Once City staff become aware that unregulated short-term rentals (STRs) are having a negative effect on the quality of life of their municipalities, they might want to immediately start contacting violators and issuing fines. However, a solid foundation of well-defined ordinances and systems has to be established first, as detailed in the first of the Three E’s of Enforcement: Establishing the Rules. Once that groundwork has been laid, your municipality can move to the second E: Enforce Compliance.
Your patience and persistence pays off here because enforcement actions have the support of the community at large (since citizens should outnumber tourists in most cases except for Disneyland!), and the resources needed for compliance are available online. Now you can begin reducing the number of non-compliant STRs, which will result in recovered tax revenue and reduced nuisance complaints from residents. Some of the actions that need to be taken at this stage are listed below:
- Be prepared to update your ordinance. After putting an ordinance in place and seeing it in action for a few years, you may discover issues that could not have occurred to you without the benefit of real-world experience. Keep track of the major issues as they come up and be prepared to make revisions if necessary.
- Know where your boundaries actually are. One crucial requirement of enforcing compliance is identifying the right person who will receive your tax notices. The STR operator may simply be the “concierge” or “cleaning lady” and not the person ultimately accountable. Secondly, mis-identifications may result in return mail, or worse the wrong person was identified. Making errors here results not only in unhappy residents, but also a loss of trust in your program. Third you want to make sure the enforcement actions only apply in your jurisdiction. An important first step is to obtain the shapefile from your GIS department so you can be certain of which properties are actually in your jurisdiction boundaries.
Expect 30% to 70% STR compliance at this stage. Typically when a new ordinance or regulatory obligation is introduced in the STR industry, there is a grace period (of 30 days or longer) where people can voluntarily comply. In our 6 years of compliance experience, that list of voluntary compliance rarely exceeds 30%. That’s typically where people start ramping up their efforts. Some of your non-compliant STRs will be relatively easy to track down. The hosts and their addresses are clearly identified, or the operator is a real estate professional. They maintain a steady presence on the STR platforms, include easily identifiable photos of their property, and they seem to be making a reasonable attempt at operate above-board. At the other end of the spectrum are those grey market operators who know they are defying the rules and are employing advanced tactics for evading detection (tracking these operators down falls under the last of the 3 E’s: Endgame).
Expect 30% to 70% STR compliance at this stage. Typically when a new ordinance or regulatory obligation is introduced in the STR industry, there is a grace period (of 30 days or longer) where people can voluntarily comply. In our 6 years of compliance experience, that list of voluntary compliance rarely exceeds 30%. That’s typically where people start ramping up their efforts. Some of your non-compliant STRs will be relatively easy to track down. The hosts and their addresses are clearly identified, or the operator is a real estate professional. They maintain a steady presence on the STR platforms, include easily identifiable photos of their property, and they seem to be making a reasonable attempt at operate above-board. At the other end of the spectrum are those grey market operators who know they are defying the rules and are employing advanced tactics for evading detection (tracking these operators down falls under the last of the 3 E’s: Endgame).Most of the STR operators and listings will be located somewhere in-between these two extremes, and the effort you spend working on these cases is what will improve your compliance figures the most. Look for the following methods these operators use to avoid detection:
- Using partial information, such as only listing their first names or being vague about their location.
- Duplicate listings on multiple platforms and/or stand-alone promotional sites. Rates of duplication can range from 5% to 20%. It’s not wrong to have, for example, a listing on Airbnb and a stand-alone site at the same time, but by posting multiple ads it could mask rental activity that exceeds the maximum nights allowed per year set by the ordinance.
- Hosting the same listing on different platforms on a rotating basis to avoid the appearance of exceeding the maximum rental nights allowed. For example, when a listing has reached its maximum rental activity on Airbnb, the operator may take it down and relist it on VRBO. When the VRBO maximum is reached, the listing moves to FlipKey, and so on. To match up duplicate listings, look for identical photos, titles and operator names.
- Some listings may stay on a single platform, but “go dark” during regular working hours to make it harder for 9-to-5 employees to find them without incurring overtime.
- Require permit numbers on all compliant STR listings. This will help eliminate confusion when listings appear in more than one place, and they will be easy to filter out later when searching for new, noncompliant listings.
- Establish a 24/7 tip/complaint hotline. Make it easy for your community to help you find noncompliant properties that are becoming nuisances. Respond quickly to these concerns so residents will feel confident using the hotline system.
- When you are certain that you have the right operators, begin phone and mail outreach. Remember that your proof of their identities must be verifiable and court-defensible.
- Consider outsourcing when making staffing decisions. Regular staff members will not always be available to receive late-night hotline calls or investigate weekend complaints. Outsourcing also gives you the advantages of specialized training. For example, our team at Harmari STR is trained to track down non-compliant operators through deep searching and intuitive cross referencing of land registry, public records, maps and social media, resulting in 95% accuracy for all houses and 75% accuracy for condos.
You will have to deal with the greatest volume of effort for non-compliant STRs during the Enforce phase, but in the years that follow the process of tracking new properties will be much simpler.