Seattle looks at regulation of Airbnb and short-term rental market

Hundreds of Airbnb hosts list Capitol Hill properties with an average nightly rate around $110 around the Hill's core, and $150 in North Capitol Hill

Hundreds of Airbnb hosts list Capitol Hill properties with an average nightly rate around $110 around the Hill’s core, and $150 in North Capitol Hill

Vacation and short-term rentals appear to be the next crowd economy targeted for regulation in Seattle. This week, City Council affordability committee chair Tim Burgess posted about regulating short-term rentals, a plan Burgess says “aligns” with Seattle’s Housing Affordability and Livability Agenda recommendations:

In the coming months, my City Council committee will explore a regulatory framework for short-term vacation rentals. This work aligns with the Council’s work plan issued in response to the Mayor’s Housing Affordability and Livability Agenda recommendations.

On the other side of the coin, however, short-term rentals can boost incomes for those struggling with their own home payments. Airbnb, one of the major players in this arena, recently released data about their users and emphasized that the vast majority of their hosts live in the unit they rent; they either share their home or rent it while out of town themselves.

Burgess says his committee will seek to answer five key questions about the rental market for companies like Airbnb and VRBO:

  1. Unit type: Is the short-term rental for an entire unit or a shared space?
  2. Rental frequency: Is the unit rented commercially (frequently) or casually (infrequently)?
  3. Host presence: Does the owner live on-site or off-site?
  4. Building type: Is the short-term rental in a single-family or multi-family building?
  5. Location: What type of land use zone is the short-term rental in?

The initiative follows Seattle’s efforts to reform the taxi and “transportation network company” industry like Uber and Lyft. In December, the Council voted to allow Seattle’s for-hire drivers to unionize. Following the vote, Mayor Ed Murray said in a statement that he would not sign the bill, but would not veto it either, paving the way for it to become law. “I remain concerned that this ordinance, as passed by the Council, includes several flaws, especially related to the relatively unknown costs of administering the collective bargaining process and the burden of significant rulemaking the Council has placed on City staff,” Murray said.

(Image: Airbnb)

(Image: Airbnb)

In the wake of the Burgess post, Airbnb released a “Seattle economic impact report” showing “151,000 guests stayed in one of 2,900 Seattle-based Airbnb locations and generated $178 million in ‘total economic activity,’ which includes direct, indirect, and induced spending,” Geekwire reports.

The Airbnb report positions its users as casual landlords. “The average host is 45 years old, with a large percentage working in art, design, and creative services, as well as education and health services,” the report based on a combination of 2014 and 2015 data reads. “While Airbnb hosts are highly educated, roughly one in three hosts earns less than $75,000 per year in household income.” The company says its 2,900 “hosts” received around $30 million in the 12-month period covered by its report. The full document is below.

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23 thoughts on “Seattle looks at regulation of Airbnb and short-term rental market

  1. Extremely against this. With the surging rent prices this is one of the few ways us simple folk can still afford to live in this city. Complaints are minimum to none with the renters I’ve had. Let’s stand up to this guys!

    • That’s a tough argument to accept at face value because the number of completely independent dwellings being rented out via Airbnb contribute to keeping rents high by artificially limiting the legit rental market.

      It might help you to get by here, but it isn’t realistic for more than a small percentage of the population to support themselves via Airbnb, and it’s especially nonviable if by doing so they are making the market tough for other “simple folk” to get by.

      I mean, I’ve used the services and it does beat the hell out of hotels/motels. But one of the reasons it beats those options is because it is ducking regulations that those services have long dealt with.

      • I have been involved in the traditional bed and breakfast business in Seattle for over 30 years now and run and own one of the leading places to stay on Capitol Hill. My reviews are excellent and I have many repeat guests. Surprisingly enough I still love doing what I do.

        In recent years I can honestly say that sites like airbnb are killing folks like us. Last year was down 16K over the previous year for no other reason than HUNDREDS of rooms being available in the same neighborhood (Capitol Hill) Studies have shown that hotels/motels have the same problem and it costs local hotel jobs and their viability. From my angle these places do need to be scrutinized for their impact on people like me as well as working folks trying to rent a place at a somewhat realistic price.

