How an Easy-to-Use, Self-Registration Platform Helps Local Governments Forge Constructive Relationships with the Newest Breed of Small Business Owners
Hardly a week goes by without news of the ongoing tug of war between short-term rental (STR) platforms and local communities.
Ever since residents started using digital platforms to rent out everything from a fold-out couch to an entire vacation home, city and county governments have grappled with how to respond. Across the U.S. and around the world, governments are divided in how they feel about STRs. Some municipalities have tried to ban them outright, while others welcome this new business model as a way to draw more visitors to their cities and stimulate commerce.
Wherever they stand on policy, many government officials voice concern about the disruption that STRs can bring in practice. For instance, what if hosts don’t carry enough liability insurance? What if the property is missing smoke alarms, fire extinguishers or other safety equipment? What if the rental attracts noisy or unsavory guests, making life miserable for the neighbors?
On top of those worries, many governments want to make sure that when residents become STR hosts, they pay the same occupancy taxes that apply to traditional hotels. Local governments want this new revenue, and they need
to respond to complaints from hotel owners who feel that competition from untaxed hosts is unfair.
Whatever the concerns that motivate public officials, it’s clear that short-term rentals are here to stay. To make sure these rentals operate as a positive force in the community, local governments must figure out how to regulate them effectively, agree on a reasonable, practical set of policies for STRs and then create a registration process to support enforcement.
Every community will design its own policy to regulate STRs. Whichever route a city chooses, it has been demonstrated that the best strategy for getting hosts to register their businesses and comply with regulations is to make the process easy, seamless and digital.
Some municipalities have tried to keep STRs from operating in their jurisdictions in any form. But it’s not easy to enforce such prohibitions. In cities where short-term rentals constitute an underground economy, locating the illegal hosts to shut them down can become a major undertaking.
In cities that want to allow STRs but also regulate them, public officials need to work out several categories of policy.
“I think the big three questions are how to collect the taxes, how to deal with potential nuisance problems and how to permit the activity in such a way that it meets community standards,” says Matt Curtis, founder and president of GPS Policy Group, an Austin-based consultancy that helps local governments formulate and execute policies for working with STRs.
Once a government addresses those issues, auxiliary concerns such as insurance coverage and the effect of STRs on affordable housing all fall into line, he says.
In Denver, city officials allow STRs only in primary residences, and operators have to file their license applications online. And, since January 2017, Denver requires STR operators to include their license numbers in ads for their units. In the Middle East, Dubai has also made STR licensing an all-digital process; in fact, it was the first city in the world to do so. But unlike Denver, Dubai allows an individual to offer any number of homes or apartments for short-term rental.
Whatever policy decisions a city makes, it’s important to engage with stakeholders and get them registered into a program.
“You need to ensure that the good actors — who are probably 99 percent of the short-term rental operators — are in the program, and following the rules and regulations.” Curtis says “Then we can easily figure out who those very few bad actors are, and go out and enforce action against them.”
He adds that a good registration system is crucial.
“Imagine a system that is easy to access online, doesn’t require a lot of paperwork, captures your registration quickly and requires just a small fee,” he says. “Then think about a system that makes the operator visit multiple offices to complete complex paperwork and submit copies of forms such as certificates of occupancy. Wouldn’t the easy-access one get more compliance? Of course the answer is, ‘yes.'”