Miami Beach proposes major crackdown on short-term rental platforms

Key Points
  • Miami Beach is one of the most popular resort cities for short-term rentals.
  • The city is cracking down on illegal listings by proposing strict requirements on how properties are advertised.
  • The sweeping changes, if approved, could have a major impact on the short-term rental market.
Popular short-term rental destination Miami Beach

Miami Beach, Florida, one of the most popular resort cities for short-term rentals, is cracking down on illegal listings by proposing strict requirements on how properties are advertised.

The sweeping changes to an existing law, if approved, could have a major impact on the short-term rental market.

"I wish Airbnb and some of these other home-sharing platforms would be responsible and simply say, 'We're not going to send people into neighborhoods which forbid this kind of behavior,'" said Miami Beach Mayor Dan Gelber, who is proposing the changes.

Miami Beach prohibits rentals for less than six months and one day unless the property is in a legally permissible zone, such as most of tourist-dense South Beach. Short-term rentals are largely illegal in the residential areas of the city.

The city already imposes stiff fines for illegal short-term rentals that start at $20,000 for the first violation. But the activity has continued despite the tough enforcement.

The mayor's proposal comes on the heels of a CNBC investigation last month which found the city trying to enforce regulations on illegal listings, through the fines and routine visits by code compliance. The investigation also found commercial companies leasing properties and turning them into illegal rentals, not only in Miami Beach but in other cities around the country.

Property owners who rent out rooms in Miami Beach are now required to have a resort tax certification number and a business tax receipt number, which is a business license. Since rooms are being rented out, owners must pay the resort tax to the city. Short-term rental platforms are not covered under the existing law.

Airbnb: Unwelcome guests
Airbnb: Unwelcome guests

The proposed amendment would require each property owner engaging in short-term rentals to "conspicuously display the city-issued business tax receipt number in every advertisement or listing of any type in connection with the rental of the residential property," the proposal states. "Failure to comply with this requirement shall create a rebuttable presumption that the residential property is being operated without the proper registration."

It is expected to be on the City Commission's agenda in July.

Airbnb did not immediately respond to a request for comment. But in an interview at Airbnb headquarters in San Francisco last month, Chris Lehane, the company's head of global policy, said Airbnb is open to talks with Miami Beach.

"There has to be two parts to this," Lehane said. "They have to be able to work with us so that they can effectively enforce. Government has the authority and responsibility to do enforcement."

He said: "We can give them the tools. We can give them the information. They're presumably trying to do enforcement right now. Not particularly successfully, on one hand, because this activity has always existed there. On the other hand, because it's really difficult for them to be at the end of the day, able to enforce a middle-class family who's trying to make a few extra bucks."

Asked repeatedly why Airbnb won't block illegal listings in Miami Beach on its own, Lehane said: "We've worked with cities all over the country. We've put in something called a pass-through registration system. Cities can determine if something is in the permissible area or not. We've done that. We've done it all over the place. Happy to do that in a place like Miami Beach."

Gelber said: "Airbnb's business model is not compatible with the kind of recognition that short-term rentals are not broadly in the public interest in cities. So they're either going to fight or they're going to change."

Leslie Cafferty, spokesperson for Booking Holdings', told CNBC, "We abide by all local laws and so if the law changes, we will accommodate."

Expedia, which owns HomeAway, did not immediately respond to a request for comment.

Cities around the world have cracked down on illegal short-term rentals in various ways. For example, last year, Airbnb and HomeAway, reached a settlement with San Francisco. The two platforms agreed to enforce regulations passed in 2014 that require them to register all hosts.

The settlement also requires Airbnb and HomeAway to collect data from people who list their units for under 30 days, information San Francisco can use when determining who can register.

The goal of the agreement was to limit the number of "commercial de facto year-round hotels," according to Omar Masry, senior analyst of the San Francisco Office of Short-term Rental Administration and Enforcement.

"We tend to see a strong correlation with quality-of-life issues, noise and parties," Masry said about commercially operated listings, adding they "rarely see this with short-term rentals playing by the rules."

Since the new rules went into effect last September, the number of listings has dropped from around 10,000 to 4,000.

Masry said the city has been working closely with Airbnb to identify illegal listings and remove them from the platform.

"We've seen a massive reduction in illegal listings, including many folks who we had seen operating ... high-volume short-term rentals across the city," Masry said.

In order to register with San Francisco, hosts must provide personal information such as proof of residency in the unit, a driver's license, photo identification and basic listing information for the property. Hosts must also pay fees for a business registration certificate and a short-term residential rental certificate.