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Seattle will tax and regulate short-term rentals [Update]

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The new limits take effect in 2019


Update December 12: On Monday, the City Council passed a regulatory framework for short-term rentals that had been sent back to committee in mid-November.

The law, which won’t take effect until January 2019, will limit the number of short-term rentals one person can operate in the city limits. It also creates a license for both operators and platforms, like Airbnb and Homeaway.

The goal is to “limit mass conversion of long-term housing for Seattleites into short-term rentals, while still allowing people to rent out their homes,” the City Council’s Twitter account posted soon after the legislation was passed.

Under the new rules, most short-term rental operators will be able to operate a maximum of two short-term rentals: a primary residence plus one extra. Existing operators have two extra units grandfathered in. Inside the downtown urban center—that’s south of Olive Way and north of Cherry Street, plus some buildings in First Hill and Capitol Hill—all previous units that have been lawfully operated in September this year or before get to stay.

In mid-November, the council passed the taxation piece of short-term rental regulations; when the legislation takes effect short-term rental operators will be taxed $8 to $14 per night

The package of legislation has been passed slowly. In addition to the taxation element, a piece of legislation passed last week defined short-term rentals as units that are rented for periods of fewer than 30 days.

An Airbnb spokesperson called the legislation a “landmark win.”

Original article, November 13:

The Seattle city council passed part of a package of legislation on short-term rentals Monday—ensuring that platforms like Airbnb, and the homes listed on them, will be taxed. But a regulatory piece that’s been in the works since April likely won’t come up for a vote until December.

Seattle has a problem creating enough long-term rental stock to meet demand in a rapidly-growing city. Meanwhile, short-term rental platforms like Airbnb and VRBO are growing, too.

Last year, a report from Puget Sound Sage found that with the rate of growth at the time, as many as 1,600 long-term rentals could be taken off the market to be used as short-term rentals in the next few years. Since then, they’ve followed up on that data: A recent email to supporters noted that in the last two years, 2,500 whole homes have been added to Airbnb alone. More than half of the 4,600 Airbnb listings in Seattle are operated by someone with more than one listing.

Under the legislation passed Monday, short-term rental operators will be taxed $8 to $14 per night, depending on whether the rental is a full or partial unit. That money, in addition to funding operation of a short-term rental license, will go toward affordable housing. The first $5 million raised, however, will go toward the city’s Equitable Development Initiative, which, among other things, fights displacement.

A companion bill would create a license and regulatory framework for short-term rentals. It would limit short-term rentals to two dwelling units per operator—with a few exceptions, including one for existing short-term rental operators. Platforms would be required share basic data with the city on rentals and nights booked. Bed and breakfasts—the “bnb” in “Airbnb”—would fall under the license, but existing ones would be grandfathered in.

Short-term rental operators would also have to pay $75 per unit in license fees annually to the city, ensure their rentals are up to code, and publish their license number in listings. Platforms, like Airbnb, VRBO, and some smaller outfits, would have to pay a quarterly license fee based on nights booked.

The license and regulation piece was sent back to the planning, land use, and zoning (PLUZ) committee for more tweaks.

The regulation legislation is not to be confused with a previous proposal introduced last year, which would have limited nights, not units.

When then-city-councilor Tim Burgess started working on this version of the package, he said he was trying to prevent “a mass turnover of existing rental housing stock into short-term rentals” while still allowing homeowners an opportunity to help pay the mortgage.

After Burgess took over as interim mayor, the legislation was passed onto PLUZ committee chair Rob Johnson. Johnson asked for more time on the entire package of proposals—he said the two proposals are inextricably linked. The council ultimately voted to give just the regulatory half more time.

Airbnb, which came out against the proposal last time around, seemed more open to the new regulations as they were first developing earlier this year. Several representatives of a smaller advocacy group, Seattle Short-Term Rental Alliance, spoke in favor of the proposal before Monday’s vote.

Johnson estimates the regulatory piece will come back to full council December 11. The new regulations are slated to take effect in January 2019.

A previous version of this article mentioned a committee discussing regulations in June. This is not the case and the paragraph has been removed.