Centering Equity in Short-Term Rental Regulations

A blog post in Urban Wire by Luisa Godinez-Puig and Jorge González-Hermoso outlines the costs and opportunities presented by the rise of short-term rentals (STRs).

On the one hand, incentivizing unregulated growth can result in the reduction of for-sale and rental housing supply and the displacement of local communities because of increasing rent costs or units being taken off the rental and ownership markets. On the other, residents can potentially diversify income sources, and cities can see an increase economic activities and tourism. As is often the case, different communities are affected in different ways.

The authors describe STR policies from cities around the world that effectively regulate the industry, as well as the demographics of STR ownership. “If the government doesn’t set incentives correctly, STR-friendly agreements, like the one in Mexico City, may end up benefiting wealthy individuals with multiple properties who are running large businesses, rather than those leveraging their sole assets to diversify their income sources.”

The authors also note that renters could suffer most from an increase in STRs in their community and describe ways that governments can prevent displacement. The authors conclude, “Each of these solutions has its merits, but to find the best solution for a particular city, local governments should prioritize equity and proactively consider the consequences of increasing STRs in their communities, including how to help STR owners in communities of color benefit from this market and how to use public funds generated by STRs for housing projects.”