Cascade Policy Institute 
By Everet Rummel, research associate
On July 2, the Portland City Council held a hearing on proposed amendments to the Zoning Code concerning short-term rentals. The council chambers were packed with citizens who support legalizing renting one or two bedrooms from a primary residence.
An emerging sector of many local economies is “homesharing,” or renting space in your home to strangers on a short-term basis, usually for a few nights. Smartphone apps such as Airbnb allow owners to list their homes for renters to see. Homesharing is controversial because it remains informal in most places and presents a challenge to the status quo of residential living and conventional hotels.
In Portland, homesharing falls under traditional bed and breakfast regulations. These may be too expensive for the typical homeowner short on cash, so many homesharers operate illicitly.
In an effort to regulate homesharing and make compliance cheaper, the City Council has taken testimony from citizens. Sharers say renting provides them with supplementary income, allowing them to keep their homes or enjoy their retirement years. Renters benefit from low prices and a more authentic atmosphere compared with hotel rooms. Opponents of homesharing fear increased noise, diminished neighborhood safety, and that lucrative short-term rental prices would attract landlords to the market, making long-term rentals less affordable.
However, noise and safety issues probably can be solved by talking to your neighbors and complaining to the police if things get out of hand. A study by the Rosen Consulting Group shows that short-term rentals make up a small fraction of the total rental housing stock in San Francisco, so they are unlikely to affect rents.
With many benefits and low costs, the City should embrace homesharing and interfere with it as little as possible. Council members are infatuated with the idea of requiring sharers to have their homes inspected and licensed and to display their license numbers if they post an ad on Airbnb. But maintaining a listing of high-quality rentals is in the best interest of Airbnb. The site already offers refunds to guests who cancel due to rentals that fail to meet health, safety, and legal standards. Online branding is a powerful tool that may be preferable to city codes for promoting high standards among homesharers.
The hotel industry has expressed a desire for “fairness.” It wants short-term rentals to face the same tax and regulatory burdens as conventional hotels. However, hotels are in a better position to comply with taxes and regulations, which will disadvantage cash-strapped homesharers. A truly fairer route would be to reduce the burden on both hotels and homesharers alike.
The City’s discussions so far have ignored the fact that many short-term rentals include entire homes; and no one is sure how to address the question of rentals in apartments or condos, either. Portland is instead leaning toward working out these crucial details later. Given the enormous costs of regulating such a diverse and informal industry as homesharing, Portland should step back from over-regulating it.