Nation's Capital Is the Latest City to Threaten Home-Sharing

by Christina Sandefur
October 24, 2018

In July, the Washington, D.C. City Council voted to advance restrictions on home-sharing in the District. The proposal would outlaw home-sharing unless it is the homeowner’s primary residence and would limit home-sharing in an owner’s primary residence to just 90 days per year unless the homeowner is present during the rental.

These restrictions are similar to those recently passed by the city of Seattle, where after January 2019, home-sharers will be limited to renting out their primary residence plus two additional properties. This sudden change threatens the livelihoods of local entrepreneurs like Andy Morris, who co-owns Seattle Vacation Home, LLC, a local business that operates 11 properties around the city and rents nine of them as short-term rentals through online platforms. Andy’s 2,500-plus bookings have received high reviews from renters and only 10 noise complaints, which Andy promptly dealt with. Seattle’s anti-home-sharing law threatens to put Andy and everyone who cleans and works on his properties out of business. We’re in court on challenging these new rules under the Washington Constitution because they don’t target nuisance behaviors but instead unconstitutionally punish responsible homeowners who have built popular businesses on the expectation that they were allowed to rent their homes. If the D.C. Council prohibits homeowners from renting second homes, it could face a similar legal challenge.

Yet Kenyan R. McDuffie, the city councilmember who introduced the ordinance, argued that restrictions are necessary because home-sharing “take[s] properties off the market for tenants for the long term.” These arguments are economically unsound—and ironic. After all, it’s cities’ own regulations that make it prohibitively expensive to build, improve, or own housing. If anything, home-sharing allows homeowners to keep their homes when faced with rising housing costs.

Unsurprisingly, the D.C. ordinance was widely supported by the hotel industry and local hotel workers’ union, who came out in droves to attend the most recent council vote. But many home rentals are in neighborhoods where no hotels exist, filling a demand that would otherwise go unanswered. Moreover, when hotels and short-term rentals are allowed to compete, travelers are presented with lower prices and more options.

D.C.’s proposal would be costly to taxpayers as well. The city’s Chief Financial Officer predicts the regulations will cost the city more than $104 million in enforcement costs and lost tax revenue over the next four years. Other cities that have cracked down on home-sharing have suffered similar fates. For example, Santa Monica’s ban cost taxpayers nearly half a million dollars a year to staff a full-time task force to implement its ban on home-sharing. In fact, it took more than a year for the city to convict its first homeowner. Miami Beach taxpayers fund five full-time employees whose sole job is hunting down short-term rentals and taking their owners to task. As Travel Technology Association Vice President Matthew Kiessling notes, “The more heavy-handed and draconian the regulations that cities try to impose, the more complicated it is for them to enforce.”

But there is hope. The high costs of this anti-home-sharing proposal—in terms of taxpayer dollars, lost income, and damage to property rights—have caused homeowners to fight back. In fact, the backlash caused D.C. Council Chairman Phil Mendleson, who initially pushed to pass the restrictions, to postpone a final vote on the proposal until November. Here’s hoping that the D.C. Council learns from the mistakes of cities across the country that, rather than improving the local economy and supporting homeowners who want to take a shot at the American Dream, have chosen to squander taxpayer money to drive away visitors and turn homeowners into outlaws.

Christina Sandefur is the Executive Vice President of the Goldwater Institute.