The Leaflet: Popularity of Short-Term Renting is Exploding

Published March 31, 2016

In a recent Mackinac Center for Public Policy blog post, Policy Analyst Jarrett Skorup says the popularity of short-term rental services is “exploding”: “Short-term renting is exploding in popularity. People sign up through companies or websites – like Airbnb or HomeAway – to rent out an extra room or a house for a short period. If you live in a city that is going to host the Super Bowl and have extra space, renting out a room for two nights gets you extra money and saves the renter from higher-priced or less convenient lodging options.”

new study by Andrew Moylan, executive director and senior fellow of the R Street Institute, assigns localities with letter grades for their regulatory structure related to short-term lodging services, such as Airbnb, HomeAway, and FlipKey. The report, titled “Roomscore 2016: Short-Term Rental Regulation in U.S. Cities,” grades 59 U.S. cities in five categories: whether a legal framework exists, the level of restrictions, taxation, licensing, and enforcement.

The study first examines cities’ legal frameworks, ranking cities highly for having a regulatory structure that explicitly acknowledges and creates a legal foundation for rentals conducted on a short-term basis. The cities that are ranked the highest in this category include: Anaheim, CA; Austin, Texas; Boulder, CO, Ft. Lauderdale, FL; Galveston, TX, Louisvill21e, KY, Nashville, Tennessee; Philadelphia, PA, Portland, OR, Sacramento, CA; San Francisco, CA; San Jose, CA; and Savannah, Georgia.

While many of the aforementioned cities possess robust laws in place to support short-term rental services, many of the cities have a hostile city enforcement regime for short-term rental restrictions, such as burdensome inspection regimes, disproportionately high insurance requirements, restrictive occupancy limits, mandates to provide vehicle parking spaces, and prescriptive regulations of a host’s location. Some of the cities with the most unfriendly environments for short-term rentals include: Anaheim, CA; Atlanta, GA; Denver, CO; Ft. Lauderdale, FL; and Los Angeles, CA.

The U.S. Conference of Mayors (USCOM) announced its support of short-term rentals in a 2012 resolution, which stated the overall economic impact created by short-term rentals is positive. “Fair regulation of short-term rentals ensures greater compliance and greater receipt of local hotel taxes. Onerous regulations of short-term rentals can drive the industry underground, thus evading local regulations and local hotel taxes,” wrote USCOM.

Short-term rental services provide individuals, businesses, and consumers with economic opportunities. Lawmakers should support the rights of those who profit from the short-term rental industry, a decision that will encourage economic growth and free-market competition.

What We’re Working On

Budget & Tax
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Constitutional Reform
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In a new Heartland Institute report, titled “Introducing ‘Article V 2.0’: A Compact for a Balanced Budget,” Nick Dranias, a constitutional law expert, asks the question, “[W]hat if the states could advance and ratify a powerful federal balanced budget amendment in just 12 months?” Dranias says the Compact for a Balanced Budget could accomplish that task, “changing the political game almost immediately.” Read more

Research & Commentary: Maryland Education Tax-Credit Scholarships
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Energy & Environment
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Health Care
Research & Commentary: Colorado Should Reject Single-Payer Health Care
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In this Research & Commentary, Senior Policy Analyst Matthew Glans examines ColoradoCare and the many problems the proposed single-payer system would create. “The Heartland Institute argues the best way to preserve individual freedom, improve the quality of health care, and enhance the efficiency of the nation’s health care system is to empower individuals by giving them more control over the dollars spent on their behalf. Single-payer systems do the exact opposite. Colorado should resist completing the transition to ColoradoCare and instead pursue policies emphasizing consumer-driven health care.” Read more

From Our Free-Market Friends
A State-by-State Map of Worker Freedom
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