Apartment Home Sharing: Proper Zoning

Since Airbnb’s launch in 2008, the short-term home sharing model has upended the hospitality industry.  Now, they’re further disrupting it by enabling home sharing in multifamily communities through an alliance with Migo by RealPage®. 

Home sharing benefits property owners

According to Multi-housing News, the pandemic's impact has caused short-term rental platforms to pivot in a very short period of time, which has resulted in modified business models that are more financially sustainable and flexible for multifamily property owners. Their resiliency in the most difficult financial environment in over a decade indicates that short-term rentals are here to stay.

At the same time, the multifamily industry's perception of short-term rentals (STRs) has evolved over the years. Before the pandemic, multifamily property owners viewed STRs as a threat, not as a benefit.

But that view is changing due to a rapidly accelerating demand for flexible living. Simply put, apartment residents who don't occupy their units 365 days per year want the option to engage in home sharing, which can enable them to make money on their unused space. In fact, home sharing can enable renters to offset their rent by upwards of 20 percent.* (Data source:  Migo)

Property owners also stand to benefit from the arrangement through higher occupancy and lease renewal rates, which translates into increased rent revenue. It's a win-win. The problem is that many towns and cities across the country either prohibit apartment home sharing or severely restrict it.

Home sharing support and challenges

Until now, almost all short-term rentals hosted in apartments have occurred without property managers’ knowledge, and some have violated city, state, and local home sharing ordinances.  Enter Migo by RealPage®.

With the Migo home sharing solution, property owners can harness the power of RealPage to deliver the only comprehensive suite of technology and services needed to successfully manage, monitor, and monetize home sharing on Airbnb in multifamily communities. Migo enables multifamily owners to unlock new revenue streams while supporting residents’ desire for flexibility and the ability to offset their rent.

Migo also helps property owners and residents navigate the restrictions imposed by local ordinances and does so by simplifying and securing the multifamily short-term rental experience for all parties involved and by monitoring home sharing arrangements to ensure that residents and short-term guests follow the terms and restrictions established by multifamily communities and local ordinances.

In this article, we have compiled a summary of cities that impose such short-term rental restrictions so multifamily communities and their residents can be better prepared to capitalize on this rapidly growing sector of the rental sharing economy.

New York City

New York City has some of the strictest short-term rental laws. The New York State Multiple Dwelling Law makes it illegal for an apartment (in most apartment buildings) to be rented out for less than 30 days, unless the permanent resident (the “host”) is present at the same time (which means that a resident cannot rent out their entire apartment).  Sales and use taxes and hotel room occupancy taxes apply, and only two paying guests are permitted.

Apartments cannot be advertised as available for short-term rental, as mandated by state law. Illegal advertising of apartments (defined as a building with three or more units) is subject to a fine of up to $7,500.

San Francisco

San Francisco was among the first cities to regulate short-term rentals. As early as 2014, the city imposed a limitation on the number of days a property can be rented out for short stays. 

In order to home share in San Francisco, the resident (host) must be registered as a business and as a short-term rental.  San Francisco maintains a list of all registered hosts, who report every quarter on occupancy.

The host must also be a permanent resident. Up to 90 nights may be rented without the presence of the host. There is a $250 STR license fee, and you must pay a transient occupancy and business personal property taxes.

Short-term rental of income-restricted affordable housing and student housing are not permitted.

Violators are fined a minimum of $484 per day.

Los Angeles

Los Angeles requires that home share rentals be licensed, and the unit must be the host’s primary residence. Hosts must also keep records for city inspection. 

After registering with the city, hosts are permitted to home share up to 120 days per year. Moreover, an $89 STR license fee and hotel and transient occupancy taxes must be paid.

Short-term rental of rent-controlled units is not permitted.

Violators are fined $500 to $2,000+ per day. 

Washington, DC

The restrictions in Washington, DC, are also stringent. First, the resident must obtain a license as well as an additional “vacation rental” endorsement for renting out an entire unit. According to a city regulation act, home sharing is limited to 90 nights per year in the absence of the host. A transient lodging tax must also be paid.

Violators are fined $500; repeat offenders are fined $6,000.

Chicago

Chicago requires short-term rental platforms to be licensed, and hosts with one home-share unit must register through the rental platform.  Hotel accommodation tax also applies. 

Hosts who only have one short-term rental listing can register with the platform, which then collects data of all hosts and submits them to the city.

Hosts that have more than one listing need to obtain a license directly from the city for a fee of $250.

Violators are fined $1,500 to $3,000 per day.

Cambridge, Massachusetts, also requires a license for home sharing. Moreover, under a new state law signed in December 2019, short-term rental hosts must pay the same 5.7 percent state hotel tax.

The city of Boston also requires that Airbnb listings display a city-formatted registration number, or the listing is removed. Airbnb has agreed to share data about listings with the city, including the listing’s URL, registration number, host ID, information, and zip code.

Short-term rental of income-restricted units is prohibited.

Hosts who fail to register face a $100 fine per violation per day. Those who rent out units that are ineligible, like below-market-rate units, face a $300 fine per violation per day.

Seattle

In Seattle, both short-term rental platforms and individual hosts need to obtain licenses from the city. According to the city code, platforms like Airbnb and VRBO are obligated to provide monthly reporting of all licensed operators and their listed units. Hosts must also apply for both business and short-term rental licenses. 

With a valid license, a host may rent out up to two units as short-term rentals.  If the host has two units, one must be the individual’s primary residence.  A $75 STR tax applies, as do retail sales, lodging, and business and occupation (B&O) taxes (but may be able to qualify for the small business B&O tax credit).

Violators are subject to fines of $500 for the first offense and $1,000 per each repeat offense.

Denver

In Denver, short-term rental hosts pay a Lodger’s Tax of 10.75 percent of the entire fee charged for the rental.  Property hosts must apply for a license from the city at a cost of $25. If the city has reason to believe that the unit is not the, it can launch an investigation, and enforcement actions can range from warnings to fines—and even felony charges.

Miami Beach

Miami Beach strictly regulates short-term rentals and home sharing. Rentals for less than six months and one day are prohibited unless the property is in a legally permissible zone, such as the majority of South Beach.

Violators face steep, escalating fines: 

• $20,000 for the first violation
• $40,000 for the second violation
• $60,000 for the third violation
• $80,000 for the fourth violation
• $100,000 for each offense thereafter

For more information about home sharing through Migo by RealPage, visit Migo Home Sharing or call 1-87-RealPage.