You may hear a lot about the “gig economy,” which is a term for the growing number of people who use web-based companies like Uber, Lyft, or AirBnB just to name a few to make extra income. There are many reasons for the rise of the gig economy, and I won’t get into them here, but those interested can find a host of resources online. The bottom line is that median household income today is about $40,000 whereas it was around $50,000 in the year 2000 adjusted for inflation. At the same time, prices for household goods and consumer staples have risen, forcing people to stretch their dollar further and find creative solutions to meet their budget requirements.
The rise of one popular app, AirBnB, has led to consternation between people including myself who don’t fully understand the platform, and people who are expanding it beyond AirBnB’s intent. It has also created a debate between the proper level of state and local regulation. AirBnB was created as a platform to let homeowners rent out a spare room or couch in their house to travellers, giving people affordable options besides low-budget motels, and allow the residential homeowner to make a little money on the side.
In some places, AirBnB users stretch this platform’s intent and rent out entire apartment complexes, or allow film crews to use their home for days at a time, disturbing residential neighborhoods and circumventing county code zoning laws, liability insurance requirements and taxes on rental income. Few people want the house next door to become a hotel or B and B. This is not the original intent of the platform.
The General Assembly in 2016 passed a bill authorizing the Virginia Housing Commission to study short-term rentals like those done through AirBnB to learn how to protect the ability of Virginians to use their primary residence to make extra money through hosting platforms such as AirBnB while establishing an innovative and efficient mechanism for the collection and remission of applicable taxes on all short-term rentals.
Specifically, the legislation as introduced would have provided for safe and uniform regulations governing short-term rentals of primary residences by allowing for reasonable local ordinance provisions to govern such rentals without allowing localities to ban them outright.
The legislation would not have impacted non-primary residences like second homes, empty apartments or houses or rentals of more than 30 days — localities would retain any and all existing regulatory authority over those areas.
The bill would have also made clear that all short-term rentals (primary residence or otherwise) are subject to the sales, use, and transient occupancy taxes, which Fairfax County does have. The bill also would have provided a new mechanism for the direct collection and remission of such taxes by the hosting platform, on behalf of the operator, to the Tax Department to be distributed to localities. This mechanism solves a key problem faced by the state and localities, and would have helped help deliver valuable tax dollars to local government to support education, law enforcement, and other important services.
While the county could not, under the introduced legislation, ban the practice outright, local homeowner and condo associations could still restrict rental properties in their community. The county could still require those individuals to be covered for up to $500,000 of liability insurance, and enforce all other zoning and code compliance regulations on those individuals.
I do not anticipate that the General Assembly will re-debate the legality of AirBnB as a whole, nor do I find it appropriate to undermine emerging technologies and innovative economic opportunities when so many people are struggling to make ends meet. The Housing Commission is currently studying this legislation and working with stakeholders to determine the appropriate level of regulation. This study is looking at the issues involved with renting out a bedroom in your house as well as the issues with renting out a second home or empty apartment.
If you have any recommendations or ideas on this legislation — and I heard some good ones at Mason Hill Civic Association on Monday night — please send them to me within the next few weeks at DelPKrizek@house.virginia.gov and I will forward them on to the Housing Commission, which is meeting again on July 14 in Richmond at 1:30 p.m. House Room 3 in the Capitol, so they are aware of them during their study that will provide the framework for next year’s legislation.