Regulating the short-term housing-rental market makes sense, but Seattle should carefully weigh the impacts on property owners.
THE term “sharing economy” is a nifty bit of marketing: Share your car — via uberX — or your house — via Airbnb. The marketing would have you believe those slick app-based businesses are radical disruptions of stodgy economic models.
In reality, you’re not sharing; you’re renting. And the sharing economy’s sparkly innovations also bring, as we’re increasingly seeing, new problems.
The Seattle City Council, fresh from tackling ride-sharing services, appears ready to take on the short-term rental market served by popular companies like Airbnb or Vacation Rentals By Owner (VRBO). Together, they have an estimated 3,000 units listed in Seattle.
That’s a good move. The scrutiny is overdue. Big cities from Berlin to San Francisco have already put the reins around these services because an unfettered short-term rental market can squeeze the supply of long-term rentals and make housing affordability worse.
But the council should also tread carefully, respecting the right of property owners to make an honest buck by occasionally renting out a room or their entire house. Housing advocates likely will push for the most restrictive approaches to regulation, which would be a mistake.
A look at regulations imposed by cities around the world offers some options. First, Seattle must weigh regulations requiring that short-term rentals be owner-occupied or the host’s primary residence.
According to Airbnb data, about 80 percent of its Seattle listings fit that description. Imagine a retired couple seeking to rent out their apartment for a month while they travel or a university professor hoping to help pay the mortgage while away on a sabbatical.
But that remaining 20 percent slice of the market — multiple listings by a single host — has spiked as commercial-listing companies exploit a lack of regulations. One analysis shows an estimated 50 percent increase in just a few months last year in hosts with three to five listings and a similar jump in listings from hosts with six or more properties on the market.
One consequence of a “primary residence” rule is that owners of vacation-home rentals in Seattle — often listed on VRBO — would get squeezed. The city should figure out how to accommodate this market, perhaps by requiring vacation-rental owners to get a special permit.
Looking at regulation in other cities, the Seattle City Council should also consider capping the number of days a unit can be used as a short-term rental. Neighbors have a legitimate interest in avoiding the equivalent of a hotel appearing on a quiet street. And an annual cap would further discourage commercial listings of short-term rentals.
San Francisco sets its cap at 90 days. Airbnb says its data in Seattle suggest a cap closer to 157 days — the financial break-even point between a property being listed as a long-term rental versus a short-term rental.
In considering a cap, the council needs to balance property owners’ interests with the larger concerns over housing access and affordability. Setting the cap too low could, for example, squeeze a middle-class family looking for extra income by renting a child’s room while he or she is away at college.
This is a market due for regulation. But the council should tread carefully.