Should Seattle regulate vacation rentals like Airbnb?

by: Natasha Chen Updated:

In Seattle, the use of home-sharing and vacation rental sites, like Airbnb and VRBO, has exploded in the last six years. The effect is an expanded, and more visible, marketplace for people to rent out their homes for short-term use.

Hosts on these sites are making big money. Airbnb said there were 2,900 hosts in Seattle last year who made $30 million. This money is often used to save the hosts’ homes, supplying much-needed income to pay mortgages.

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At the same time, city leaders are concerned that this practice of short-term rentals is discouraging people from renting out what would otherwise be long-term housing for Seattle tenants. Stories of entire condo buildings turning into a hotel, or landlords displacing tenants in favor of Airbnb rentals, have reached the council office.

In deciding if, and how, to regulate the short-term rental industry, Councilmember Tim Burgess said he’s focusing on the commercialized activity on these websites, not the people who may be renting out a primary residence occasionally while on vacation.

Condo owner'It’s totally a hotel.'

Melissa Marsh lives in a Belltown condo building that was constructed before Airbnb came into existence. She said she and her partner bought the two-bedroom unit and remembers how they used to have dinner parties with their neighbors. 
But they left for five years, and upon returning to their Seattle condo, everything changed.

“There was someone coming out of the next-door building, and I’m like, ‘Oh, you guys moved in? What’s your name?’ And they’re like,‘Oh no, we’re only here for 3 days.’ And I’m like, ‘What?’” Marsh said.

Now, she looks out across the courtyard and can see that in one vertical line of windows, different people are passing through them on four out of five floors.
“There was a stripper party there a few weeks ago. A bunch of bridal shower women had like a disco ball,” she said.
Marsh said the neighbors they used to have dinner parties with had sold their units at top dollar. The new owners are renting them out through Airbnb, VRBO and other similar sites. 

She once saw 12 college boys coming out of one unit at once. She said beer bottles are often being left in the elevators and in the hallways. Someone even asked her where the towels are kept for the pool, where she said short-term renters have caused damage. 

On a Friday evening, KIRO 7 observed two to three groups of short-term renters in the lobby, with suitcases, within a matter of 20 minutes. Marsh said visitors will often prop the door open for others, not understanding the safety risk that has prompted condo owners in that building to always shut the door behind them as they enter and exit.

Marsh said their homeowners association has been unable to change the rules to prohibit these rentals. Many newer condos and apartment complexes already forbid these short-term rentals.

The result has not just been a loss of the "home" environment Marsh thought she would have; it is also the loss of a diverse set of residents who used to live there long-term.

Marsh is not alone.

A Magnolia resident, Annette de Soto, told KIRO 7 that the townhouse next to theirs was turned into a short-term rental unit. She said they were initially awakened every weekend by loud parties, drunken guests, and people parking in her driveway.

De Soto said in an email, “We purchased our house thinking we lived in a residential neighborhood.  Now we essentially live next door to a hotel only it's a hotel without staff to monitor guest behavior or security.”
Both she and Marsh have said they are looking to move to escape the problems created by the rentals.

Airbnb host: 'It’s a co-living experiment.'

The most prolific hosts on Airbnb have about 40 listings at any given time. KIRO 7 contacted some of the top hosts by writing a message during the booking request, about a KIRO 7 interview. Some of them showed interest, but schedules did not align.

One host seemed to reply with an automated message that confirmed the booking, without any reference to our message.

Timo Way responded on behalf of “Andrew,” a host we found with 37 listings as of early January. Way said that Andrew is a local technology entrepreneur who owns a business and many properties. Way manages the properties for Andrew on Airbnb.

When KIRO 7 asked Airbnb what percentage of its hosts have multiple listings, the company did not release that particular data. 

Instead, KIRO 7 calculated that based on data collected by an outside party, InsideAirbnb.com, on Jan. 4, 2016. 
Many of Andrew’s listings, managed by Way, describe a “hacker house.”

“This space is for an experiment in co-living, where people in science and technology are brought together,” Way said.

