Vacation Rentals Subject of Government Crackdown

With the rise in popularity of vacation rental services like Airbnb, local and state governments are hoping to find a way to regulate the use of such services. The existence of illegal short-term and vacation rentals are creating an issue for the government in terms of taxation and regulation while creating potentially unsafe conditions for those choosing to rent such properties.

With property owners listing their rentals on vacation rental websites and apps, it’s difficult for the proper regulations to be put in place to assure no illegal activity. Without the standards and rules in place for these rentals, buildings being rented out may not be up to fire code and therefore may pose a risk to occupants.

According to chicagoist.com, some lawmakers are proposing to tax Airbnb rentals as a way to regulate them. Chicago mayor Rahm Emanuel proposed legislation in conjunction with the Department of Business Affairs and Consumer Protection to “generate more than $1 million annually to support affordable housing and reduce homelessness in Chicago” by forcing rental units to be registered with the city.

Stipulations within the legislation include any property rented for more than 90 days of the year will be required to be licensed more rigorously, similar to the regulations forced upon bed-and-breakfasts and other vacation rentals.

The Chicago Tribune reports that the passage of the legislation will lead to a 2% surcharge on bookings with Airbnb, bed and breakfasts, or weekly vacation rentals. This tax will be added to any necessary as state and county hotel taxes. Rental properties will also have to receive liability insurance that covers a minimum of $1 million per incident.

The goal of this legislation is to cut down on unlicensed rentals that bring in no tax revenue and can be unsafe due to a lack of regulation by the government.

Airbnb released a statement in regards to the proposed legislation that expressed some skepticism:

“While the legislation introduced by the Mayor yesterday is an important first step towards ensuring middle class families can continue sharing their homes, and we want to work with the city on this matter, we have real concerns about the substance of the policy as the city seems to be unaware that we have been collecting and remitting hotel taxes in Chicago since February 2015, and are perplexed why someone staying on a couch on the southside of Chicago would be taxed at a higher rate than someone renting out the penthouse of the Four Seasons.”

The statement continued, “Meanwhile, the blanket registration process has the potential to violate the privacy of thousands of middle class Chicagoans and we want to work with the city, as we have done in countless other cities around the world, to provide them the data they need while protecting the privacy of our community.”

Author: GWOB

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