        Yes as a bed and breakfast I have many many expenses that an airbnb owner does not have. This is the reason why my room is $150 rather than the $120 charged to rent someone’s furnished condo while they are out of town.

        Perhaps the biggest expense for me is a COMMERCIAL insurance policy which is currently $400 per month with a 25K deductible. A residential policy could be had for perhaps 1/4 of that amount.

        I would have to say that proper insurance is the MOST important aspect of opening your home to strangers. You are using your property for a COMMERCIAL use. To my knowledge there is NOT a residential policy that will cover you in case of accident/injury. If the insurance company gets word of the COMMERCIAL use your claim is automatically denied. Something to think about when you book on one of these sites or decide to be a host.

        I know lots of people that use their places for airbnb and I have always cautioned them that if something happens and they are not properly insured they will have a VERY big problem.

        That standard Washington Apartment Lease has a provision to NOT allow nightly/weekly rentals and I am sure many condo CCR’s include the same provision. If you are going against that provision then you are in essence breaking the law.
        I can’t imagine too many landlords readily willing to allow their places to be used this way. They have liability too for what happens on their property.

        For years now in cities everywhere this has become a serious issue from a jobs/affordability point of view. I will be interested to see how it works out.

        Fortunately I will be retiring in a few years and moving far away from Seattle (thankfully) but I would NOT recommend opening a traditional bed and breakfast to anyone who asked. There just isn’t any money in it for what you have to go through. Although you do get to meet all sorts of nice people if you can’t survive doing it that is a bad thing.

      • “Fortunately I will be retiring in a few years and moving far away from Seattle (thankfully)”

        We feel your pain. My partner and I as well are looking forward to retiring far away from here. It was once a great place to live, now, no. No one would even know how great a place this was, distant memories, everyone here is so young now. Ever higher property taxes just because back in the day every adult was expected to buy and we had no idea prices would go crazy, plus a progression of one worse mayor followed by an even worse mayor followed by an even worse and so on. Also I don’t get what is going on with people from the central valley in California. It is bizarre. We meet new people, where are you guys from? Cali central valley. I blew some minds by guessing, guessing they are from the central valley of California because I guessed correctly not that I’m psychic but kept hearing that answer so many times I could correctly guess. Bizarre, I don’t get it. Anyhow, thank you for contributing to the once great Seattle and you are not the only ones who will remember Seattle for what it was rather than what it unfortunately became.

      • I have the feeling your are the owner of that very wonderful B&B on 15th Ave….and I can personally attest to what a great place it is.

        Anyway, thanks for your insights. I think your concerns are very valid, and I hope the City Council takes them under serious consideration as they decide on new regulations for the arbnbs.

  2. I am all in favor of limiting air bnb rentals to shared spaces with owner on site. In order to make as much of our housing supply as possible available to people who actually live here, we need to stop the rentals of entire houses and apartments to short term tourists. Residential apartment and condo buildings do NOT want to be turned into defacto hotels. Single family homeowners do not want to find themselves living next to a rental party house. We need our residential housing stock for residents.

  3. Totally agree with some of this. Owners or Renters need to live onsite. Most communities have language in their lease that ban short term rentals, which is what airbnb is. But if you want someone to stay in your apartment that you live in, then go for it. Don’t let these out of state developers who can give two $hits or our government bully us. It’s a little bit of an oxymoron that our government wants us to afford to live in the city, yet they make rules making it more difficult to make ends meet.. What gives?

  4. Requiring AirBnB rentals to purchase insurance for commercial use is completely fair and should be a minimum requirement. Owners and renters should also be on-site. None of this is unreasonable. If AirBnB can’t agree to these requirements for its services then Washington State needs to take a deeper, closer look at regulating the sharing economy.

