Ann Arbor’s frequent sporting, academic and cultural events draw in large numbers of tourists, creating an expansive market for short-term rentals through platforms like Airbnb and VRBO. But, in light of Ann Arbor’s lack of affordable housing crisis and the threat to the hospitality industry, city officials are considering regulating short-term rental companies.
There are currently 978 Airbnb listings in Ann Arbor, and over 300 of these are for an entire home — whether it is a house or one bedroom apartment. This means there are 300+ less homes available for people who want to live in Ann Arbor.
Ann Arbor City Councilmember Elizabeth Nelson told The Daily she is concerned about how short-term rentals are affecting Ann Arbor’s housing market.
“If people are going to advocate strongly to city council that we need to build new housing, those same people should be every bit as concerned about the housing that we are losing to short term rental,” Nelson said. “That’s something I’d really like to know — how has this impacted our housing supply? A lot or a little?”
Nelson also said the growing popularity of these properties threatens the close-knit neighborhood communities of Ann Arbor.
“I don’t know that we necessarily want all of those really near downtown neighborhoods to just turn into all short term rentals, so we sort of have this pseudo-hotel district,” Nelson said. “People like the fact that they can live in a neighborhood and be in an actual neighborhood with real neighbors and be as close to downtown as they are.”
To help alleviate concerns about these short-term rentals, the city of Ann Arbor is considering policies to regulate these properties. The council held three public forum meetings last week to discuss potential policies for regulation and gather input from local residents.
Regulatory considerations mentioned by city officials during the meeting included allowing short-term rentals only in certain zones, taxing the properties, requiring registration and inspection, establishing a minimum and maximum length of stay for guests and only allowing properties where the owner remains at home during the stay. However, city officials noted these regulations may not solve the concerns typically associated with short-term rentals, which mostly relate to nuisance or noise issues reported by local residents for which regulations are already present.
Nelson said the council’s main concern is holding accountable properties that are frequently considered to be a nuisance among local residents.
“One of the things that I’m hopeful about is to quickly identify the nuisance houses and figure out how to force compliance and responsible behavior,” Nelson said. “There is no excuse for a house to repeatedly become a nuisance. There’s just no excuse because every new set of guests is a new opportunity for that landlord to be responsible.”
The meetings covered the pros and cons of regulation, noting that other cities regulate short-term rentals to maintain neighborhood integrity, bring in tax revenue, prevent nuisances, hold renters and homeowners accountable and level the playing field between these properties and hotels. Without regulation, they also discussed that the city could not ensure that existing short-term rentals are up-to-date or safe for renters.
Absence of regulation would also not reduce any potential negative impacts of these short-term rental properties, and would be raise competition for business among these properties and traditional hotels/motels. The city can also not receive tax revenues without regulation.
Nelson said taxing short-term rentals is an option the council is considering to balance competition among these properties hotels, motels and bed and breakfasts.
“It is possible we might go so far as to figure out some sort of tax and fees system, because we do have some traditional bed and breakfasts in Ann Arbor and they have pointed out that there is something a little bit unfair about folks who are just using an app and sidestepping significant hospitality taxes and regulations,” Nelson said.
Jennifer Hall, director of the Ann Arbor Housing Commission, echoed this sentiment, saying short-term rentals serve as a concern for hotels and motels.
“This really does not have any impact on the housing market, it has an impact on the local hotel/motel industry,” Hall said. “It is a really interesting issue to contemplate, especially in a college town and a town with a large research hospital. There are lots of people from all over the world who come to Ann Arbor for short research projects and residencies at hospitals that are too long for an expensive stay at a hotel, yet too short to rent an apartment. So Airbnbs are serving a niche in the marketplace that is needed.”
Hall noted that unlike hotels, short term rentals don’t have to worry about hiring employees, thus dodging the issue of workers being unable to afford living in Ann Arbor.
“Due to the lack of affordable housing and low unemployment, it is difficult for our hospitality industry to fill positions,” Hall said. “Owners who do short-term rentals in the home that they own are providing all the housekeeping and maintenance labor and Airbnb is doing the marketing and financial management of the transaction so it is an efficient and cheaper model than a physical hotel (or) motel.”
Hall said in some cases, Airbnb hosts are neglecting their properties and taking away options from residents looking for affordable housing.
“People who purchase homes or apartments to do short term rentals on Airbnb as a business investment are more problematic,” Hall said. “They are not just competing with existing hotel businesses, but with fewer regulatory requirements; these also are likely the housing that neighbors complain about because it is an absentee landlord, and it of course takes housing off the market that people could live in who work in the city but can’t afford to live here.”
According to MLive, Airbnb reported that Washtenaw County hosts earned $6.7 million in income in 2018, providing short-term housing for about 42,000 guests.
As the council continues to weigh the advantages and disadvantages of these short-term rental properties, Nelson said the city is having difficulty balancing the many interests involved with short-term rentals, and is not taking any drastic measures concerning regulations at the moment.
“There is a significant number of residents who are making money off of short term rental and are doing it in a responsible way, and then we also have to figure out how to address concerns of people who really see their neighbourhoods changing a lot and have legitimate complaints,” Nelson said. “We’re balancing a lot, we’re having to consider everything. How are we sensitive to the needs of both residents who are letting their own homes be used because it helps them afford to live here and how do we allow this business model to exist without letting it explode?”
Business junior Allison Feng has used Airbnb as an alternative to a hotel. She said it provided more space and was in close proximity to the attractions of downtown Ann Arbor.
“I had a visitor in town and we decided to go with an Airbnb because we wanted to cook and the Airbnb had a kitchen and would give us more room in general, especially since my apartment was pretty small,” Feng said. “The price was pretty similar to that of a hotel, but was near downtown and was pretty close to Zingerman’s.”
Allison Okuyama, an employee at local bed and breakfast Burnt Toast Inn, said there are many differences between bed and breakfasts and Airbnbs, which she believes can make bed and breakfasts more appealing in some cases.
“I don’t know when someone chooses Airbnb over us, I just know when someone chooses us, and we get to interact with those people and create relationships which can last for years,” Okuyama said. “I think the difference between what a proper bed and breakfast offer and Airbnb is sort of security and peace of mind as well as the service aspect. Anybody can go and book a room in someone’s house, but they have no idea who that person is. As someone who works in the bed and breakfast business, I would never be comfortable renting out my personal home to people without having the right kind of insurance.”
Okuyama said she thinks the rising popularity of short-term rentals in Ann Arbor is a result of economic complications.
“I think it’s a bad thing that people feel like they have to monetize so many parts of their lives that they can’t have a job that fulfills their needs, but they also have to work part-time as an Uber driver or rent out part of their house to afford the life that they want to have,” she said. “I think it’s a tragedy and it speaks to our current economic problem in Ann Arbor.”