The evolving regulatory environment surrounding short-term rentals accelerated this week, with San Francisco’s Board of Supervisors releasing clear rules framing short-term rentals.

Board President David Chiu was the lead behind the so-called “Airbnb law,” which he spent two years crafting with numerous meetings with the various stakeholders for and against short-term rentals. In introducing the law, Chiu recognized how behind the city had become, saying, “The status quo isn’t working; we have seen an explosion in short-term rentals.”

After a 7-4 vote in favor of the law, these rentals – defined as stays under 30 days – will be now be regulated by the following framework starting in February:

Only permanent residents can offer legal short-term rentals. Hosts are required to purchase a business license at a cost of $50 from the city. Hosts are required to keep records proving appropriate and legal use of the site – basically that they are not violating the 90 day rule for whole home rentals. There will be an official city registry for hosts. All hosts must take in the hotel tax from guests. Whole-home rentals are limited to 90 days per year. Each listing must carry $500k in liability insurance. The SF Planning Department now has guidelines for enforcement.

Serial renters and multiple property owners are still illegal under these new regulations, maintaining the illegal status of anyone renting out more than one property to multiple renters throughout the year.

Another concession made in the agreement was to notify neighbors in certain residential areas of registry applications, facilitating a more transparent means of neighborhood engagement with this shifting societal trend.

However, one huge win – for Airbnb especially – was the failure to pass a limit on “hosted rentals,” or renting a home when the host is present. The limits mentioned above are specifically for renting of entire homes and not for those hosts renting a room in a home in which they live.

Short-term rental companies welcomed the changes, seeing the rules in one of America’s largest cities as paving the path for future clarity in other cities.

In an e-mail to Tnooz, Alan Clarke, CEO, highlighted the model of Amsterdam as one to follow, and supported the future growth of the industry through city-supported regulation:

San Francisco’s new rental regulations are a boon to the Homestay industry, providing much needed clarity in the peer-to-peer residential rentals market. [The ruling] is another validation to the host-present residential renting model. It was historic for us as it established a homestay category in San Francisco’s housing regulations.

I hope to see more U.S. cities follow in creating clarity and more guidelines around peer-to-peer residential rentals, including New York City.

As more U.S. cities follow, confidence in both the host present homestay models will surely grow. In the new sharing economy, there is a tremendous market opportunity for host-present accommodations and yesterday’s ruling made that even more apparent.

Overall, the new law is a win for sharing economy proponents and companies, who hope to see this legal framework used as the basis of any future laws governing short-term rentals in other cities of comparable size.

NB: San Francisco image courtesy Shutterstock.

Original author: Nick Vivion