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Short Term Rental: Ensure its Legal

I just had a conversation with an old friend from college that had an unfortunate experience with an AirBnb in Italy. It was on AirBnb, but apparently wasn't properly registered and lost the booking the day before arrival.

Very many cities now require short term rentals to registered or licensed. Almost always when this is a requirement the registration number must be in the advertising. I really do believe that AirBnb does try and weed out the non-compliant units but they dont get them all. I think this one WAS caught by AirBnb and thats why the reservation went up in smoke.

I spoke to a RS person a few months back and warned him the unit he was about to rent was not legal. He communicated with the host and determined that indeed it was not licensed .... but rented anyway. Short Term Rentals get a lot of bad press as it is so lets not support the law breakers. That just leads to more restrictions.

I couldn't find a comprehensive list of the cities that require licenses and registration numbers, but its not that hard to guess. Go to a city on AirBnb, Budapest for instance, and look and see if listings have a registration number. If you see twenty listings with numbers and two listings without, thats a giveaway. Or ask on the RS forum, I suspect we have a local in most large tourist destinations.

Renting within a platform like AirBnb, VRBO or Booking.com will increase the likelihood that its legal as well, as they do try and weed out the ones that are not conforming, where an individual website has no policing.

Posted by
4293 posts

Well I do rent apartments from time to time and believe firmly in the concept of only renting from legally registered places. But I am guilty of making the assumption that if they are listed on these major platforms, they have fulfilled legal requirements from their end. So first take-away is for me to be more careful.

Second was to figure out where the registration number is on the platform. AirBnB puts it on the front page where it’s easy for me to see. On booking (which I use often) and vrbo (which I never use), it seems to be under “Important Information” and is a bit harder to find at a first read.

I just did a very short search for Budapest on booking.com and for Paris on vrbo and found places on each platform in those cities that did not have a number shown that I could find. It may be there, may be registered, but the number was not anywhere I could find it (for just a few places). Most were easily seeable, once I figured out where to look.

We had a recent discussion on the forum about how to ascertain if a number is real - not just invented to satisfy the requirements on AirBnB’s (and others) form and I didn’t see a conclusion (and can’t find that thread now). I also, in googling, saw an article on how to double check in Barcelona - seems to be a problem there also with fake registration numbers. And on a recent thread for Scotland, someone kindly listed the governmental website to check registration in the new process.

I know the conclusion for many is to just not rent an apartment. That won’t be my conclusion - I do a mix of many kinds of lodging depending on country, city, and circumstances. I am sitting right now in a delightful little apartment in Jajce, Bosnia. But obviously we all need to be careful, legal, and learn how to do our due diligence - and be mentally (and financially and technologically) prepared to pivot if something falls apart.

Posted by
4293 posts

Also thanks no thanks - for today’s mental rabbit hole and sorry for the sidetrack, but…..

For years, I have played with the thought of buying a property somewhere, if I could decide where (making this decision is the first thing in my way). I am not looking at getting a long term visa or moving or anything like that - just finding the place I like to return and then making somewhere a bit my own. I would never make a complete move.

Therefore it would have to be something I could legally use for an income property when I wasn’t using it. As I look, I feel like this would have to be a property that would need some renovation, in order for me to afford it. I seem to keep winding up in Budapest, but also love Ireland. And I know Budapest is beginning to limit new rental units. Any thoughts? (I probably should have started my own topic….)

Posted by
2764 posts

Can you please tell me how Airbnb is going to weed out the rentals that aren’t registered? You just pointed out in the original post that your friend who is renting via Airbnb lost their unit the day before. Renting via company like Airbnb or VRBO and it’ll be legal?

What Airbnb does, for example in Paris, is require that you put in your registration code. Your registration code is a 13 digit code that in Paris must begin with the 75. Anyone with half a brain can make up a 13 digit code that begins with 75. Airbnb does not actually validate the code. Additionally, your registration code may only allow you to read X number of days per year, Airbnb does not do anything to validate that. Now, in some countries or cities, you may be able to validate any required registration but you still probably won’t be able to validate the number of days if there’s restriction on days. But in other places you won’t be able to validate anything

Do not assume because you rent at one of these platforms you have a legal rental and will not have problems. I’ve noticed particularly in Paris, that what you will get is an email shortly before your rental telling you your unit has “plumbing problems”. It’s become apparent that plumbing problems is code from one of two things. One “oops my rental was illegal and I got caught “ or 2 “ I’m running out of days and I can get more money from somebody else in a different time so you just got kicked out”

I actually rent through companies because if they have a problem I have found that it’s easier to deal with them than Airbnb and they generally have more than one locations so if something does happen, they can move me. But unless the location gives me a way to validate a registration number or other method to tell that the rental is legal, I don’t even bother looking for those numbers anywhere. I’d almost be happier if they tell me they don’t have one as make one up just to get on Airbnb. At least I know the risk.

Posted by
18571 posts

Carol, a lot of good points. Brings up another question: what is AirBnb? (and when I use AirBnb I really mean all the short term rental platforms). Is it a 21 century version of a newspaper classified? If it is then we should hold it as libel as we did for the newspaper classified (generally not at all).

But good business practice says they should be policing and I have read in Paris at lease, and I assume elsewhere, they are policing with spot checks, rapid response to complaints of illegality and by providing the lists to the government. I guess the best we can do is personals responsibility; check the license is on the website. But I do wish the platforms would put information pages for at least the top 100 markets. Information on the law and circumstances of the destination. That would be a good service.

