities looking to reap tax revenues.

Operating a short-term rental business was once as simple as putting up a listing online. Now, an increasing number of communities are asking far more of short-term rental hosts. These demands can include:

  • Requiring short-term rental permits and/or business licenses
  • Adhering to rules on the number of days short-term rentals can be offered
  • Restricting whole-home rentals
  • Limiting short-term rentals to primary residences only
  • Following zoning restrictions
  • Observing parking and occupancy restrictions
  • Requiring lodging tax registration, collection, and filing

As the rules multiply, cities continue to look for help in enforcing those rules. In the past, it’s been extremely difficult for communities to track short-term rentals, but technology is changing that.

For example, Charleston, South Carolina, which recently passed a strict short-term rental law, is accepting bids from third-party companies to provide a system of "continued monitoring and support for prosecution" of illegal short-term rental properties. The desired software would include weekly screenshots of short-term rental listings as well as addresses and contact information.

Software solutions

Charleston’s search is not unusual. In many cities, budgets for short-term rental law enforcement now include contracts with outside companies that hunt down short-term rental properties operating illegally or operators failing to fulfill their lodging tax obligations.

These companies sleuth out identifying data on rentals — even though addresses and full host names are not generally provided in short-term rental listings. Using special software, the companies use short-term rental listings and other public records to identify short-term rental addresses and owners. These are then matched up with a city’s records to see which rentals are out of compliance or whether operators are dodging tax obligations.

These companies also provide other services for cities, including sending out notices of violations to property owners, operating hotlines for complaints about short-term rentals, and tracking short-term rental property nuisance violations.

One of the largest of these companies is Host Compliance, which provides services for more than 120 cities and counties, including Fort Lauderdale, Los Angeles, Nashville, Oakland, and more.

Other companies that help cities with short-term rental compliance include LTAS Technologies, which has worked with cities such as Santa Fe, New Mexico, and La Quinta, California, and STR Helper, which counts Moab, Minneapolis, and Palm Desert among its client cities.

Yet other firms, such as BNB Shield and LeaseAbuse, focus on helping landlords and homeowners associations ferret out tenants or members offering short-term rentals in violation of policies or contracts.

Getting results

The services these kinds of companies provide can help cities boost short-term rental compliance dramatically. In Madison, Wisconsin, for example, only 11 percent of short-term rental operators were licensed by the city in August of 2017. In late 2017, the city hired Host Compliance and the percentage of operators with short-term rental licenses rose to 68 percent by April of this year.

Steep penalties

While cities are employing technology to crack down on illegal rentals, they’re also creating penalties with teeth. In Miami Beach, for example, operators are charged a fine of $20,000 on the first violation of the short-term rental code. Each subsequent fine increases by another $20,000 and can go as high as $100,000. Since March 2016, Miami Beach has issued $12.1 million in fines.

A resident recently sued the city over the fines, but the severe penalties show that cities are getting serious about enforcing their short-term rental laws.

San Francisco has also been aggressive in its efforts to crack down on illegal short-term rentals. The city holds short-term rental platforms such as Airbnb, VRBO, and HomeAway responsible for monitoring their listings, and they can be fined up to $1,000 per day for each illegal listing. Hosts can be fined at least $484 per day for each unit in violation.

Earlier this year, the San Francisco City Attorney’s Office asked a Superior Court judge to fine a couple more than $5.5 million for illegally offering short-term rentals on 14 units.

And in Portland, Oregon, violating short-term rental laws can result in penalties of $1,000 for the first offense, $3,000 for the second, and $5,000 for the third.

No longer the Wild West

For cities, getting outside technological help to enforce short-term rental laws means they have the resources to crack down on illegal operators like never before. For hosts, it means that flying under the radar is no longer a low-risk option, especially in areas with high penalties for breaking short-term rental laws. With more and more communities cracking down on noncompliance, hosts can no longer afford to ignore their communities’ short-term rental regulations.

MyLodgeTax can help hosts easily comply with lodging tax requirements, including registration, rates, and returns.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.