By Adam Lampe
Short-term rentals like Airbnb and VRBO are expected to continue rising in popularity. However, though short-term rentals solve problems for both owners and renters, the trend was bound to prompt restrictions in response to complaints by neighbors concerning problems caused by some tenants.
Across the country, and notably in cities across the state of Texas, like Austin, Dallas, Fort Worth, San Antonio, South Padre Island, Corpus Christi, and Galveston, this division among middle-class citizens has resulted in the recent enactment of many short-term rental laws and regulations.
Short term rentals are even banned from many residential areas (though preexisting properties are normally grandfathered in). The implementation of and the effects resulting from some legal restrictions that have been put into place for short-term rental properties have been furthering a major divide among middle class Americans rather than solving it.
Why do Short-term Real Estate Rentals Spark Division?
Several concerns top the list of legitimate concerns neighbors of short-term rentals have voiced.
Some short-term rental tenants, on vacation with their friends, hold loud partiesin neighborhoods where residents are normally quiet and reserved. Tenants who will only be in the area for a short time don’t always respect the rights of neighbors.
Additionally, Airbnb or VRBO rentals may be able to demand higher rental fees than those normally charged in an areabased on the cost of living there. When local landlords with long-term rentals realize this, they sometimes raise their rental fees, making homes unaffordable for those who have resided in the area for years.
Permanent residents have also raised concerns about safety in their neighborhoods. Some short-term renters may participate in illegal activities. Or, their unruly presence may seem intimidating. Established residents of quiet neighborhoods may fear for their safety, and/or that of their children.
Laws Governing Short Term Rentals in Texas
Loud parties that disrupt the peace of residential areas, skyrocketing rent prices that make it impossible for tenants to remain in homes where they’ve resided for years, and incidents of crime in neighborhoods where formerly they were rare, are real and legitimate concerns.
The state of Texas has no specific laws regarding short-term rentals. Instead, it has been left up to individual cities like Austin, Dallas, Houston, Fort Worth, Galveston, San Antonio, and South Padre Island.
They have enacted, in some cases, strict requirements and restrictions on the use of private homes in neighborhoods for short-term real estate rentals, includingAustin’s requirement for an operating license, and rules regarding number of occupants, noise level, etc., Houston’s Multiple Dwelling Law and hotel occupancy tax on short-term rentals, and Fort Worth’s extreme legislation banning vacation rentals in residential areas.
Pros of Airbnb for Property Owners are at Risk from Restrictions
Homeowners, many of them middle class, who need the income from Airbnb or other types of short-term real estate rental arrangements, suffer from rulings that restrict their right to offer their home as a short-term rental. The following are some of their concerns, regarding these restrictive laws.
If they typically do long-term rentals but currently have no leasers, Airbnb is a good way for property owners to fill in the gaps and still make money until a semi-permanent resident is found. Restrictive laws can force them to leave properties empty. Thus, income is lost for the time it takes to secure a new long-term tenant. Not all property owners can survive these periods without rental income.
Many Airbnb owners are middle class families or retirees who invested all their spare money into one property to make extra cash. These new restrictions could be severely limiting to their income.
The Need for a Fair Solution
Many Airbnb and other short-term rental owners aren’t big, greedy real estate barons. They’re just average families looking for an additional source of income to support themselves and their families.
Highly restrictive laws can unfairly hurt average citizens. An answer is needed, which addresses the problems caused by some who occupy short-term rentals, while allowing homeowners and small investors the freedom to use their residences to gain needed income.
New Airbnb anti-party Technology
A move announced in June by Airbnb, could solve some of the community’s concerns without overly limiting property owners. The previously temporary ban on parties will now become a codified policy, enhanced by new anti-party technology. The new anti-party tools will be implemented in the US and Canada to help identify potentially high-risk reservations and prevent such users from taking advantage of the platform.
The system examines factors like history of positive reviews (or lack of such), how long the guest has been on the Airbnb platform, length of the trip, distance to the listing, weekend vs. weekday, and many more. The system is designed to help reduce the ability of guests to throw unauthorized parties which negatively impact Airbnb hosts, neighbors, and communities.
Airbnb’s responsible plan should help prevent the need for restrictive laws that limit the rights of short-term rental owner’s, many of whom have middle class incomes, to earn profits from their properties.
Adam Lampe is the CEO and Co-Founder of Mint Wealth Management, a firm dedicated to providing holistic wealth advice to families in Greater Houston and across the United States. Learn more at mintwm.com.
Securities and investment advisory services offered through Royal Alliance Associates, Inc. (RAA) member FINRA/SIPC. RAA is separately owned and other entities and/or marketing names, products or services referenced here are independent of RAA.