And we have all read the horror stories. They make good press. There are over 700 million bookings a year on AirBnb. If 1/1000 of those bookings are bad, thats 700,000 good stories for the press and the ideologs.

Posted by
18571 posts

TexasTravelMom, location, location, location. Yes, you really got to love the place.

The place i live in now started out as a my short-term rental property. Now, its my home.

When I purchased my flat 15 years ago I really had no idea what I was doing. It was affordable and I liked the city. I hadn’t even heard about AirBnb. Later I found out about short term rentals and that Budapest was a hub for WizzAir (well back then it was MALEV's hub) as well has a port for all the major airlines and as a result I had the income and the means to see more of Europe than most people would. So little would have been possible without the flat.

What happened here was that the tourist zones got full, the restaurants and shops and the like had to start moving up side streets. Those businesses started the renovation process and that made the side streets pretty nice places for tourist to stay so the short term rentals moved in which brought more renovation to the streets and then the values began to increase to reflect the increase in quality of the housing and the increase in quality of the neighborhood. One fed the other. My particular street hasn't fully realized this yet, but is slated to go pedestrian in a few years and then I suspect the value will go up quite a bit.

Then a point was reached where my District said enough and froze new licenses. Interesting the property value didn’t go down because the value is mostly in the result of the activity not the activity itself. In Budapest that meant buildings that hadn’t been improved in 100 years now having new wiring, safer gas services, internet paint and plaster. Not a wealthy place .... middle income neighborhood.

When I bought, I bought a few blocks away from the tourist zone (all I could afford). Again, blind luck, because in 5 years the tourist zone caught up to me and now the flat is in it. So how to make it affordable, just look at where the growth is going and move a tad outside of it. Doing that you can still buy a flat here for $50,000 and figure another $25,000 to renovate it. Not large, but for vacation purposes, maybe suitable. In the full tourist areas figure 2 to 3 times that cost.

But as you noted and as in my situation you have to know which districts you can do rentals in and which you cannot. And don’t expect to get rich off it. This is a marginal business. You can make enough so that the investment costs you nothing to own and then rely on appreciation for your future return. And you can make enough for your airplane tickets and you save on hotel costs ….. but you wont get rich. You also need to hook up with a company that can do all of the legal and a company for the renovation and a management company. I learned all this the hard way. But it was still fun and one of the smartest moves of my life.

I hope you find your place. But not in Ireland. If you are going to spend a lot of time someplace you should be able to understand the language at least a little.

Posted by
709 posts

I live in Hawaii, and many people have not gone through the arduous process of licensing their short term rental. So, on their AirBnB or VRBO listing, they put their County TAX license number and renters looking for lodging don't realize that is not the STR license number. I have gotten into the practise of contacting the host and asking them directly for their STR number. Of course, as Carol pointed out, I have no way of knowing if they just make something up but at least putting them on notice that I'm checking.

Posted by
18571 posts

And we never know how many of any businesses are operating illegally or if anyone paid tax on that cash payment to your hairdresser. But, yes, it's a problem and it would be better for the customer and tge honest airbnb owners if a solution could be found.

Posted by
7507 posts

It seems that one possible solution could be for AirBnB and others to spend time and money ... eliminating revenue (that is, FEE) producing listers from their entrepreneurial, Silicon Valley Bro website. I don't see that happening soon. This is a problem in the US, as well. Even my wealthy suburban (NYC) town has outlawed rentals under 30 days, 25 miles from Times Square.

Posted by
4293 posts

Thanks for the thoughts, Mister É 🍺🍷. If I ever decide to pull the trigger, I feel like it would require some definite hand holding from a lawyer, contractor, and management company. I don’t think it’s easy in Ireland to buy and renovate, so I guess I am safe there. I am sure those exist in Budapest - you probably have used some. We’ll see. I am still looking.

And for now, it would be nice if the system were fool-proof. But I will probably keep renting apartments when it makes sense - and at least be more diligent about checking to see if registration is required and if the apartments I am looking at are at least pretending to be in compliance.

Posted by
242 posts

Mister E, if airbnb were just a "classified ad", then I'd agree with you that they should be held harmless. But they are not. They take a cut. A percentage of every rental goes to them. Now if they labeled stuff (e.g., "verified legal"/ "not verified legal" / "it is Hungary so what does legal actually mean anyway"), then I suppose they could say "hey I told you" but as far I know they don't do that either. I'm no lawyer but I think they ought to be held responsible if they are taking money for illegal activities (even if that is okay in Budapest!!!)

But what do I know? Not much.

Posted by
18571 posts

David, you had a good point. It is the argument about services like AirBnb. A lot like the Twitter and Facebook argument that they are bulletin boards and so not responsible for the postings. Its a great debate. What if Airbnb just changed the business model where every listing paid a monthly charge and they took no cut in the sales? End result is the same, but payment process is different (more like a newspaper listing). Of course fewer listings because it is not as advantageous to the the owner or the renter as the current system. I generally lean to the free trade and personal responsibility end of the spectrum, but there are good arguments across the spectrum.

I'm no lawyer but I think they ought to be held responsible if they
are taking money for illegal activities (even if that is okay in
Budapest!!!)

(even if that is okay in Budapest!!!) That's sort of an irrational statement given the point of the original post.

Posted by
242 posts

Mister E, I am nothing if not mostly irrational, thank you very much!
P.S. Learning Hungarian can have no good end!