Why Most States Are Struggling To Regulate Airbnb

By Elaine S. Povich

WWR Article Summary (tl;dr) Many states have had a difficult time regulating and taxing the short-term rental industry. Some big cities see short-term rentals as a threat to the rental market while other cities see them as a potential source of income.


Jeannette Belliveau lives with her dog and two cats in a 19th century house in the Upper Fells Point section of Baltimore, not far from Johns Hopkins Hospital, and rents out a couple of rooms for short-term stays to make a living.

In other parts of the city, Al Hallivis, a real estate investor and single dad, owns a half-dozen houses that he also rents by the night.

A few miles toward the city’s picturesque harbor, a variety of hotels offer traditional overnight stays.

All three models cater to Baltimore visitors, but that’s where the similarity ends.

Belliveau, Hallivis and hotels have different business models, different perspectives and different agendas. These competing constituencies help account for the difficulty states have had in regulating and taxing the short-term rental industry, even as some cities have taken action to regulate short-term rentals.

“One-size-fits-all state regulation may not always be the most appropriate policy response, and states may therefore choose to allow local governments to regulate,” said Kellen Zale, a law professor at the University of Houston who has done research on the short-term rental market.

Some big cities, such as New York, saw the short-term rentals as a threat to the rental market based on long-term leases, as well as to traditional hotels.

New York last year allocated extra funding to enforce a state law restricting rentals for fewer than 30 days unless the host is present and there are no more than two guests.

Other cities saw the short-term rentals as a potential source of income and sought to expand tourist or hotel taxes to the new schemes, with varying success.

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