  5. Its interesting that Santa Monica has said no to airbnb without the owner being onsite (http://www.latimes.com/business/realestate/la-fi-santa-monica-airbnb-20150427-story.html)

    Also lots of Airbnb on cap hill which are clearly sublet of rental apartments. I cant imagine that most leases / landlords knowingly allow this. It would seem that Airbnb should make sure the owner of the property is renting it out (easily done via property tax records etc).

    • The above airbnb report oddly didnt survey if the property is sublet via a renter or via the owner. What % of the 340 units in cap hill are owner occupied ? As the LA times points out, airbnb doesn’t provide an address upfront so its hard for any city to check.

  6. AirBnB loves to trot out its casual hosts as marketing spin – “oh, we are just providing regular Joes like you with the opportunity to supplement their income and pay their mortgage”.

    But like the PR from any large corporation, it needs to be taken with a large grain of salt.

    San Francisco is currently wrestling with this same problem. A recent study found that over one-fifth of AirBnB’s revenue in San Francisco was from the rental of units in violation of SF law.

    http://sfist.com/2016/01/21/study_airbnb_makes_illegal.php

    The study also found that full-time AirBnB hosts accounted for a significant portion of AirBnB revenues. These are people who are not average Joe’s renting a spare room periodically to help pay the mortgage. These are professional landlords renting their units via AirBnB full-time as commercial operators who are completely dodging local law with respect to operating hotels/motel/travel lodgings. The study found that while full-time operators accounted for a mere 3 percent of AirBnB hosts in SF, those full-time operators accounted for over 22 percent of AirBnB revenues in SF, for a total of $43 million made illegally.

    The growth of full-time, commercial operators on AirBnB has gotten so big that there are now startup companies that will professionally manage AirBnB hosting on behalf of property owners. We are at the point where AirBnB is knowingly making money by taking permanent residential housing OFF the housing market & illegally converting them to hotels – thereby exacerbating the current housing crisis in cities across the country.

    AirBnB would be worth a LOT less than it currently is if its frequent hosts were forced to follow local laws on operating a hotel. Which is why AirBnB keeps trotting out those regular Joes for PR spin.

    • One million in coverage is not enough in the event of a real catastrophe. House burns to the ground and guests are injured. Contents are destroyed. In my case I am responsible for 8 strangers a night in my house. That would not cut it at all in my case. A serious injury would probably burn through a million dollars on two weeks in the hospital.

      Sales tax is another big issue here. My 4 rooms generate around $1,000 per month in sales tax. When you have 400 rooms (on Capitol Hill alone) and no taxes being collected that is a BIG amount of lost revenue for the City/County. Money that could be spent on all sorts of things. Infrastructure, low income housing, schools etc etc.

      • As of mid October Airbnb has several fees/charges that include a City of Seattle Lodging Tax. Hosts also pay a WA State retail tax. For insurance, beyond the 1m coverage (property and liability), hosts can add a personal Umbrella Policy.

      • If the website operators continue to refuse to provide their data, the city will not be able to enforce any regulation. That tax collection is a ‘gift’ completely controlled by Airbnb. That’s not how to regulate, because there are others like VRBO which purposely only accept full units.

  7. That article refers to an incident occurring 2011, and admits that Airbnb now offers a host coverage that seems to cover owners/hosts from liability for personal injuries to guests/renters. I offer my home for rent through Airbnb about 30 days per year and have previously obtained liability insurance for the months my home will be rented (usually for one week or so in four different months per year). That monthly insurance cost me about $19 per month. I will probably continue doing that even with the Airbnb policy because it is prudent to do so and the cost is marginal.

    I am amenable to paying all local taxes through Airbnb, but really don’t think many apartments are being taken off the market as a result of Airbnb. As a landlord, I have run the numbers on that arrangement and it really doesn’t seem to make much sense to do short term rentals when you can rent apartments out so readily and profitably in the current marketplace. So, I am skeptical that regulating that type of usage will have any net positive affect on housing affordability or availability.

    • As a landlord you should be more concerned about your tenants renting out your property on airbnb. That seems a significant source looking at n cap hill.

      I also see some apt units which would be rentals going for $120 night. I guess they must make it work.

