Austin is set to change how it regulates short-term rentals, with the intent of making it nearly impossible for people to rent their homes without a city-issued license.
“We [currently] have no real leverage over an unlicensed operator of an STR,” Council Member Chito Vela, who represents parts of Northeast Austin, said. “The changes will bring everybody under the city’s licensing scheme.”
A new city license costs roughly $800. If the ordinance passes, the city would require short-term rental websites to mandate owners provide a license number before advertising their homes for rent. A company like Airbnb wouldn’t be required to check that license numbers are active, or even real, city staff said.
KUT asked Airbnb and Vrbo if they plan to comply with the city’s requirements if passed. Company spokespeople did not answer the question, but each sent a general statement saying they “welcome” and “appreciate” Austin’s work. Airbnb’s website suggests it does this in other cities.
The new rules, city staff say, would allow them to focus on responding to noise or trash complaints at so-called “party homes” instead of spending time tracking down owners of unlicensed properties.
“[We are] effectively playing whack-a-mole,” Daniel Word, assistant director with Austin’s Development Services Department, told council members last week. “Trying to locate the properties that are operating, that put up an advertisement, then take it down and then put it right back up.”
With more owners licensed, Word said, the city could have more power to enforce “nuisance” violations. If a property is cited for noise disturbances or other behaviors that prompt neighbors to call police, the city would have the right to revoke an owner’s license.
Austin defines a short-term rental as a home that is rented out in whole or in part for fewer than 30 consecutive days. The city has required owners of short-term rentals to have licenses since it began regulating these homes in 2012, but data suggest the vast majority of owners don’t have one.
Numbers from AirDNA, a third-party company that aggregates listing data from websites like Airbnb and Vrbo, show there were about 14,500 short-term rental listings last month in Austin. City records, on the other hand, show that just 2,200 property owners here have a license.
Austin is also proposing changes to how it collects taxes from short-term rental owners. Texas cities and the state collect what is called a hotel occupancy taxes, or HOT, which is also paid by hotels. The city has long required short-term rental owners to pay taxes directly to it.
These new rules would require websites such as Airbnb to collect taxes from owners and then send this money to the city. Airbnb has similar agreements with dozens of other cities in the U.S., including Houston and San Antonio.
"We are supportive of platforms collecting and remitting local tourism taxes on behalf of hosts — something we have long advocated for here in Austin," Luis Briones, senior policy manager at Airbnb, said in a statement.
Currently, Austin receives about $7 million a year in hotel taxes from short-term rental owners. Some elected officials estimate this new requirement could add millions more annually to the city’s coffers.
“It’s hard to get an accurate number on the amount of hotel taxes we’ve been missing out on,” Vela said, “but it’s likely in the $10 million a year range.”
“It’s hard to get an accurate number on the amount of hotel taxes we’ve been missing out on, but it’s likely in the $10 million a year range.”Austin City Council Member Chito Vela
While some short-term rental owners celebrated not having to file taxes on their own, others balked at some of the proposed requirements – including a mandate that owners have a $1 million liability insurance policy.
Darrell Gest and his wife rent a bedroom in their Central Austin home. He says they’re able to pay their property tax bill and homeowner’s insurance with the income they earn.
“We have the license fee, we have the hotel tax and now we have a liability insurance premium,” he said during a public meeting last week. “That adds an expense.”
Gest pointed out that Airbnb already provides owners with up to $1 million of liability insurance. The city confirmed to KUT that this policy would suffice. But owners would need to get their own policy if the company they’re using to list a rental doesn’t provide it.
Council members could vote to adopt these rules as early as Feb. 27. If they do, it would be the first time in years Austin has had any substantial regulations regarding short-term rentals.
In 2016, council members came out strong against these rentals, passing rules that would have required the city to, over time, stop licensing so-called Type 2 short-term rentals. These are homes where owners rent out the entire house as opposed to a bedroom.
But property owners sued the city, arguing the rules violated their private property rights. Judges agreed and said the city’s move was unconstitutional. “We can’t regulate away someone’s short-term rental license,” Word, with Austin’s Development Services Department, conceded.
Austin is still proposing some sort of limit on short-term rental licenses. If passed, the rules would restrict owners from using two or more homes as short-term rentals if they are within 1,000 feet of each other. This would likely apply only to someone who owns a duplex or two homes on the same property.
A map of licensed Airbnbs has been removed from this story.
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