Whether you live in a popular travel destination or just need help paying your bills, renting your home on Airbnb can seem like a great option. But before you jump in, it's important to understand the laws that apply to short-term rentals in your area.
More communities are regulating short-term rentals
The increase in short-term rentals on websites like Airbnb and VRBO has caused controversy in many communities. In places like New York City where apartments are expensive and hard to find, short-term rentals can reduce the supply of affordable housing and drive up rents.
In beach towns and other vacation spots, short-term rentals can cause tensions with neighbors who are permanent residents, especially when rentals are overcrowded with rowdy or inconsiderate vacationers.
As a result, many localities have now passed laws restricting the right to rent homes on a short-term basis. Airbnb provides information on the laws and regulations in 50+ cities, which usually take one or more forms:
- A minimum number of rental days. In New York City, for example, it is illegal to rent—or even list— an entire apartment for rent for less than 30 days.
- A maximum number of days per year you can rent out your entire home. In San Francisco, you can rent your entire home for 90 days each year, but you must live there for the other 275 days. This does not apply to people who live in their home full-time and only rent out a room.
- A requirement that you register your rental and/or obtain a business license from the city. You may have to pay a fee for registrations and licenses, and you may also have to pay occupancy or tourist taxes.
- Other regulations related to things like parking, health codes, liability insurance, and building safety.
The localities that approve these laws also are responsible for enforcing them. The level of enforcement and the penalties you pay for breaking the rules can vary greatly from place to place.
How to find out whether you can rent out your property
If you are thinking of listing all or a portion of your house, condo, or apartment on Airbnb, VRBO, or another rental site, do your research ahead of time. This is especially important if you are considering purchasing a home and are expecting rental income to help you pay your monthly bills. Here are three things to look into:
- City and state laws and regulations. If your locality has rental restrictions, they will most likely be in the city or county code, possibly in the form of a zoning regulation. In addition to checking the Airbnb site, you can look up your city or county code online or at the local library. Alternately, a call to the local zoning board or administrative offices may give you the information you need. If you list your property in violation of state or local regulations, you may be fined or suffer other penalties.
- Homeowner's association rules. If you live in a condo, planned community, co-op, or other property with a homeowner's association or board, you're probably subject to bylaws; rules; or conditions, covenants, and restrictions. These may restrict or prohibit you from renting to short-term tenants. If you violate the rules, the association may impose a fine or even place a lien on your home until the fine is paid. Contact your homeowner's association or board for a copy of all applicable regulations before you list your property on any rental site.
- Lease restrictions. If you rent your home and want to list it on a short-term rental site, check the terms of your lease. Most leases require the landlord's approval to sublet the property, and some leases prohibit subletting altogether. If your landlord agrees to the sublet, get it in writing. If you do a short-term rental in violation of your lease, your landlord may have grounds to evict you.
Renting on Airbnb and VRBO can be a great source of extra income, but be sure you know what laws and restrictions apply to you. And, to minimize the chance of complaints and enforcement actions, be respectful of your neighbors who must live alongside your short-term guests.