With apps like Airbnb hitting the market in a big way, short-term rentals are already having a significant effect on the commercial real estate market. But we’re just starting to see the beginning of it. Airbnb enjoys a whopping three million listings spread across 19 countries, and regulators are scrambling to define a new model for how this nascent industry will be governed. The coming years will assuredly see short-term rentals receiving more structured oversight, but it will also likely to continue to grow despite these new limitations.
And while some entrepreneurs may chafe at the push towards greater oversight, there are some very valid reasons for it. Homeowners and renters often complain about the effect that these rentals are having on the culture of their neighborhoods and the looming risk of gentrification, while traditional hoteliers see the lack of regulation undercutting their traditional business models in the same way that services like Uber have upended the taxi industry. And then there are the practical considerations of collecting taxes on temporary tenants and ensuring that these rental properties are safe for said tenants. Sometimes these can escalate into extreme situations, such as when an Airbnb tenant stayed for over a month while refusing to pay the owner and gained occupancy rights under the law.
Those who make a living off of renting properties will soon be facing the dilemma of either protecting themselves against the potential risks of short-term competitors or else joining the market. The former will require a heavier level of vigilance by tightening up the terms of leases to limit or eliminate short-term rentals and by carefully monitoring the short term rentals in your area to ensure that everything is being done by the books. Regulations will likely create an eventual balance between short-term and traditional rentals, but it won’t happen overnight. If you choose to join the potential housing revolution, there are options. Leases can be adjusted to allow tenants to rent out their units on a short-term basis for an added charge, or owners can begin renting out their units on a short-term basis directly. Regardless, vigilance is key here. Regulations will come, and you’ll have to learn how to navigate the changing regulations in your area, keep meticulous bookkeeping of your rental agreements, and monitor and comply with tax regulations.
How Short-Term Rentals are Affecting Commercial Real Estate