Some of the beds in shared rooms there rent for $35 a night. Way said some people are in town to work on projects for various large tech companies. They stay for any length of time, from a week to a year.
Despite the many listings, Way said it’s not about making a huge profit, but rather more about the experience of living with others in the same industry.

“It’s certainly not a cash cow business. In times like these, paying rent for a house like this, when we only have a few guests, is not really going to be a money-making situation,” Way said.

When asked whether they might consider signing a lease for those who want to stay longer, he did not seem to oppose the idea outright. However, their guests sometimes don’t know how long they will stay.
Some hosts are more explicitly commercial.

Some have used their business names on their Airbnb profiles, like “Sea to Sky Rentals,” or “Corporate Condo.”

The owner of Corporate Condo, Jenell Thompson, told KIRO 7 she does most of her bookings through her company’s website. But she also lists them on Airbnb. 

Thompson wrote in an email to KIRO 7 that her corporate units have helped people transition into long-term housing in Seattle: “In every building I am in, I have connected guests with permanent housing within the building! It gives relocation's a first-hand experience in the neighborhood, building before diving in to such a large transition.”

Whether or not these short-term rentals are replacing long-term housing, the use of Airbnb is sometimes the only way a host can maintain an existing home.

Nora Carria manages an apartment located at the basement of a century-old building in Ballard. The building belongs to the Independent Order of Odd Fellows, and the living unit is beneath the main lodge space where many events are held.

“It’s not exactly appropriate for a full-time resident to live in the apartment, being that it doesn’t have windows that look at anything other than the building next door. It is accessed through the alley,” Carria said.

Carria said they do make more money through Airbnb than if they were to rent out to a full-time tenant. Their unit was rented for two-thirds of the year in 2015, and they made more than $20,000 to help maintain the historic lodge.

Carria said people who have stayed there longer than three months in the past have had trouble with the activities that go on in the rest of the building. Any full-time tenant would also have to deal with changing members of the board, who act as landlord.

Councilmember Tim Burgess: 'It’s how we balance those competing interests.'

Airbnb said a Seattle host would have to rent out a home for 157 days of the year before he or she would outpace the income from a full-time tenant. (See info graphic above for the number of days units are rented per year.)

David Owen, the regional head of public policy at Airbnb, said he’s glad that Seattle is looking at regulation from a holistic perspective.

“We’re really heartened that they’re taking a thoughtful approach,” Owen said.

Councilmember Tim Burgess has focused on those hosts making a commercial enterprise through these sites. 
“It has moved to a scale that is much more widespread and is pushing the edge of potentially threatening long-term available housing in the city,” Burgess said, “while at the same time recognizing that these online platforms are giving homeowners real opportunity to make some money on the side.”

Burgess said there’s not anything wrong with people using sites like Airbnb for their businesses. 

“But those examples may be in violation of other city code requirements,” Burgess said, referring to regulations regarding zoning for hotels versus private residences.

Since Oct. 15, Airbnb guests in Seattle have been paying state taxes. 

Airbnb also said that for an overall picture, one should remember that their units make up 1 percent of the city’s housing stock. 

VRBO vacation homes make up 0.1 percent of the housing stock in a city like Seattle, according to its parent company, HomeAway.

HomeAway’s director of government relations, Matt Curtis, said at any given time, 400 homes are being rented at once.

For VRBO, Curtis said their homes are more on the luxury end, usually secondary properties people use as a vacation home. He said they are not likely to put these properties for sale on the housing market.

“The easy way to deal with regulating this activity is to create very fair, and easy to follow regulations, that allow people who are operating a traditional short term rental, to be able to register their home,” Curtis said.

Seattle leaders do not currently have any specific proposals, though Philadelphia’s recent regulations have been noted as a model to learn from.

Last year, Philadelphia legalized rentals in residential zones, but subjected them to an 8.5 percent hotel tax. 

A home cannot be rented out for more than 180 days of the year.

Permits are required, except for homes “where the total accommodations of visitors is for fewer than 91 days per year but where the provision of lodging to any particular visitor is for no more than 30 consecutive days.”

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