Is prohibiting short-term rentals an intrusion on property owners’ rights or is it protecting homeowners’ rights by preserving residential areas?
The Wall Street Journal reported that an estimated five million visitors to Berlin last year chose to stay in unregulated, privately rented vacation apartments instead of registered hotels. Berlin, like many other cities around the world, has seen a rise in the vacation-apartment trends which has become a significant part of the growing real-estate market.
Berlin's hotel industry which booked 22.3 million reservations last year has grown in the last ten years, with a total of 769 hotels in 2011, an increase of 38% in a decade, and 45 hotels currently under construction. While overall hotel stays have risen and hotel construction continues, the hotel industry is not celebrating. The industry is concerned that the popularity of budget apartment rentals has pushed down hotel room rates reducing profits. Despite growth, average hotel room prices in the city have stagnated, with an average hotel room going for about $109.00 in 2011 a decrease of 4.07% from the average in 2007.
Hotel industry lobbyists claim that unregulated vacation apartments are not subject to the expensive safety and standard regulations that hotels follow and can therefore charge less which gives the budget apartment an unfair advantage. In 2010, Berlin’s city's government passed a law attempting to define and regulate the cottage industry, classifying buildings with more than a dozen beds rented out as an "accommodation," and thus subject to the regulations imposed on hotels. However, the law has not been successful in stopping the growing tide and the city is considering new legislation that would force people subletting their apartments as holiday vacation homes to first obtain permits or face the risk of heavy fines.
This issue is not unique to Berlin, apartment-swapping, sublets and short-term rentals, became popular in cities around the world five years ago as peer-to-peer house sharing sites like Airbnb, HomeAway and Roomarama sprang up to market the rooms. In New York where this trend had also taken off, a bill to make short term apartment rental illegal was passed in July 2010. According to the USA today, the governor who signed the bill, David Paterson was quoted as say that the law making New York apartment rentals for less than 30 days illegal “fixes problems caused by illegal hotels and improves quality of life in traditional residential apartment buildings, while also meeting the needs of visitors. By removing a legal gray area and replacing it with a clear definition of permanent occupancy, the law will allow enforcement efforts that help New Yorkers who live in SRO units and other types of affordable housing preserve their homes." Attempts by other local government in the state of Florida to pass similar laws as New York failed.
In this relatively new business opportunity, is prohibiting short term rentals an intrusion on property owners’ rights or is it protecting home owners’ rights by preserving residential areas?
Michael Hobbs, SRA, LEED GA, PahRoo Appraisal & Consultancy