Photo by Raysonho | CC0 1.0 Public Domain
The short-term rentals industry is entering a new phase in Massachusetts, with implications for the rest of the country.
A little over two years ago, constituents began reaching out with serious concerns about short-term rentals. Airbnb and other companies aiming to disrupt the hotel industry had begun to disturb residential neighborhoods and distort Boston’s housing market.
Residents in the downtown area, from the North End to Mission Hill, reported an alarming growth in the number of housing units converted from long-term rentals into weekend tourist stays. Residents of multi-unit apartment buildings suddenly faced a constant stream of visitors, creating anxiety about security. Advocates in Chinatown warned that short-term rentals were destabilizing community and driving up rents, as buyers acquired entire brownstones and displaced all the tenants to operate de facto hotels where zoning code would prohibit legal hotel use. Although not saturated with the same density as downtown, residents in outer neighborhoods were also seeing short-term rentals replacing neighbors invested in the community.
Absent any regulations, short-term rentals were taking so many units from our residential housing stock as to drive down the vacancy rate and drive up rents. A group of community leaders, united as the Association of Downtown Civic Organizations, painstakingly scraped data from Airbnb’s website to quantify the impact.
The data highlighted a large discrepancy from the image that Airbnb cultivates as a modest home-sharing service for people to make some extra cash by renting out an unused bedroom or share their whole unit when they happen to be out of town. Instead, the vast majority of listings in Boston came not from primary residents, but hosts listing whole units year-round and with the same names connected to many units across the city – in other words, companies with a business model of running de facto hotels. Opened without community process through zoning review and not subject to safety standards applied to hotels, the de facto hotels were growing quickly by reaping profits at the expense of wage benefits to workers and public safety benefits to customers.
An Important Win For Communities
Over the last year, local and state leaders have sought to address these issues with a new framework for reasonable regulation of short-term rentals.
Last spring Cambridge and Boston passed short-term rental ordinances closing loopholes for companies that run de facto hotels. Shortly after Boston’s ordinance took effect in January 2019, statewide legislation was also signed into law to take effect in July, recognizing short-term rentals as profit-generating businesses subject to taxation at the same rates as hotels, and creating a public statewide registry to aid cities with enforcement.
Michelle Wu
Implementation of the new laws has proceeded against the backdrop of litigation from an aggressive tech giant. Airbnb has a well-documented history of going to battle against any city that tries to impose regulations, from New York to San Francisco, Honolulu to Palm Beach. In Boston, the lawsuit came as no surprise after the company’s aggressive negative lobbying efforts failed to block passage of the local ordinance.
But the May 3 ruling from federal district court came back with an important win for Boston and municipalities across the country. The judge rejected Airbnb’s argument that federal telecommunications law should shield them from accountability for content posted by others on their website, such as illegal listings. In upholding Boston’s provisions levying a fine on Airbnb for each instance of accepting a booking fee for an illegal listing, the court reinforced local authority to set parameters for this evolving industry.
Our challenge now turns to enforcement, as Airbnb continues to fight data-sharing and requirements to scrub illegal listings from their website. But Boston stands strong in the national push to empower municipalities to take action for housing affordability. Along with the statewide law, Boston’s ordinance language has become a template for other municipalities looking to protect their residential housing stock. Increasingly engaged city governments are charting a legislative roadmap to close loopholes and preserve community.
Michelle Wu is an at-large Boston city councilor.
