The impact of short-term rental laws on corporate housing in the Americas

Short-term rentals are furnished apartments or houses leased out on a temporary, short-term basis. They can be popular among business travel and corporate mobility professionals staying away from home for a short period of time (a few weeks or months) and looking for a more flexible option than a standard rental agreement.

Short-term rentals form a significant part of travel and tourism economies across the world; they provide business travelers with a wide choice of quality, safe and flexible corporate housing, and offer homeowners the opportunity to earn money if their home is vacant during the year.

| Why have local councils started putting their foot down on short-term rentals?

Local residents and their representing councils have been examining the impact of short-term rentals on their community. The risk is that a rise in short-term rental properties puts pressure on the housing market, making it more difficult for people to rent long term or buy in their local area.

Many councils enforce legislation to balance the needs of local residents and visitors, protecting both economies and letting them thrive side-by-side.

| Examples of short-term rental rules across the Americas market

New York City built on existing regulation and tightened their short-term rental laws in 2023, requiring hosts to register their property with the Office of Special Enforcement (OSE) if they want to continue offering stays of less than 30 nights. Hosts must also comply with Local Law 18 and pay a registration fee to be approved for short-term stays.

This is similar in Colorado where hosts must have a license to rent their property out for less than 30 days and the property has to be their primary residence. All adverts where the property can be booked must show the license number and comply with taxing and insurance rules.

In Florida, a 2024 bill pertains to occupancy levels and limits the number of people who can stay overnight in a short-term rental property. It’s restricted to two people per bedroom (or more if each person has at least 50sqft of space per bedroom) and two additional people in the common area.

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As of May 2024, rules in some communities of British Colombia were enforced to limit short-term rentals (for stays less than 90 days) to only the host’s primary residence or an accessory dwelling unit in the same lot, like an annex. This is similar to rules in Alberta’s Calgary and Edmonton, where properties leased for less than 30 days must be registered and remain the host’s principle residence (or be additional room located at the same residence).

Canada’s Toronto, Ottawa and Huntsville have similar short-term rental rules including registering your rental with the city and receiving a license, limitations on number of guests and nights allowed each year, and compliance with local zoning laws.

Many states also tax short-term rental hosts to regulate this accommodation type in the same way as hotels. The tax requirements put pressure on short-term rental owners to ensure the accommodation is safe and compliant with certain standards.

Other areas that tightened their short-term rental laws in 2023 include Atlanta, Memphis, Quebec, and Palo Alto, some Latin American cities have similar laws on paper but struggle to enforce them in reality.

| What’s the impact on the corporate housing industry?

In light of cost-containment the short-stay market is growing across the United States and Canada, but several cities have been tightening their regulations of short-term rentals. The consequences of these rules on the corporate housing industry are that supply is limited where properties can’t comply with stricter rules and rates of remaining properties are raised with the redirected demand.

Across the Americas market in Q1 2024, compared to Q1 2023 SilverDoor saw: 40% increase in demand for short-term rentals 4% increase in ADR for <30-day stays

While SilverDoor’s portfolio is broad and represents a diverse range of products to suit varied requirements, it can certainly be a challenge for operators to comply with changing requirements.

Interestingly, the US recently signed a new bill to help reduce visa application backlogs ahead of the influx of visitors expected for the 2026 FIFA World Cup. It seems that this momentum to support inbound travel is at odds with the restrictions on short-term rentals – how many of those first-time visa applicants will be staying for less than 30 days?

Indeed, some operators may opt for a 30-night minimum stay to avoid short-term rental rules. This is another example of supply shifts misaligning with US demand trends because, with an increasing difficulty to secure permanent housing for global mobility, relocation demand is culled as businesses instead opt for project work. This means the appetite for short-term rentals is strong, but businesses are often having to pay higher daily rates or struggling to find housing for transient trips.

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| An operator perspective on the changing legislation

The upshot on the corporate housing market could be a positive one, though. I recently spoke to Wendy Galati from LivinLocal Vancouver to hear an operator’s perspective on the changing legislation.

In Vancouver particularly, short-term rental rules are a significant challenge with the British Columbian government changing the definition of a short-term stay from less than 30 days to less than 90 days in May 2024. For operators providing corporate housing to workers on one to three-month assignments – like doctors, nurses, and construction workers, for example – or to corporates relocating to Vancouver and in need of temporary housing before finding a permanent residence, this was understandably a concerning change.

We recognise the impact these rules have on providers, but Wendy shared a hopeful outlook.

“It’s an opportunity for us to demonstrate our differences”, she says, because “we provide a place for people to live, not stay”.

"We” is a collective reference to corporate housing providers, as Wendy points out that while hotel rates for corporate bookings rise in response to increased demand redirected from short-term rentals, corporate housing providers have an opportunity to bridge the supply gap.

Corporate travelers seek quality and compliant housing and businesses need value for money, making corporate housing the ideal option. About the potential opportunities for corporate housing providers amidst ongoing changing and new short-term rental legislation, Wendy says "maybe I'm overly optimistic, but I'm a small business owner. I need to be overly optimistic."

| What does it mean for the corporate travel buyer?

So that’s a whistlestop tour of short-term rental regulation across the Americas, but how can buyers and bookers of corporate housing manage the impact of short-term rental rules? There are several considerations or amendments travelers and organizations can make to their booking practices or program policies to optimize value when using short-term rentals:

Get to grips with local tax guidelines in the areas you’re booking

Each destination could have different tax laws relating to unique local definitions of a short-term rental which is worth bearing in mind when setting policies and budgets. There could be ways to reduce overall trip costs by paying for more nights in areas like Washington DC where a short-term rental is defined as stays of 90 days or less with a 15.95% tax for such stays. If booking stays of 79-90 days here, it’s often more cost effective to add extra nights onto the trip and make it 91+ days rather than paying the short-term rental tax.

Getting to know these regional variances and amending your travel program to get more out of longer trips could save on overall yearly spend.

  Be flexible with dates to avoid seasonal rate spikes

Like all accommodation types, short-term rentals are subject to seasonal ADR fluctuations for periods of high demand. It may not always be feasible, but it could be beneficial to rearrange your less time-sensitive projects so they fall outside of surge seasons to bring housing costs down.

In New York City for example, events like the US Open, Fashion Week and UN General Assembly typically push September rates 10% higher than in July and August. Learning these sort of demand hot spots and shifting projects around accordingly might save businesses money and means your travelers won’t be staying during such busy periods.

Get creative with booking destinations to make savings

There are also small amendments you could make to bookings to get more bang for your buck, like considering housing a small drive/commute across a state or city border from where a project is based could mean you avoid city taxes and even pay lower daily rates. For example, your travelers could stay in New Jersey instead of New York City – the commute is only around 30 minutes on public transport but rates are far lower and short-term rental laws are less strict.

With legislation evolving all the time and global elections that could further shape the short-term rental market, SilverDoor is monitoring the changes and on hand to support our operators and clients navigate the short-term rental landscape. Speak to a member of our Americas team or any of our experts around the world for advice on the short-term rental rules and regulations.

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The original version of this article was published by The Business Travel Magazine and you can view here.