The short-term rental (STR) market has seen rapid growth in recent years, but it now faces increasing short-term rental regulations across global cities. Governments are imposing stricter controls to balance local housing needs with the surge in STRs, forcing property managers (PMs) to rethink their strategies.
To stay competitive, PMs must adapt to these regulatory changes by embracing innovation, compliance, and new business models. This article explores how PMs worldwide are navigating STR regulations, leveraging technology, and expanding into new markets to future-proof their businesses.
The global regulatory landscape
Cities like London, Barcelona, San Diego, and New York are setting the standard for short-term rental regulations. These cities have introduced stringent rules to mitigate issues like housing shortages, community disruption, and lost tax revenues. Property managers operating in these markets face a range of new legal hurdles, including limitations on how frequently properties can be rented out, license requirements, and restrictions on non-primary residences.
Across Europe and the US, trends in STR regulations reflect a growing desire by governments to regulate short-term rentals more tightly. For instance, London limits short-term rentals to 90 days per year for non-primary residences, while Barcelona imposes strict zoning laws to control the number of tourist accommodations in certain districts. Meanwhile, cities like San Diego and New York have implemented rules that only allow short-term rentals in a host’s primary residence. These restrictions are reshaping the landscape for property managers, requiring them to be proactive and adaptable.
The most pressing challenges for PMs include navigating complex tax obligations, obtaining and maintaining licenses, and dealing with primary residence restrictions. Failing to comply with these short-term rental regulations can result in fines, loss of rental licenses, and other penalties.
To stay updated on the most recent STR regulations in different regions, explore our detailed coverage on San Diego, Boston, and the UK.
READ:
- Denver Airbnb Rules: What You Need to Know
- New Rules for Holiday Lets in the UK and What to do Next
- San Diego Short-Term Rentals Law – Impact of the ‘23 Regulations’
- Navigating the Barcelona Short-Term Rental Ban
How PMs are future-proofing in key markets
Leading property management companies (PMCs) in regulated cities are adopting proactive compliance strategies to stay ahead of STR regulations. In Denver, for example, Effortless Rental Group quickly adapted when new primary residence rules came into effect, reducing their portfolio while maintaining revenue by shifting to longer-term rentals and condo hotel projects.
In the UK, PMCs are leveraging technology to automate compliance with short-term rental regulations, using tools to manage licenses, tax payments, and renewals. In Barcelona, where strict caps on tourist apartments are enforced, property managers have turned to diversifying their property types and exploring new locations outside the city to mitigate regulatory impact.
Staying ahead of STR regulations and ensuring compliance is critical for maintaining operational stability. Proactively adjusting to new rules—whether through automated license management or adjusting business models—can safeguard against regulatory penalties and even improve relations with local authorities.
Diversifying revenue streams and business models
One effective response to tightening short-term rental regulations has been to pivot toward mid-term rentals. In cities like San Francisco and New York, where stricter STR rules limit short-term stays, PMs have shifted to offering 30+ day rentals, targeting professionals and families who require longer-term accommodations. This business model not only complies with local laws but can also generate higher revenue than traditional long-term leases.
PMCs in regulated markets like Denver are also exploring condo hotels as an alternative business model. Condo hotels allow homeowners to rent out units within a hotel-managed complex, circumventing strict STR regulations on vacation rentals. This hybrid approach provides property managers with a stable revenue stream and offers homeowners more flexibility in regulated cities.
Another strategy to navigate regulatory hurdles is leveraging grandfathering provisions, where properties that were compliant under old rules are exempt from new regulations. This has been particularly useful for multi-property PMs looking to maintain their portfolios despite regulatory shifts.
Leveraging technology and data for compliance and efficiency
As short-term rental regulations grow more complex, technology has become an essential tool for PMs. Platforms like Superhog offer guest screening services that help property managers comply with local safety requirements, while also providing transparency for guests. These tools reduce the risk of non-compliance and liability, which is critical in highly regulated markets.
In addition to compliance, PMs are using dynamic pricing and occupancy analytics to stay profitable in a challenging regulatory environment. These tools allow PMs to adjust prices in real-time based on demand, competition, and seasonality, ensuring optimal revenue even when STR markets face downturns due to new laws.
Automation is another crucial tool for managing compliance. With automated systems for tax payments, license renewals, and occupancy tracking, PMs can reduce administrative costs and ensure they meet all regulatory requirements without manual intervention.
Making your voice heard
Active advocacy is key for PMs to influence the development of short-term rental regulations in their cities. Advocacy groups such as Rent Responsibly and Mile High Hosts have been effective in lobbying for balanced regulations that protect both the local economy and STR operators. By building coalitions that include property managers, cleaning services, vendors, and other stakeholders, PMs can present a unified voice to regulators.
In Denver, property managers worked closely with local authorities to propose regulatory frameworks that allowed for mid-term rentals and other alternative business models. By actively participating in the conversation around STR regulations, PMs can help shape laws that are both fair and beneficial to their businesses.
Expanding to new markets
To offset the challenges posed by short-term rental regulations in major cities, many PMs are expanding into less-regulated markets. Palm Springs, for example, offers more favorable conditions for STR operators, allowing property managers to diversify their portfolios. Similarly, rural areas in Europe and parts of Eastern Europe present untapped opportunities where regulations are still in early stages.
PMs are also exploring international expansion to capitalize on less-regulated markets in regions like Asia and Latin America. By entering these markets early, property managers can establish a foothold before local STR regulations become more restrictive.
Future-proof with strategic foresight
The future of short-term rentals will be shaped by ongoing changes in STR regulations worldwide. To remain competitive and compliant, property managers must stay informed, invest in technology, and diversify their business models. Engaging in local advocacy efforts and expanding into less-regulated markets can also help PMs navigate the complex regulatory environment.
By focusing on compliance, innovation, and advocacy, property managers can turn regulatory challenges into opportunities for growth. Staying proactive, leveraging technology, and collaborating with local communities will ensure that PMs are prepared for the future of short-term rental regulations.
