With over half a million listings in more than 33,000 cities around the world, Airbnb is one of the most popular short-term rental sites. But in Grand Rapids, Mich., the city is regulating these short-term rentals as “bed and breakfasts.” Residents who want to legally rent out their rooms and homes on Airbnb face over $2,000 in fees.
In order to comply with the city’s restrictions, residents have to pay $291 for a “home-occupation” business license and an additional $1,750 for a special land use permit to re-zone their home. To put that in perspective, most listings on Airbnb in Grand Rapids charge between $35 to $100 per night. So even at $100 a night, someone in Grand Rapids will have to rent out their home for three full weeks, just to pay off the city’s exorbitant fees.
So that needlessly makes it more difficult for property owners to earn income, which is particularly crucial during a recession. Plus, “there is a huge difference between running a full-scale bed-and-breakfast and renting out a room or two in your home on a part-time basis,” as Karen Coy, an Airbnb user explains.
Not to mention there’s economic protectionism at play here, too: The owner of a local bed and breakfast supports cracking down on Airbnb users. As the Institute for Justice has previously reported, this is, unfortunately, a common theme in other cities.
In addition, the city is considering an ordinance that would outright ban advertising a home on Airbnb without the proper permits. On October 8, the city commission gave preliminary approval to add this clause to the city code: “No person shall advertise any portion of a dwelling unit or rental by the night or by the week unless that person shall have first obtained a home occupation license.” But after pushback, a hearing is now scheduled for November 12 to further discuss short-term rentals.
— Nick Sibilla
Nick Sibilla is a writer at the Institute for Justice