How rentals can prepare for and manage regulatory changes

With travel resumed in spurts, short-term rental hosts around the world are fully engaged to capitalize on the excitement.

But in the rush to achieve some semblance of a new normal, it’s important that homeowners take a moment to understand the new efforts to enforce marketplace accommodation laws, lest they fall into the trap of falling into the cracks. myriad of regulatory and compliance potholes emerging around the world.

DOS in the United States

In 2020, Airbnb became a target for state and local governments across the United States, with state lawmakers claiming that the online marketplace is not collecting and paying billions of dollars in taxes.

Throughout the year, states like California, Georgia and Illinois set out to work on market legislation that would crack down on short-term rental platforms like Airbnb and Vrbo.

State and local governments continue to enact market legislation, with each tax jurisdiction taking different approaches to liability, enforceability, classification, and fines for non-compliance.

Regardless of the location, the constant trend is for authorities to look to booking platforms to help monitor and enforce requirements, both now and in the future.

Pamela Knudsen – Avalara

Enforcement can be done directly in the marketplace, and licensing, registration and remittance compliance is more closely scrutinized than ever.

A difference in overall approach further obscures these laws, making it sometimes difficult to know whether or not the laws apply to short-term rentals. Some states have taken a straightforward approach, first deployed by Massachusetts, that uses a rental unit registry and requires all “rental intermediaries” (accommodation markets) to collect and remit occupancy tax.

Others take more roundabout approaches, such as the application of South Dakota v. Wayfair – mainly linked to the taxation of online markets such as Amazon – to short-term hosting platforms by designating them as “market facilitators”.

Yet another method has been to change the definition of “innkeeper” to also include external facilitators of accommodation services, shifting the responsibility for collecting hotel taxes to Airbnb and similar platforms.

In this changing legal landscape, many states are placing the burden of enforcing unauthorized properties on market platforms. In many cases, the licenses required by these states are brand new, resulting in fines for the platforms for their unlicensed users they may not even know about.

Whichever method is used, this legislative trend shows no sign of slowing down. Keeping up with the onslaught of state-level legislation is taxing enough, but there are even more layers that are sure to leave short-term rental operators bewildered.

Meanwhile in Europe

While the United States has had its own back and forth with STRs, the ongoing debate is remarkably similar on both sides of the Atlantic. The UK, the European Union and many other parts of the world are all grappling with the rise of STRs.

As in the United States, European authorities are keen to ensure that guests are “good neighbors”.
The governing bodies are examining three key parameters: the impact on resident housing, the impact on tourism and the overall economic impact of STRs.

Responding properly to these concerns means understanding both the individual and collective effects of these measures: how much money does tourism make for short-term rentals, and how can residents be assured that their neighborhoods will not be adversely affected?

While the UK has been slow to introduce any generalized regulation, the same upward market trends are seen as elsewhere in the world. Recently the Thanet District Council in South East England, for example, brought forward a motion to discuss STR rental limitations, although it failed before the debate stage.

In contrast to proactivity, the EU has been swift and fluid in its response to STRs, with many cities in European countries introducing their own rules and regulations.

Some of them were shot down by higher powers while others remained stranded. Barcelona, ​​in particular, has banned the rental of short-term rooms altogether, while continuing to allow the short-term rental of full apartments.
Other cities and countries have taken different approaches, including:

  • The distinction between “peer” rentals and “professional” rentals is an area to consider. Peer-to-peer rentals are individuals who own and rent their second homes, while professional rentals are units owned by businesses or organizations that own multiple DOSs in one location.
  • Limit the number of units that a professional organization can rent as an RTS in one location.
  • Limit the number of nights per year that an STR can be rented for professional and peer-to-peer rentals.

Consistent with approaches used in the United States, many of these EU authorities hold booking platforms accountable for the compliance of hosts who use their services.

By imposing fines and other penalties, they engage platforms such as Airbnb and Vrbo both to better understand market dynamics and to provide additional means of enforcement.

The EU is now considering broader action, with discussions underway as to whether the union requires a comprehensive set of regulations or whether it would be better to leave it up to countries and cities to craft regulations that work for them. the best.

Play catch-up

Regardless of the location, the constant trend is for authorities to look to booking platforms to help monitor and enforce requirements, both now and in the future.

The STR landscape is changing rapidly across the world, with many regulations transforming across the borders of nations, states, cities and even districts and municipalities. Understanding these evolving discussions and ensuring rentals are compliant will be paramount for everyone involved in the STR industry.

It is unrealistic to expect homeowners themselves to follow these rapidly changing regulations.

Modern cloud-based technology tools can pave the way for automated compliance, allowing hosts and businesses to focus on how well they run rather than on the latest ordinance or local law that they might accidentally violate in the process. Today’s increasingly complex regulatory minefield.

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