Short-term vacation rentals, such as those listed on Airbnb and VRBO, have become a hot issue in many parts of the country, as communities try to strike a balance among property owners looking to make some money, housing advocates trying to preserve stock for local residents, and governments eager for new tax revenues. Now Seattle has joined the fray, passing new regulations on short-term vacation rentals.
Seattle Ordinance for AirBnB and VRBO rentals
On December 12, 2017, the city council voted 7-0 to approve an ordinance that will require new short-term rental operators to be licensed and will limit most to renting out two units — one of which must be their primary residence.
For operators who were already in business as of September 30, 2017, the number of units they will be allowed to list will depend on location. Most will be limited to two units, plus their primary residence, if they add it later.
However, in a controversial decision the council provided special exemptions for operators with short-term rentals in the downtown core and in small buildings built after 2012 in the trendy neighborhoods of First Hill and Capitol Hill. Those operators will be allowed to continue listing their current units, plus their primary residence and one additional unit.
Originally, a council committee had proposed exceptions for short-term rental operators in many other Seattle neighborhoods – Belltown Uptown, South Lake Union, Pioneer Square, and part of the Chinatown International District – as part of deal with operators to drop legal challenges against the ordinance. Those neighborhoods were eliminated during final negotiations on the bill.
Rental unit limits only apply to whole-unit rentals, not to operators who are renting out extra space in their homes.
Short-term rental licenses
Under the new law, rental listing platforms, such as Airbnb and VRBO, are also required to have licenses to operate within Seattle, and listings on online platforms must include a short-term rental license number. The new ordinance also outlines procedures in cases of violation of the law, with penalties for noncompliance of as much as $1,000 a day.
The short-term rental ordinance goes into effect on January 1, 2019. It joins a related ordinance, passed about a month earlier, that levies a tax on short-term rentals. The tax, which operators must collect from guests and pass on to the city, adds $8 per night for rentals that are part of a home (such as a room) and $14 a night for accommodations that are whole units. The tax is expected to generate around $7 million a year for the city.