New proposed rules will restrict short-term rentals in Seattle

by: Natasha Chen Updated:

SEATTLE - Councilmember Tim Burgess will announce a proposed set of rules on Wednesday, to govern short-term rentals, which have increased in popularity across the country through sites like Airbnb and VRBO.

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“Our primary motivation is to protect long-term rentals in the city and make sure that our supply of long-term rentals is not harmed. At the same time, we want to allow people to take advantage of the economic opportunity that these rental platforms like Airbnb and others provide to them,” Burgess said.

Burgess proposes the following.

  • All hosts must comply with existing law in having a city business license.

o   This costs $110 and requires reporting earnings to the city.

o   Only those grossing more than $100,000 a year must pay business and occupation taxes.

  • Hosts who rent out their primary residence for more than 90 nights a year must obtain an additional short-term rental operator’s license.

o   The cost is TBA.

o   This license requires proof that the unit is the host’s primary residence, proof of liability insurance that covers the short-term rental use, a local contact number for guests, and a signed declaration that the unit is up to code, and basic safety information posted for guests in the unit.

  • Hosts who rent out a unit that is NOT a primary residence may only do so for a maximum 90 nights out of the year.
  • Hosts who rent out a unit for a consecutive 30 days or more are not subject to these rules, as that would be considered a long-term rental.
  • Companies hosting rental platforms would be required to obtain a license and provide data on their hosts on a quarterly basis.

Hotels, motels, and bed and breakfasts are regulated under different sections of the city code and are therefore not addressed by this proposal.

In those cases, regulations are strict and have additional taxes that hosts of individual units do not pay.

In the process of trying to attain more affordable housing, some had wondered if Seattle could charge a special tax on short-term rentals, to be put toward the creation of affordable housing. But Burgess said the Washington state legislature does not give the city such authority.

Airbnb had previously told KIRO 7 that 80 percent of their entire home listings in Seattle are being rented for fewer than 90 nights per year.

See KIRO 7’s February report on the effect of short-term rentals in the city.

Additionally, the company reported that 70 percent of Seattle hosts are sharing a home they live in.

For that reason, Burgess said most hosts would not be affected by the proposed changes. Those hosts renting units out for fewer than 90 nights a year would just need to comply with existing laws to have a city business license.

Burgess admitted that he does not believe most hosts have such a license.

When KIRO 7 asked whether the city would enforce this existing law, he said, “Every person who runs a commercial enterprise has to have a business license, so I’m not going to say that you don’t have to have one - because you do. But our focus is going to be on that over-90-day use.”

In order to enforce the law for an additional license in that latter category, Burgess said the city will require companies like Airbnb and VRBO to supply data about their consumers on a quarterly basis.

To that, an Airbnb spokesperson told KIRO 7:

The policy paper proposed by Councilmen Burgess and members of city staff is a great first step toward creating sensible rules for home sharing. The proposal takes into account the important distinctions between those who share their homes on occasion to help make ends meet and those who do so with greater frequency. However, we have legal and privacy concerns with any requirement compelling platforms like Airbnb to turn over personal, confidential information about the people who use our service without any idea about how that information would be used. We believe there are alternative ways for the City to enforce its regulations without compromising consumer privacy, and remain hopeful we can work together to devise a balanced solution.

VRBO is part of the company HomeAway. Matt Curtis, the senior director of Government Relations for HomeAway, told KIRO 7:

"For decades, vacation rentals have played a vital role in Seattle’s travel and tourism economy by helping travelers experience new and unique areas of the Puget Sound and empowering homeowners with additional ways to make ends meet.

As Mayor Murray, Councilman Burgess, and the entire city council begin to chart a path forward, it's critical that they remember the important role short-term rentals play in the lives of local homeowners, small businesses and travelers.

Councilman Burgess' proposal, while a step in the right direction, is not without its concerns. HomeAway believes provisions such as the 90 cumulative day limit will onerously harm responsible homeowners and small business.

HomeAway is confident that the city council will ultimately arrive at a well-developed regulation that takes into consideration the needs of all community members. Effective regulations come though smart collaboration.

We look forward to working with the city to bring all stakeholders to the table.”

Burgess said he estimates that 4,000 to 5,000 units in the city of Seattle have been taken off the long-term rental market and converted to short-term rentals. He said his emphasis is on deterring those operating a commercial enterprise through short-term rentals.

That’s a problem for Sea to Sky Rentals, a vacation rental company started by Michelle Acquavella in 2003. Acquavella said she would go out of business under these new rules, because the 46 properties the company manages would not be considered the owners’ primary residences.

She believes this would leave the short-term rental market to individuals casually renting out their space from time to time.

“We are the ones who are going to operate above board, we’re going to take care of our properties. We’re going to take care of our neighbors. And that may not be true with an individual homeowner,” she said.

Moreover, she does not believe that her clients’ homes would suddenly be made available to long-term renters if these proposals become law. She said 74 percent of her clients use these as secondary homes that they visit on occasion. She said they would want to maintain that flexibility of arriving any time they wish.

“They just wouldn’t rent it. It would just become unavailable for anyone,” Acquavella said.

The city will welcome public comment on the issue, before the council makes a decision sometime in July.

>> See FAQ written by Councilmember Burgess’ office here. 

>> See his policy summary here. 

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