  8. I am currently moving out of an apartment in an older house that will soon be torn down, along with the house next door, to build new apartments. The house next door had been a single-family house before the developer bought it. If it was illegal for them to rent it out via VRBO, they would have had to leave it empty for the past 1½ years, which would not have helped anyone. They had expected to start work last summer, so it was not practical for them to rent it to a longer term renter.

  9. I rent one unit on Capitol Hill, adjacent to my home. Before I recently released it for 2100.00 per month to full time tenants, I toyed with the idea of doing an Airbnb. I concluded that for me it would not pencil out. I could likely have rented it for 200 or so a night. But then I looked online at calendars for available units in the neighborhood and noted that few were rented more than a third of the time. Then I considered a few other issues:

    – Commission to Airbnb
    – Need to clean, provide fresh sheets etc.
    – Need to buy cable/Internet
    – Need to furnish and maintain
    – Risk of damage, smokers, unwelcome pets, jerks showing up.
    – Need to entertain and guide guests who ask. Hard to say no because we are nice, and would also care about our ratings.
    – Potential enmity of my valued neighbors if something went wrong, and plain resentment at renting this way period.
    – Risk of the unknown and other issues I have not considered.

    So if I miscalculated how much I could actually rent the place for more than 200, and more than a third of the month, am I really that far ahead? I value my time, privacy and peace. My tenants are great and stable.

    The success that other people have with Airbnb speaks for itself as does the valuation of the company. But it is not a panacea or a windfall for landlords, at least on Capitol Hill. If you don’t believe me, go to the site and look at the availability calendars of multiple units and see how many days are unrented.

    • It does seem to be a race to the bottom – I see $1m+ properties with basement adu nightly for $100. The constant turn over, parking, random guests seems a hard way to make money.

    • You are a neighbor. I agree with the penciling out that you did, but you also would be a responsible real host. The real money for Airbnb and VRBO is owners of multiple properties who do not live as a neighbor. They expect, and I’ve seen, the neighbors to act as their concierge service. They take what should be rentals to residents off the market. They are hotelizing our neighborhoods and our multifamily buildings. It is a requirement that an owner of a state licensed Bed and Breakfast in a residential zone be resident on the property. No less should be expected of a vacation rental host.

      The thing is, under 3 rooms/units and it is not considered a hotel under the state law. There are some who are violating state law and complaints can be filed. But, one unit or one room is not a hotel. Someone operating 5 or 6 houses as vacation units, or one bedroom in each of 13 rental properties, scattered around town is in the grey area from a regulatory point of view.

  10. Airbnb has done nothing to make housing affordable, in fact it is doing the opposite. There are quite a few investors who have purchased properties and are relying on airbnb to make the payments thereby removing those housing units from the pool of available units and indirectly driving up the price of the remaining units. In other areas as well this has taken place. Seattle has a rich heritage of live aboard boat owners, starting in about 2014 several people began buying up all the small barge homes and many of the older wooden boats, they ghetto rehabbed them and began seeking marinas which would allow them.

    Seattle has limited the percentage of live aboard boats allowed in marinas, as a consequence those who owned fleets of vessels they hoped to rent via airbnb went to marina owners and offered to pay half again the normal moorage rates. Several marinas agreed driving up moorage rates for everyone and removing tens of available slips.

    Today it is nearly impossible to find live aboard moorage in Seattle, I know of at least three marinas where every live aboard slip is occupied by a boat which does not run or a house barge that are all being let on airbnb. Those who grew up in Seattle living on boats can no longer do so and are forced back onto land to compete for housing.

    The shoreline management act specifically prohibits Department of Natural Resources land from being used for hotels and was designed to preserve Seattle’s rich maritime history including it’s live aboard population. Airbnb has somehow flown under the radar and what has developed is a number of individuals who have become floating airbnb slum lords and have driven out the indigenous population.

    I know of one such slum lord who owns 11 older boats each rented out as an apartment to the incoming crop of Amazonians, and another who owns 7 house barges all rented through airbnb.