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As a short-term rental host, you may be watching the landscape of the industry evolve and wondering how to stay ahead of the curve. With local governments imposing new rules and regulations, hosts must navigate these changes to ensure that their business remains sustainable. In this article, we’ll look at practical strategies for hosts to adapt to shifting government policies while maintaining profitability and developing positive relationships in the community.
Why Are Some Governments Strictly Regulating Short-Term Rentals?
Municipalities across the USA have increasingly enacted new restrictions as well as bans on short-term rentals. Neighbors cite concerns related to neighborhood disruption, housing affordability, and zoning conflicts.
New regulations are intended to alleviate noise, parking concerns, and a perceived strain on local infrastructure caused by vacationers. Restrictions also aim to address the potential of converting residential housing into vacation rental properties permanently. They claim short-term rentals reduce the availability of long-term housing for local residents and contribute to rising local housing costs and shortages.
Additionally, residents appeal to their local boards for help in maintaining the character and stability of their neighborhoods. As with many shared economy enterprises, these new markets are often seen as “disrupters” to the traditional ways communities have functioned and can cause conflict between property owners who rent short-term and their neighbors. Local governments are also often restricted by their state from realizing the economic benefits of “bed taxes” as states and counties do, even though the local community shoulders the greatest impact.
The Impact of Regulations On Short-Term Rental Businesses
Regulatory changes can have a profound impact on short-term rental businesses. These changes can reshape or break an entire operation, especially for property owners with only one listing.
Changes can limit or prohibit formerly permissible activities, limit occupancy, and cause financial hardship through taxes and licensing practices. Changes to zoning and code enforcement may also necessitate a greater need to adhere to health and safety rules that can make operating a short-term rental more challenging and costly, while still ensuring a positive guest experience.
The Importance of Adapting To Changing Government Rules and Regulations
Adapting to changing regulations is essential for hosts as it can ensure legal compliance and maintain continuity in their business. Hosts who do not stay on top of requirements threaten the value of their property and risk legal liability that can be costly, or worse, cause them to be shut down. However, if this industry survived a pandemic, it can survive in a new way with changing community conditions. People are nothing if not creative!
How Can Hosts Adapt to New Regulations?
What changes can you make before your community imposes new rules? Many potential problems can be avoided simply by reviewing your current practices and updating them. Stricter occupancy limits and noise regulations can limit booking opportunities, which can affect the bottom line, so you are better off doing this sooner than later. Responsible hosts can adapt by doing the following:
- Know before you buy or rent. What restrictions exist in your area? If you are considering getting into the business of short-term renting, you must research carefully what regulations exist in the jurisdictions where the property is. Contact your municipal offices on all levels to learn what they require of you or if they allow this type of business at all. You will waste your money and effort if you don’t take this essential precautionary step.
- Update your guest screening process. Is it time to scrutinize your potential guests more carefully? Would it benefit you to turn off Instant Booking to avoid problematic guests? Can you write your listing in a way that emphasizes the nature of your area? Are you reviewing guests accurately to help the entire short-term rental community avoid problems?
- Making House Rules very clear. Don’t leave your guests in the dark. Make sure they understand your requirements for your property and the neighborhood. Have a plan in place for immediate response to noise and parking violations and all other concerns. Improve communication with both guests and with neighbors by letting them know you are available at any time during the stay to address concerns and then follow through.
- Educate yourself on local regulations. Sign up for and seek out newsletters, website updates, meeting agendas, and minutes of your local city, town, and county boards. This includes their governing boards as well as planning and zoning boards.
- Attend local meetings. Be available at meetings to answer questions and speak at Privilege of the Floor opportunities. Stay informed on efforts for Comprehensive Planning, so you can share your perspective and encourage other local hosts to engage with the process.
- Watch what nearby communities are doing. Often when one community sets regulations, others follow. But some may consider a ban in another neighborhood an opportunity for their own. There’s still time to convince your local leaders of the benefits you bring to the community.
- Join industry advocacy organizations. Connect with other hosts and tourism related businesses that will support you and assist in engagement and mobilization efforts when discussions of regulation take place in local circles. Join organizations such as RentResponsibly to learn how to effectively advocate for your self and your fellow hosts.
- Be a responsible neighbor and business. Participate in local efforts to support positive initiatives such as fundraisers and clean-up efforts. Work shoulder to shoulder with other community members to make an impact on their perception of you and your ability to manage your rental in the community. Engaging in this way shows your neighbors that you wish to contribute positively.
- Make connections with the local community. Support local businesses by showcasing their products, and encouraging guests to participate in local events and shopping opportunities.
- Take care of your property. Implement sustainable practices in the maintenance of your property. Tend to maintenance and aesthetic issues as they arise.
- Always keep your communications respectful and productive. Short-term rental hosts have many opportunities to become valuable assets to the area rather than be perceived as a problem. Regular and open communication with neighbors, through channels like neighborhood meetings or dedicated online platforms, helps establish rapport and address any concerns proactively.
- Seek legal counsel. When all else fails, legal counsel may be your best option. Many laws include waivers and hardship clauses. Read local laws and policies carefully to see how they really pertain to you and your rental property. You may need an attorney to help you review and respond to these changes.
Adapting to Existing Local Short-Term Regulations
Bans or restrictions on certain types of rentals may force hosts to shift their business model entirely or get creative with alternative uses for their property. Some options include:
- Transition to long-term or mid-term rentals. Determine who your ideal guest would be for your area if you were to shift to mid-term or long-term renting. Are you near a large medical center? Is an Ivy League school nearby? Is a large new project coming to your area that will mean builders and other contractors who may be seeking housing to meet their contract dates?
- Consider other platforms. Aside from Airbnb and VRBO, Furnished Finders and Houfy offer opportunities to control your listing and provide ways to connect with people seeking living space under changing circumstances.
- What does your community need? Engage with community members to learn more about what is needed in the area. Are there opportunities to enhance the services provided by local organizations by renting your property to them?
- Host workshops and events. Does your space have lots of room for mingling or a large backyard? Organizations and businesses often need spaces for events and retreats that don’t require sleeping accommodations.
- Consider using Airbnb’s Experiences option. Do you have a skill that’s in demand? Can you teach a skill or cook and host an event? Do you know someone you could hire for this type of experience? Airbnb Experiences can last a couple of hours, or a day, or more, so utilizing your space for a specific day-long or evening event such as a class, a meal, or a retreat could be a very popular option for your property.
- Co-living arrangements for people in transition. Mid-to-long-term rental opportunities with multiple renters under one roof can be affordable options for people in transition between homes for various reasons. This could also be an ideal arrangement for grad students or co-family arrangement, which is gaining in popularity.
- Co-work space is becoming more in demand. Consider this excellent opportunity to provide a much-needed benefit to an ever-growing freelancer population. A house can easily adapt to this type of environment. It’s an ideal offering for those seeking a workspace outside of their own four walls, and opportunities to collaborate or gather for meetings for businesses without brick and mortar locations.
While it may seem like a large or impossible undertaking (and sometimes it is), short-term rental hosts must embrace adaptability as a core tenet of a successful business. This tracks no matter what niche you’re in. Successful hosts proactively engage with regulations and the community, finding the opportunity in every challenge to improve and even grow their business.
In the end, our efforts and practices can inspire the community to speak on behalf of short-term rentals and not against them. Strive to be a connected and engaged member of the community and not a problem they want to get rid of.
Have you experienced this type of change for your property? How are you adapting? What’s working for you? What isn’t? Let us know in the comments below or visit the STR Community on Facebook to share your experience and learn from other hosts.