Chicago city council has introduced new legislation which will see homesharing hosts register directly with the council, instead of details being passed on by intermediaries.
The new legislation also temporarily banned one-night stays in sharing economy properties, with local residents given additional powers to complain.
The council said the moves would improve transparency within the home-sharing industry while giving the City of Chicago more regulatory authority “to prevent and remove party houses and other problem locations”.
New measures includes removing the ability of shared housing hosts to list units and accept reservations while their registration application was pending; expanding the zoning districts that could prohibit Shared Housing through Restricted Residential Zones; and a new $125 fee in order to register.
Previously, shared housing hosts had submitted their information directly to an intermediary, who submitted this information to the Department of Business Affairs and Consumer Protection (BACP) every two weeks. The council said: “This has led to incomplete data and a lack of identifying information that would support enforcement against problem locations. This will improve the City’s ability to ensure regulations are being met and take enforcement when necessary against problem locations”.
The city also created a tiered licensing fee for intermediaries and increased the registration fee for each host. Previously, all intermediaries paid an annual fee of $10,000, no matter the size of the platform. Under the proposal, intermediaries with 1 to 499 units will pay a decreased fee of $5,000 per year, intermediaries with 500 to 999 units will pay $7,500, and intermediaries with 1,000 or more units will pay the current rate of $10,000 per year. The council said: “This will make it easier for smaller operators to compete and come into compliance.”
“Chicago’s home-sharing industry is a critical link for residents and visitors in our city, that’s why with this monumental ordinance, we are not only ensuring customers have the transparency they need but also making it easier for small operators to become licensed in our city,” said Mayor Lori Lightfoot. “By enhancing the City’s enforcement powers against bad actors and increasing regulatory oversight through BACP, we can further ensure this new and innovative industry remains safe for all of Chicago’s residents.”
Chicago’s sharing economy has been regulated since 2016 under a regulatory model which made Chicago the first city in the US to receive information from hosts, allowing the city to enforce restrictions designed, the city said, “to protect quality of life throughout Chicago”. However, the council added, “the industry has evolved over the past four years”.
Currently, there are 8,869 shared housing units listed through two licensed shared housing intermediaries: Airbnb and HomeAway.
Insight: Banning single-night stays will be music to the ears of the hotel sector as finally its dreams are coming true and Airbnb is being legislated out of existence. Well, not quite, but away from the stories about party houses, what is gripping attention is that registration of homes is being taken out of the hands of intermediaries and put into the hands of councils. Turns out that the intermediaries weren’t as reliable as they could be.
Of course registration is not a given everywhere, in fact, it’s hardly anywhere, much to the sadness of most jurisdictions, who would dearly love to know where sharing homes are, so they could collect tax and stuff. Not to mention ensure that local zoning rules are adhered to.
This is likely to be start of a trend for registration and possibly for limiting stays (which will also require registration) and we watch with interest to see whether this will push Airbnb back towards its stated strategy of long-term stays; students and the like. For further details, we turn to its thus-far opaque IPO.