What Is Going On with Short Term Rental Restrictions?

More and more communities are placing restrictions and at times all out bans on short term rentals. The biggest complaint from locals comes from “party houses.” No one wants the house next to where they are living to be constantly disrupted with strangers going in and out with no care for the local community. There is also concern from local governments about health and safety issues if there isn’t a local person responsible for their guests. These are legitimate concerns.

I own several Airbnbs and so I do have an owner’s perspective. I would argue that an outright ban is short sighted. Enforce local noise ordinances and make short term rental owners get a permit and agree to basic safety standards. Short term rentals do offer solutions for tourists, travel nurses, and even locals that need a spot for out of town guests. Short term rentals also bring in tax revenues. In Georgia, all short term rentals collect hotel and motel taxes that are passed on to the local governments. These rentals are also typically kept in really good condition with regular cleaning and maintenance unlike the stereotype of long term rentals.

People also speculate that short term rentals are the reason that home prices have gone up so much. Why are housing cost so high? Supply and demand. So, yes, short term rentals are taking some of the supply that affects overall price. However, the bigger issue is that we didn’t build nearly enough new homes in the decade after the last recession. Home prices are high even where there aren’t short term rentals. So what would happen to housing costs if short term rentals are banned? With the recent ban in Athens Clarke County (read in full HERE), I am seeing a few properties hitting the market that do look like they have been a short term rental. So far there haven’t been enough to see a downtick in housing prices here at all. And, for all the individual home owners that fought hard to buy a home in the last few years, would they want housing prices to drop? Affordable housing is a much more nuanced issue than just banning short term rentals.

As I have delved into this subject over the last years, I personally have changed my emphasis on short term rentals. I think that in a college town like Athens, Airbnbing your personal home for game days or graduation is a great way to make some extra money while providing necessary housing for people during times where there won’t be enough hotel rooms. Having an accessory dwelling unit on your property or a finished basement ensures that the Airbnb owner is being responsible for their guests and can help offset the high cost of housing for a homeowner. It also doesn’t take away from the local housing inventory. Moreover, I still think short term rentals are a great way to help people afford a vacation home. I would argue that short term rentals also help maintain property values, especially in a lake, mountain, or beach community. With a short term rental option, a family can more easily afford a vacation home that other’s can enjoy instead of the home just sitting empty more than half the time. Regular occupancy helps support the local businesses too.

To me, having some common sense regulations in place, with no outright ban, seems to be the best compromise. I am seeing that supply and demand will also affect the profitability of having a short term rental. We have both a short term rental and a long term rental in Athens. My long term rental has some family friends in it and is rented below market rent. Even with football season, after we took out all our expenses like utilities, our long term rental actually made more money than our short term rental. We have had to lower our rates and our occupancy wasn’t as high simply because there are so many short term rentals in Athens. Even without the short term rental ban, I would guess that some investors would sell or convert their rental to a long term rental. There is some degree of self-regulation.

What are your thoughts on short term rentals? Have they been a help to you? Have they affected your community?