Booking platforms such as Airbnb and Vrbo are increasingly faulted for limiting housing options for local residents and driving up rents.

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Cities around the world are imposing stricter rules for short-term rentals offered as vacation properties by the likes of Airbnb and Vrbo. Short-term bookings, often defined as stays shorter than a month, reduce the supply of long-term rentals in local markets and are frequently blamed for exacerbating housing shortages, inflating rents and threatening hospitality jobs.

Barcelona pledged an outright ban on short-term rentals in June, in one of the most aggressive policies so far. It had already forbidden the rental of private rooms within homes.

Here’s why and how regulators are cracking down on Airbnb and Vrbo listings.

Why are cities regulating short-term rentals?

Many city governments see short-term rentals as an obstacle to affordable housing. When a large swath of the local housing supply is carved out for tourists, there’s less inventory for full-time residents. The New York City comptroller’s office found that roughly 9.2% of the rent increases imposed by landlords from 2009 to 2016 were attributable to the effect of Airbnb alone.

Local opponents of the short-term rental business say it encourages real estate companies and wealthy investors to buy up multiple properties — sometimes making up the bulk of units in one building — and convert them into de facto hotels. In most tourist destinations, owners can earn more by renting to splurging travelers for a few nights at a time rather than leasing to budget-conscious tenants for a year or two.

Miami, a city where dedicated vacation condo towers are being built, offers an example. Airbnb and Vrbo listings there earn an average of $309 per night, according to AirDNA, a rental analytics firm, while long-term rentals bring in about $109 per night. So it would take only 11 days of short-term rentals to exceed a full month’s rent in a long-term lease.

In Barcelona, which has more than 10,000 vacation-property listings registered with the city, rents have soared 68% in the last decade, in part because high interest rates are pushing more would-be homeowners into the rental market and also because of reduced rental inventory.

Rent prices aren’t the only complaint among locals. Barcelona, which hosted roughly 16 million visitors in 2023, is also growing impatient with the imported hooliganism and overcrowding. Graffiti and signs around the city demand that “Tourists go home.” This year, city authorities had a popular bus route removed from Google Maps and Apple Maps to ward off foreigners and create space for locals.

What kinds of regulations are cities imposing?

Cities have come up with a variety of ways to discourage people from converting housing into short-term lodging.

Principal residence requirement

New York City tries to fend off real estate investors by requiring that homeowners occupy the property alongside their guests. In a city where space comes at a premium, Airbnb said the regulation was “intended to drive the short-term rental trade out of New York City once and for all.”

Similarly, the beach town of Santa Monica, California, permits only “home shares,” as distinct from vacation rentals. Airbnb has agreed to remove noncompliant listings.

A new regulation in some parts of British Columbia permits only principal residences and one secondary unit on the same property to be listed as short-term rentals.

Maximum number of listings

Seattle has a moderately looser rule that allows an owner two listings: the home she lives in, and one other unit in a secondary investment property.

Nights per year maximum

Many cities cap the total number of nights a property can be rented in one year, as a way to make it difficult to profit from a short-term rental investment. However, these caps often provide ample opportunity for primary dwellers to offer their spaces for rent while traveling.

Cities including London, Vienna, San Francisco and Washington, D.C., impose 90-night caps. In Paris, the maximum is 120. Japan imposes a nationwide limit of 180 days. Some of those policies are enforced using data provided by the platforms.

Consecutive nights minimum

Several cities use minimums rather than maximums to make Airbnbs and Vrbos impractical. Honolulu requires renters to stay for at least 90 consecutive days. In Singapore, the minimum booking is half a year for government properties — the majority of Singapore’s housing stock — and three months for private properties.

“Whitelist” neighborhoods

Mayor Rui Moreira of Porto, Portugal, says short-term rentals can be used as a precision tool to revive neglected areas of his city. Porto has adopted a strategy of “territorial dispersion” that steers Airbnb and Vrbo loyalists to areas of the city that have fewer traditional attractions, according to the mayor.

“We know that short-term rentals have a very interesting impact because they accelerate renovation,” Moreira said in a recent interview. “And it’s better to have a short-term rental in a house that’s been refurbished than to have a ruin in that place.”

Montreal, similarly, has different rules for different parts of the city — short-term rentals may be completely banned, limited to principal residences or completely allowed depending on the neighborhood.

Are the regulations working?

Effectiveness often depends on how strictly the rules are enforced. Cities need access to data — such as names, addresses and nights booked — to identify noncompliant hosts. They must strike agreements with booking platforms to share data with city officials and systematically remove listings in violation of local laws.

New York City’s longstanding rules were largely ignored until September 2023, when the city launched a stringent host registration process to verify compliance, and Airbnb agreed to block invalid listings. As a result, the short-term rentals catalog thinned by 89% in less than two months. Leases over 30 days, which don’t require a license, accounted for 86% of New York City Airbnb listings in early July — compared with 54% before the crackdown — according to Inside Airbnb.

Hotels are picking up the crowds. In May, the nightly rate for a hotel room hit an all-time high of $339 as occupancies soared. Tourists hoping to save some money are increasingly turning to Facebook groups offering unlicensed vacation rentals or to listings in nearby New Jersey. (Bloomberg Opinion columnist Betsey Stevenson argued on July 8 that the restrictions in New York and elsewhere left local residents worse off.)

Berlin imposed a ban on nearly all short-term rentals in 2016 but lacked the capacity to enforce it. Audacious hosts continued posting listings on Airbnb and sent flurries of appeals to any borough that attempted to charge the €100,000 ($108,000) fine for operating an unlicensed vacation home. Two years later, the city gave up and relaxed its policy — owners can now rent out their primary residence as much as they desire, and a second home for up to 90 days annually.

How are cities overcoming the difficulty with enforcing regulations?

Without data-sharing agreements, it’s tough to pinpoint who the policy violators are. It’s also difficult to collect taxes from hosts. Some governments are using the deals they struck with platforms to improve transparency.

Denmark’s policy allows hosts to rent out their entire homes for 30 nights per year as a baseline. However, the cap rises to 70 nights if the rental is booked through any platform that shares booking logs and host revenue data with the government. Officials say it’s a win for everyone — platforms get more bookings, hosts earn more income, and the government knows how much tax to charge hosts.

Japan’s data-sharing agreement with rental platforms allows the country to enforce its 180-night cap. And earlier this year, the European Union presented a blanket policy that will require booking platforms to share host activity data with all member states starting in 2026.

Under-the-table vacation rentals, often informally listed on social media, remain a challenge to regulate. But many cities accept reports of illegal activity from local sleuths who spy suitcases on their neighbor’s porch all too often.

What do the platforms say?

The booking platforms long resisted laws proposed by municipalities, particularly in cities where would-be illicit listings made up a significant portion of their business. For example, Airbnb sued New York City last year to block its regulations, calling them a “de facto ban” on short-term rentals, but the lawsuit was ultimately dismissed.

Booking platforms may be starting to accept that fighting regulation is a losing game. Airbnb, in particular, is becoming increasingly cooperative with regulation. “We want to be good partners with cities and have a track record of doing so,” Airbnb said in a statement.

An update to its City Portal — a tool for cities to analyze the short-term rental market — launched in February with new features to help municipalities more easily enforce local laws. For example, city officials can search listings and alert Airbnb to posts that violate regulations.

Airbnb says that it wants to “ensure that short-term rentals do not exacerbate current challenges” with housing affordability and that its data-sharing efforts show its commitment to collaborating with authorities.

Vrbo, TripAdvisor and Booking.com didn’t respond when asked how they work with cities to enforce short-term rental regulations.

Source: CityLab Housing