Are New Rental Laws Hurting Your Side Hustle? Here Are 3 Ways to Make Up Lost Income

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When an industry grows as rapidly as short-term rentals, it’s no surprise there are growing pains.


Key points

  • Local governments are trying to get a handle on the number of short-term rental units changing the landscape of their cities.
  • Owners of short-term rental units may soon find themselves forced to change the way they do business or unable to rent their units.
  • Complying with local laws or selling their properties while the market remains hot are two options.

Airbnb is the leader in short-term housing rentals. And back in 2008, when the company first got off the ground, it was all rainbows and unicorns. If city leaders were concerned about what would happen if the industry grew too large, they didn’t complain. After all, short-term rentals give tourists a place to stay when they visit a new city.

The rumbling of concern did not become loud enough to be picked up by the media for several years. By 2016, cities across the globe were actively looking for ways to rein in short-term rentals. The problems were plentiful — from a lack of safety and security regulations to local residents angry that their neighborhoods have been turned into quasi-hotel districts.

If you’re an Airbnb host who counts on short-term rentals to supplement your income, you may find yourself caught up in the new laws impacting hosts worldwide.

A growing concern

Apart from issues of taxation, noise, and safety regulations, cities are concerned with the number of housing units purchased by individuals and investment firms for use as short-term rentals.

To put this in perspective, Airbnb hosts now manage over 6 million listings in more than 100,000 cities across the globe, and purchases are not poised to slow. In 2020 alone, the sale of vacation homes grew by 44% year-over-year, and real estate investment firms across the US have plans to spend billions of dollars on additional holdings.

If you own an Airbnb rental unit in a city facing dangerously low housing inventory and sky-high rents, you may find yourself dealing with an entirely new set of rental laws or unable to rent it out at all. Here’s a sample of the cities cracking down on Airbnb practices:

  • New York City
  • Paris
  • Berlin
  • Barcelona
  • Santa Monica
  • Charleston, SC
  • San Francisco
  • Los Angeles
  • Las Vegas

Whether managing your Airbnb property represents a full-time job or a side hustle, it may be a good idea to make contingency plans for the day the local government in your area enforces new laws.

Contingency options

If things are currently sailing along for you and hosting an Airbnb means more money in your bank account, change can be a tough pill to swallow. However, having a plan in your back pocket just might cut down on the level of stress you experience.

1. Keep your ear to the ground

Don’t wait for new rules, regulations, or laws to surprise you. Let’s say you own an Airbnb near Lake Placid. No matter where you live full time, keep up with what’s going on in city council meetings. Follow any updates regarding short-term rentals.

The idea is to stay ahead of issues so they don’t catch you off guard. For example, if your rental currently has three smoke detectors and the city calls for four, add that fourth one before you’re told to.

2. Comply with new rules and regulations

It’s possible to stay in compliance, even if you don’t like the changes laid out by the local government. While it may feel intrusive to be presented with a laundry list of things that must change, there’s no reason to fight the inevitable. Make it easy on yourself by doing what’s asked of you.

The good news? Business-related expenses can typically be written off on taxes.

3. Sell the property while the market is hot

Although the market has cooled a bit due to rising interest rates, it’s still a good time to make a profit. If you have an attractive property in a nice area, consider listing it for sale. If new rules make it difficult or impossible for you to continue using the property as an Airbnb, selling while prices remain high may make the most sense.

The current issue appears to be a conflict between the rights of business owners and the needs of local residents. While there aren’t necessarily any good guys or bad guys here, there will be a need on all parties to compromise.

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