Washington, D.C., passes strict new short-term rental law

The Washington, D.C., City Council has unanimously voted to approve a new law that would place tight limits on short-term rentals starting October 1, 2019.

The bill must be signed by Mayor Muriel E. Bowser, who has said she thinks the law is too restrictive. However, she has not indicated that she will veto it, and the bill passed with enough votes to override a veto.

Under the ordinance, hosts may only rent out their primary residence, not second homes, for short terms, and they can only offer short-term rentals for 90 days a year when they are not present. There is no cap on the number of days they can offer rentals when they are present.

However, homeowners can apply for an exemption from the bill’s 90-day annual cap on unhosted short-term rentals, an exception that was passed with residents serving in the military or diplomatic corps in mind.

The new rules prohibit tenants from renting out their units through online booking platforms, and hosts are required to have smoke detectors and liability insurance. The new measure also imposes civil penalties for operating illegal short-term rentals.

The new ordinance also requires short-term rental operators to be licensed. Washington, D.C., hosts are already required to collect the District’s 14.95 percent sales tax on accommodations from guests and pass it on to tax authorities.

Both Airbnb and HomeAway collect this tax on behalf of their hosts, but hosts who do not use either of these platforms are required to collect sales taxes themselves. All short-term rental hosts are required to register for tax collection with the D.C. Office of Tax and Revenue and file regular sales tax returns. MyLodgeTax can help Washington, D.C., short-term rental hosts comply with their sales tax obligations.

Airbnb blasted the new law.

“The D.C. Council's reckless vote today is the latest example of the misleading tactics used to pass fiscally irresponsible home sharing policy. This Council managed to accomplish the seemingly impossible today, simultaneously depriving D.C. residents of $64 million in supplemental income annually and then sending D.C. taxpayers a bill for $104 million. While our host community of 6,500 D.C. families hoped for a better solution, we remain committed to ensuring home sharing is protected in our nation’s capital,” Airbnb said in a statement.

Airbnb recently sued the city of Boston over restrictions on short-term rentals the city passed this summer. Like the new law in Washington, D.C., the Boston measure limits short-term rentals to properties where the hosts live.

Affordable-housing advocates, on the other hand, cheered the legislation.

Sponsoring council members “should be commended for putting forward a common-sense ordinance that protects true home-sharing, while cracking down on commercial investors buying up residential homes to rent on Airbnb,” Graylin Presbury, president of the D.C. Federation of Civic Associations, said.

About 7,800 short-term rentals are listed on Airbnb in Washington, D.C., 68 percent of which are for whole houses or apartments, according to data tracking website Inside Airbnb.

Technically, Washington, D.C., zoning laws do not allow short-term rentals in residential areas in Washington, D.C. — but the laws are rarely enforced. The City Council has sent a letter to the city zoning commission asking it to permit short-term rentals. In response, the five-member commission asked the District planning office to study the issue and recommend changes.