The Impact of Airbnb on Agency-Enforced Rules

By Arthur Souza Rodrigues*

  1. INTRODUCTION

Traditionally, municipalities (in some cases, the municipalities created specific agencies to enforce zoning and short-term rentals) had only limited difficulties enforcing zoning regulations against residents turning their homes into businesses.[i] To attract enough guests, hotels required a minimum of scale that facilitated regulatory control.[ii] One of the biggest challenges was to connect clients, as visitors did not have the tools to find the right place and assess its quality.[iii]

Airbnb and other apps challenge this scenario. They connect both small businesses and occasional hosts to guests who were previously limited to hotels, bed and breakfasts, and hostels.[iv] Local governments then faced a regulatory challenge, as the number of supposed violators increased dramatically.[v] In addition to the usual framework of big violators, the local officers started having to deal with many frequent small ones.

As a result of the growing number of violations, municipal agencies are struggling to adapt traditional modes of regulation to the modern, diffuse structure of the sharing economy. In order to fulfill their objectives, these agencies are developing creative new approaches. This post discusses how administrative agencies are dealing with these violations. Specifically, whether small violations are de facto enforced, and whether there were changes in the way these agencies work. Finally, it discusses whether residents and Airbnb are finding legal exits to maintain their current business model.

  1. ENFORCEMENT OF ZONING RULES

Currently, small municipalities depend on neighbors to informenforcement authorities whether a house was made available on Airbnb’s site.[vi] Some non-commercial renters are not even aware that they are subject to special rules, such as a special permit, and when these properties are rented, something landlords will terminate their leases.[vii][viii]

In addition to increased enforcement, some agencies are focusing on increasing restrictions on how Airbnb post listings through the website. They present three arguments to justify regulation: (1) level the playing field with traditional hotels, (2) increase of costs to local dwellers, and (3) neighborhood disruption.[ix] However, even big cities, such as New York City, struggle to enforce these rules.[x] After outlawing advertisement of short-term rentals in late 2016, listings are still available.[xi] In fact, a quick search on the website shows wide availability in the city.[xii][xiii]

In practice, despite efforts to increase crackdown against the website, zoning violations are still rarely enforced if they are just temporary. Enforcement is extremely dependent on neighbors or mere chance.[xiv]

  1. CHANGES IN THE AGENCIES

Agencies of more in demand locations lack resources to enforce regulations and, despite showing their teeth, they do not enforce the rules absent myriad complaints or a big commercial player trying to evade them. Municipalities are reacting with stiffer fines and outlawing advertisements.[xv]

Some cities, like New York, decided to take a different approach. Mayor De Blasio increased the budget and capacity of the Office of Special Enforcement, which coordinates enforcement between different agencies.[xvi] This budged increase represented an increase of 50% of staffers (from 32 to 48), and $2.9 million over two years.[xvii][xviii] There are also reports that hotel associations are hiring private investigators to conduct “sting operations on hosts suspected of violating New York’s short-term rental rules.”[xix][xx] Other cities have been even more focused on short-term rentals. San Francisco, AirBnb’s headquarters, created an agency specifically tailored to deal with short-term rentals.[xxi]

However, curbing Airbnb is proving difficult even in places that increased their fines and regulations.[xxii] The fact that violations are not too evident and hard to prove, in addition to a limited capacity of agencies, even after changes and increases of resources, are proving to be challenging.[xxiii]

Some market-driven solutions are becoming available to deal with the problem. For example, municipalities, can have the help of a startup, “Host Compliance,” that mines data from Airbnb and other sites to detect whether hosts are complying with their rules.[xxiv]

  1. WAYS OF LEGAL COMPLIANCE

Some cities are making peace with the platform. Some cities require registration with their agencies to allow hosts to legally receive guests.[xxv][xxvi] San Francisco experienced a large reduction in hosts after requiring them to register, as the rule mandates the government to contact the actual owner of the property.[xxvii]

However, some of these regulations are proving cumbersome, prompting Airbnb itself to create a platform to assist hosts with compliance.[xxviii] Regulation varies widely, with some cities requiring mere registration, others demanding compliance with a series of rules made for small hotels.[xxix]

Absent a neighbor coming forward to the municipality or a very small market with close oversight, hosts have a very limited chance of receiving fines. Hosts, however, should take into consideration that the risks of being caught include sometimes a hefty fine, and communication to the owner. The latter may be a breach of contract of their lease.

  1. CONCLUSION

The sharing economy introduced radical changes to the enforcement of zoning and other regulations. Agencies, with limited resources and capabilities, face a large number of users who flout traditional regulations. Additionally, cities have so far failed to deal with the problem that aggregate the voices of all stakeholders: “hosts,” “guests,” neighbors and other businesses. Instead of just outlawing dozen of hosts that are having supplementary income, municipalities need to think a creative way to develop an alternative system that does more than the usual recipe of finding the rule breaker, fining them, and enforcing a series of rules at random.

*Arthur Souza Rodrigues is a Junior Editor on MJEAL. He can be reached at arthrod@umich.edu.


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[i] See, e.g., Nicole Stelle Garnett, On Castles and Commerce: Zoning Law and the Home-Business Dilemma, 42 Wm. & Mary L. Rev. 1191 (2001), http://scholarship.law.wm.edu/wmlr/vol42/iss4/4.

[ii] See, e.g., Kellen Zale, When Everything Is Small: The Regulatory Challenge of Scale in the Sharing Economy, 53 S.D. L. Rev. 949 (2016).

