Should Airbnb be Restricted?
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KEY SOURCES
Harvard Law and Policy Review
Current Issues in Tourism
Brooklyn Journal of Corporate, Financial and Commercial Law
Economic Policy Institute
Journal of Marketing Research
Mercatus Center
Planning and Environmental Law
Bookings Institution
Foundation for Economic Education
WHY THIS QUESTION MATTERS:
In 2008, Airbnb co-founders set up three air mattresses in their apartment to make a little extra cash. A decade later, the digital home sharing platform is valued at $31 billion and offers more than 7 million accommodations, where homeowners across 220countries and regions rent their homes for short-term stays.
As the company continues to grow, many local policymakers are beginning to grapple with the benefits and pitfalls of a large Airbnb presence in their communities. In the city’s most expensive local referendum to date, New Jersey residents voted to impose greater restrictions on short term rentals, aimed at curbing Airbnb’s presence in Jersey City.
THE RISE IN SHORT-TERM RENTALS:
On any given night, there are an average of 2 million people staying in an Airbnb. While traditional Bed & Breakfast lodging has existed for decades, the incredible growth of the Airbnb platform is often attributed to its superior technology. Airbnb’s website and mobile app directly and seamlessly connects hosts and guests. Hosts are property owners who rent part or all of their home to guests, who are searching for short-term accommodations.
Airbnb and other platforms that facilitate home-sharing have developed into a major players in the tourism industry. Airbnb now has more rooms available than major hotel chains like Marriott and Hilton. The growth of Airbnb and similar platforms comes with benefits and pitfalls. Benefits include giving tourists opportunities for “off-the-beaten-track” experiences and allowing hosts to earn extra income. Pitfalls include negative impacts to existing residents who may be effected by increased tourism in their neighborhoods and increased cost of living.
Many cities are now considering a plethora of options to address these concerns.
EXISTING REGULATIONS:
Currently there are several existing regulations that impact Airbnb in cities across the country. Regulations vary across state and local governments but most include specific zoning rules, which regulates how properties in specific zones are used. For example, zones may be dedicated to commercial use, schools, or single-family residential homes.
As Airbnb grows, cities’ approach to new regulations may be bucketed in three-categories -- prohibition, limitation, or laissez-faire.
Prohibition means a complete ban. While it may resolve the negative impacts of short-term rentals, it also risks increases in an underground market.
Limitation has four types:
Quantitative (number of short-term rentals and visitors)
Locational (limits based on zip code)
Density (number of short-term rentals in certain locations)
Qualitative (restricting the type of housing and set requirements for safety)
Laissez-faire means regulations are limited.
NEW JERSEY + AIRBNB:
New Jersey’s ordinance places a 28-day per-year cap on short-term rentals in buildings where the owner is not a permanent resident. Let’s take a look at some pros and cons of restricting Airbnb presence in cities.
What do you think?
The Common Thread
Proponents and opponents of the restrictions both say that New Jersey communities and the economy should thrive.
FIND YOUR Thread
Supporters of the restrictions believe that Airbnbs are hurting local communities via over-tourism and high cost of living. Opponents of the restrictions believe that Airbnbs are helping local communities via local commerce and allowing homeowners to make additional cash from their homes.
Yes, Airbnb should be Restricted.
Reason 01
Airbnb increases the cost of living and reduces the quality of life for existing residents
The rise in Airbnb rentals increases the overall costs of rent in a city -- removing potential housing from the long term rental market to the short-term tourist market. (Harvard Law and Policy Review)
Turning residential areas into de-facto hotels reduces the quality of life for existing residents, who must deal with additional noise, trash, and parking issues associated with increased tourism and sometimes rowdy short-term renters. (Current Issues in Tourism)
Airbnbs are generally concentrated in expensive neighborhoods, which can displace middle-income renters and increase the speed of gentrification. (Harvard Law and Policy Review)
Reason 02
The Airbnb business model mostly benefits real estate investors instead of traditional homeowners.
Much of the benefits of hosting Airbnbs goes to investors, not typical homeowners. Real estate investors view Airbnb as an economic opportunity to buy investment properties and rent them as Airbnbs. (Brooklyn Journal of Corporate, Financial and Commercial Law)
64% of Airbnb listings in Los Angeles are for units that are never occupied by their owners or leaseholders. They functionally operate as a year-round independent, unlicensed hotel room. (Harvard Law and Policy Review)
Wealthy investors and individuals are more likely to be able to afford the most desirable properties and are therefore more likely to benefit from a large Airbnb rental income. (Economic Policy Institute)
Reason 03
The lack of oversight and regulation pose public health concerns, including congestion and cleanliness issues in residential neighborhoods.
Unions and hotels complain that “Airbnb unfairly competes with hotels by avoiding occupancy taxes and zoning laws, skirting public health regulations, and undercutting unionized hotel workers by connecting its hosts with independently contracted cleaners.”(Harvard Law and Policy Review)
Many short-term rentals blatantly violate zoning codes and may be hazardous to public safety when they are used for parties and other unintended activities.(Current Issues in Tourism)
No, Airbnb should not be Restricted.
Reason 01
Airbnb is good for travelers, local economies, and local governments.
Airbnb is an innovative technology that makes travel more affordable. A study in Texas found that each 10% increase in the Airbnb market resulted in a 0.4% decrease in hotel revenue, as hotels were forced to lower prices to compete with Airbnb. (Journal of Marketing Research)
The average rate to rent an entire Airbnb apartment in Chicago or San Francisco is less than the average price of a 4 or 5 star hotel. (Current Issues in Tourism)
Increased tourism helps local businesses and increases tax revenue for local governments. Airbnb housing located outside of traditional tourist areas helps spread tourism income over greater areas of the city. (Current Issues in Tourism)
Short term rentals also fill a gap in the marketplace for individuals who are moving to a new city or remodeling their home, who need longer accommodations than a hotel but shorter than a long-term lease. (Mercatus Center)
Reason 02
Airbnb provides supplemental income to homeowners.
The Airbnb platform allows homeowners to leverage their largest asset (their home) for supplemental income, which is particularly important in times where cost of living is increasing in cities or in times of economic uncertainty. (Planning and Environmental Law)
Airbnb’s peer-to-peer model creates “win, win” efficiencies for hosts and guests. One study found that guest’s benefits averaged $41 per night (from more options and cheaper lodging) while hosts benefited $26 per night (from additional short term rental income). (Bookings Institution)
Reason 03
Opposition to Airbnb is led by its direct competitors and unfairly blames short term rentals for the high cost of living in large cities.
Airbnb is sometimes blamed for the high cost of living in large cities. However, restrictive zoning laws that constrain housing supply have a much more significant effect on increasing rental prices. (Mercatus Center)
Opposition to Airbnb is led by the hotel industry and hotel workers unions. A full ban of Airbnb would not be beneficial to tourists or hosts (Foundation for Economic Education)
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