Although a Second vote is still needed, new rules are poised to go into effect in the coming months. The Bill introduces new licensing requirements for renting out housing units listed on digital platforms. In addition, the legislation includes civil penalties for operating illegal short-term rentals.
The District took a major step toward reigning in short-term rental activity on Tuesday, when the D.C. Council unanimously approved new licensing requirements for renting out housing units commonly listed on digital platforms like Airbnb and VRBO. Lawmakers also approved a prohibition on property owners renting out secondary homes on a short-term basis, and an annual 90-day ceiling on rentals of primary residences when the homeowner is not present.
Although another vote is required in the coming weeks before the bill is sent to the mayor’s office and to Congress for review, the move dealt a significant blow to companies that offer booking services for short-term rentals. The housing type has proliferated in recent years as D.C.’s economy has blossomed and tourism has boomed. A record 22.8 million visitors came to the District in 2017, making it the eighth consecutive year that total visitation has jumped.
The Council’s approval was also a loss for property owners who rent out multiple homes for transient stays, including those who use second or third homes to make additional income, and commercial entities that profit from renting out several or dozens of units in residential buildings. Supporters of the legislation say it is in part designed to stop housing that would otherwise be available for long-term leasing from being converted to pricey, temporary use.
But opponents say the effort is misguided and will harm D.C. hosts and visitors. Airbnb and HomeAway—which is owned by Expedia Group and is part of the same company as VRBO—were quick to pan lawmakers’ vote on Tuesday, issuing statements shortly after it occurred.
“Fair and effective short-term rental policies are built upon compromise and collaboration—not upon onerous and restrictive bans,” HomeAway said, calling for a “plus one” rule letting landlords rent out an extra unit. “Unfortunately, the ban on vacation rentals that advanced today is anything but fair and if passed would harm thousands of local residents and small businesses.” Airbnb claimed that the Council “put the interests of the hotel cartel ahead of D.C. residents,” but said it is “ready and willing to work with the Council on rules that work.”
The company also cited a preliminary analysis released on Tuesday by the District’s chief financial officer finding that, if enacted as is, the legislation would cost an estimated $96 million in foregone tax revenue and administrative expenses over the next four years. The analysis assumes that officials would bar short-term rentals in residential neighborhoods, which is technically the case now under current zoning but rarely enforced. The proposal’s authors, including Council Chairman Phil Mendelson, say this means the analysis is inflated.
Proponents of the measure, though, clapped in the Council’s chambers after the lawmakers cast their unanimous vote. Civic association leaders, affordable housing activists, and hotel workers, among others, have said the bill will help keep rental prices in check, keep family-sized homes on the market, and prevent neighborhood disruptions like properties that turn into party pads. Officials could implement the rules and require new licenses by early 2019.
Still, the specifics may change in time for the second vote. During the discussion about the bill on Tuesday, five councilmembers, spearheaded by Ward 6’s Charles Allen, supported a failed amendment that would have increased the annual vacation-stay limit from 90 days to 120 days. Allen said some of his constituents, who own homes in neighborhoods popular on Airbnb—such as Capitol Hill, Shaw, and the H Street NE corridor—would benefit from “extra flexibility” in how they can rent out their homes, as they are frequently out of town for work.
“We’re talking about the home that you live in,” he explained. “You leave for a short amount of time—it could be because you are deployed to the military.” Challenging the amendment were Mendelson and the bill’s original author, Ward 5’s Kenyan McDuffie, who each said the 90-day cap on vacation stays was based on restrictions seen elsewhere, like San Francisco. “When you get beyond the 90-day point, it incentivizes commercialization,” McDuffie noted.
Ward 1 Councilmember Brianne Nadeau later echoed those remarks, saying “there are commercial entities in this city that are taking advantage of the fact that we don’t have regulations in place now, and that is hurting our community.” Her ward has seen a few residential buildings that normally offer rent-controlled units used for short-term stays. (Airbnb says its platform has not had a significant impact on D.C.’s supply of affordable units, and that its entire-home listings represent just two percent of D.C.’s housing stock.)
Meanwhile, Ward 3’s Mary Cheh said she hoped officials would “revisit” whether property owners could legally use second homes for short-term stays. She said she has heard from many residents in her ward, in Upper Northwest, who rent out condo units for additional income, “particularly if they’re older and want to use that property to stay in their homes.”
A Council committee projects that there are about 9,000 total short-term rentals in D.C., which “directly compete with over 31,000 hotel rooms.” It says that about 1,000 of these units are available on a given day and separate zoning rules will likely have to be updated.
In addition, the legislation includes civil penalties for operating illegal short-term rentals. Tenants would not be permitted to rent out their apartments via online booking services, and hosts would be required to get smoke detectors and liability insurance for their units. When staying on site, homeowners would be free to rent out basements and spare rooms.