Where are the Best Cities for Short-Term Rentals?

By A. I. Lendberg, Edited by Douglas Katz – 04/04/23

Short-term rental sites like Airbnb have become a popular choice for travelers seeking an alternative to traditional hotels. However, a recent study by the R Street Institute has found that there is a significant discrepancy between the legal frameworks for short-term rentals in various US cities.  These differences can be significant and they change regularly with each election cycle.

The study examined 59 of the largest US cities and scored them based on their legal frameworks for short-term rentals, legal restrictions, tax collections, licensing requirements, and enforcement of restrictions. Surprisingly, 38 of the 59 cities have no legal framework in place for short-term rentals or vacation rentals, including cities such as Atlanta, Denver, New Orleans, and New York City.  I would not personally consider this status a constant as there is a ton of information currently being reported about most cities figure out how to balance short-term rentals with the issues that sometimes accompany them.

Although 21 cities received points for having a legal framework in place, only four cities received an “A” grade for their frameworks, and only 15 cities overall received some form of an “A”. The study also found that 32 of the 59 cities had restrictions in place for short-term rentals, and 28 cities lost points for having “hostile” measures to enforce these restrictions.

These findings suggest that while short-term rental sites like Airbnb continue to grow in popularity and value, many US cities are struggling to regulate them effectively. The speed of growth has caught many of these municipalities flat footed and they are now scrambling for reasonable and positive regulation with the opportunity for short-term rental hosts.  Some cities are imposing severe restrictions on short-term rentals and even though they have no legal framework in place to support such restrictions, this is often a rapid reaction to issues and complaints from residents and other constituents.

This raises questions about the future of short-term rentals in the US and whether cities will be able to develop legal frameworks that balance the needs of travelers, property owners, and local communities. As the travel industry continues to evolve, it will be important for policymakers to find ways to support innovation while also ensuring that short-term rentals are safe and sustainable for everyone involved.

Here are some charts from the R Street report.

LEGAL FRAMEWORK

The following chart displays the scoring for US cities with legal frameworks in place for short-term rentals. Cities such as Austin, Texas; San Francisco; Philadelphia; Nashville, Tennessee; and Savannah, Georgia have been noted as having some of the most comprehensive and robust frameworks and laws in the country, providing legal foundations for short-term rentals. Cities with legal frameworks were eligible to receive up to 10 additional points, with those frameworks that only accommodate vacation rentals receiving a lower number of points. However, cities that received fewer than 10 points do not recognize the arrangements of single bedroom rentals within an apartment or home. Scoring is on a scale from 0 to 10.

Source – R Street and Skift
LEGAL RESTRICTIONS

Some US cities, including Atlanta, Denver, and New Orleans, have been identified as having some of the most severe restrictions in place for short-term rentals. The study found that cities lost up to 40 points based on the severity of the legal restrictions they have implemented for short-term rentals.  Scoring is on a scale from 0 to -40.

Source – R Street and Skift
LICENSING REQUIREMENTS

The study focused on analyzing the licensing requirements that cities impose on short-term rentals over a period of five years. It took into account the number of licenses or filings that property owners would be required to submit within that time frame, as well as the total cost of any regulatory fees and assessments. Depending on the severity of the licensing burdens, cities were deducted up to 10 points. Cities with minimal licensing requirements, such as only one inexpensive filing, were not penalized. Cities such as Las Vegas and Fort Lauderdale, Florida, were identified as having some of the most onerous short-term rental licensing requirements in the country.  Scoring is on a scale from 0 to -10.

Source: R Street and Skift
OTHER EVALUATION

The study R Street Study examined short-term rental laws, legal fines, and media reports from June 2015 to last month in the 59 largest U.S. cities to evaluate their openness to short-term rentals. The  final ratings for cities also included corresponding letter grades. Currently, per the data, 10 cities received an “F,” 15 got “D,” and five got “C.” On the other hand, cities such as Dallas, Texas; Indianapolis, Indiana; San Diego, California, and Savannah, Georgia earned “A” grades. However, the total average score for all cities in the study was only 74.7. Interestingly, no clear trends emerged from the results in terms of whether conservative or liberal-leaning cities tended to score higher or if cities more dependent on tourism revenue were less restrictive.

Source: R Street and Skift
Source: R Street and Skift

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Disclaimer: This article was created with the assistance of multiple ChatGPT AI language models and has been edited and refined by Douglas Katz. The information provided in this article is intended for general informational purposes only and should not be considered as professional or expert advice. The views expressed in this article are solely those of the author and do not necessarily represent the views of ChatGPT or OpenAI. Readers are advised to do their own research and consult with relevant experts before making any decisions based on the information provided in this article.