[iii] Emma Green, Yes, It’s Weird That Airbnb-ers Are Willing to Trust Total Strangers, The Atlantic (Nov. 14, 2013), https://www.theatlantic.com/business/archive/2013/11/yes-its-weird-that-airbnb-ers-are-willing-to-trust-total-strangers/281495/.

[iv] Id.

[v] N.Y. State Office of the Att’y Gen., Airbnb in the city (2014) at 2, https://ag.ny.gov/pdfs/AIRBNB%20REPORT.pdf.

[vi] See, e.g., Jacob Demmit, As Airbnb Grows, So Does Enforcement Challenge For Zoning Officials, The Roanoke Times (May 17, 2017), http://www.roanoke.com/business/news/blacksburg/as-airbnb-grows-so-does-enforcement-challenge-for-zoning-officials/article_345c9cb8-e01e-56c9-89a1-d37cf116a6db.html.

[vii] Suzanne Carlson, Connecticut’s Thriving Airbnb Community Is Catching Officials Unaware, Hartford Courant (Oct. 20, 2014), http://www.courant.com/community/west-hartford/hc-west-hartford-town-cracks-down-on-airbnb-20141020-story.html.

[viii] See, e.g., Suzanne Carlson, Connecticut’s Thriving Airbnb Community Is Catching Officials Unaware, http://www.courant.com/community/west-hartford/hc-west-hartford-town-cracks-down-on-airbnb-20141020-story.html.

[ix] Stephen R. Miller, First Principles for Regulating the Sharing Economy, 53 Harv. J. on Legis. 147 (2016).

[x] In 2014, the New York Attorney General, stated “most short-term rentals . . . violated the law.” N.Y. State Office of the Att’y Gen., Airbnb in the city (2014) at 2, https://ag.ny.gov/pdfs/AIRBNB%20REPORT.pdf.

[xi] See, e.g., Jennifer Fermino, NYC Sees More New Year’s Eve Airbnb Rentals Than Any Other City, New York Daily News (Dec. 30, 2016), http://www.nydailynews.com/new-york/nyc-sees-new-year-eve-airbnb-rentals-city-article-1.2928926.

[xii] Search for “Entire Home” rentals in New York City, Airbnb, https://www.airbnb.com (last visited Mar. 10,2018).

[xiii] Search for “Entire Home” rentals in New York City, Airbnb, https://www.airbnb.com (last visited Mar. 10,2018).

[xiv] Kurtis Ming, Call Kurtis Investigates: Cities Not Enforcing Their Own Rules for Short-Term Rentals, CBS Sacramento (Nov. 22, 2017), http://sacramento.cbslocal.com/2017/11/22/short-term-rental-rules/.

[xv] Megan Barber, Airbnb vs. the City: How Short-Term Rentals Are Changing Urban Neighborhoods, Curbed (Nov. 10, 2016), https://www.curbed.com/2016/11/10/13582982/airbnb-laws-us-cities.

[xvi] Rosa Goldensohn, De Blasio ramps up Airbnb enforcement: Mayor budgets $1.6 million for more inspectors to crack down on illegal hotels, CRAIN’S (Apr. 26, 2017),

[xvii] Id.

[xviii] Rosa Goldensohn, De Blasio ramps up Airbnb enforcement: Mayor budgets $1.6 million for more inspectors to crack down on illegal hotels, http://www.crainsnewyork.com/article/20170426/REAL_ESTATE/170429915/mayor-bill-de-blasio-budgets-1-6-million-to-crack-down-on-airbnb.

[xix] Alison Griswold, New York City Is Using Sheriffs and Obscure Building Code Violations to Crack Down on Airbnb, QUARTZ (Sep. 30, 2017), https://qz.com/1084108/1084108/.

[xx] Alison Griswold, New York City is using sheriffs and obscure building code violations to crack down on Airbnb, https://qz.com/1084108/1084108/.

[xxi] Office of Short-Term Rentals, City of San Francisco, https://shorttermrentals.sfgov.org/ (last visited Mar. 10, 2018).

[xxii] Sarah Rahal and Candice Williams, Detroit Not Enforcing New Airbnb Ban Rules, The Detroit News (Feb. 9, 2018), http://www.detroitnews.com/story/news/local/detroit-city/2018/02/09/detroit-airbnb-ordinance/320854002/.

[xxiii] See, e.g., Daniel E. Rauch & David Schleicher, Like Uber, but for Local Government Law: The Future of Local Regulation of the Sharing Economy, 76 Ohio St. L.J. 901 (2015).

[xxiv] Host Compliance, https://hostcompliance.com/ (last visited Mar. 10, 2018).

[xxv] Ally Marotti, Airbnb Hosts Still Not Registered 4 Months After Chicago’s New Rules Took Effect, Chicago Tribune (Aug. 2, 2017), http://www.chicagotribune.com/business/ct-chicago-airbnb-rules-enforcement-0803-biz-20170802-story.html.

[xxvi] Ally Marotti, Airbnb hosts still not registered 4 months after Chicago’s new rules took effect, http://www.chicagotribune.com/business/ct-chicago-airbnb-rules-enforcement-0803-biz-20170802-story.html.

[xxvii] Carolyn Said, A Leaner Vacation-Rental Market, San Francisco Chronicle, https://www.sfchronicle.com/business/article/SF-short-term-rentals-transformed-as-Airbnb-12617798.php.

[xxviii] Responsible hosting in the United States, Airbnb, https://www.airbnb.com/help/article/1376/responsible-hosting-in-the-united-states (last visited Mar. 10, 2018).

[xxix] Id.

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