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Short-Term Rental Update: Short-term rental operator Lyric raises $160m; Fannie Mae-backed mortgages allowed for short-term rentals; City of Seattle enforcement delayed

This week’s Short-Term Rental Update features a number of interesting topics, including these highlights:

Short-Term Rental Operator Lyric raises $160M
("Airbnb Leads $160 Million Investment in Business-Travel Startup," Bloomberg Quint - Stories on Apr 17, 2019)
Lyric is a small, luxury apartment rental company working to change the narrative around short-term rentals. It prioritizes regulatory compliance in every jurisdiction where it operates. Of note, Airbnb, which has been deeply involved in regulatory compliance litigation nationwide, is leading Lyric’s latest funding round of $160 million. It appears that Airbnb is doing everything in its power to tidy up its house before a highly-anticipated IPO.

Fannie Mae-Backed Mortgages Allowed for Short-Term Rentals
("Fannie Mae issues ruling on renting newly-purchased second homes on Airbnb," The Real Deal - Miama on Apr 19, 2019)
Fannie Mae recently clarified a rule favorably to owners of second homes with Fannie Mae-backed mortgages. Since 2001 there has been confusion as to whether an owner was permitted under the Fannie Mae rules to rent out a second home as a short-term rental and, as a result, many lenders required owners to take out an investment mortgage at a higher interest rate than a traditional mortgage. This created significant uncertainty and increased costs for owners and their lenders. With Fannie Mae’s clarification, it is now unequivocal that an owner is allowed to rent out a second home on a short-term basis (there are some caveats, including restrictions against turning over the home to a timeshare arrangement or management company).

City of Seattle—Enforcement Delayed
Although not widely reported in the media (and therefore no article is linked below), there is big news in Seattle with respect to its enforcement of short-term rental regulations. The City of Seattle recently extended the grace period for licensing short-term rentals to September 1, 2019. The City issued a statement explaining that the grace period is due to technical difficulties in launching the online system. This provides some breathing room for owners and operators who have been scrambling to comply with the regulations.


Other news:

Industry News

Airbnb goes Hollywood: Ahead of IPO, travel app to develop streaming shows
Fast Company News on Apr 24, 2019 
Chief executive Brian Chesky is reportedly the driving force behind developing creative content to advance Airbnb’s brand. Move over Netflix, Amazon, and Apple: Airbnb is coming to Hollywood.

Airbnb is working to increase the diversity of its hosts
Real Estate Boston on Apr 20, 2019
When Justin and Charalaina Heard agreed that they would lease their Edgewood bungalow on the Airbnb site, they faced one last decision. Whether to put a photo of themselves on the listing. “We thought, they are going to see that we are black and not want to rent from us?’’ Justin Heard said. “But,’’ his wife chimed in, “we decided to go ahead and do it, because people need to see that representation.’’ Less than a year and more than $40,000 later, it didn’t really seem to matter. 

National child safety advocate calls for ban on Airbnb hidden cameras
eTurboNews on Apr 16, 2019
National child safety advocacy group, Stop Child Predators, called on state and local government leaders in the U.S. today to ban hidden cameras in Airbnbs and other short-term rentals, and enact regulations and criminal penalties for violators. The group says enough is enough after a string of recent news stories regarding hidden cameras found in Airbnbs, including a story last week of a mother and young daughter potentially being filmed undressing. 

Airbnb will no longer delist Jewish settlements in the West Bank
The Real Deal - New York on Apr 14, 2019
Airbnb won’t take down Jewish settlements in the West Bank that are listed on its website after all. The move drew condemnation from Palestinians, who have long wanted the disputed region for an independent state, Reuters reported. Chief Palestinian negotiator Saeb Erekat said the announcement “signals the complicity of the company with the systemic denial of our inalienable right to self-determination,” according to the report.

Canada’s first on-demand insurance solution for short-term rental…
ILSTV.com on Apr 12, 2019
Today, Duuo, The Co-operators digital insurance brand, announced its launch into the Québec market, representing the latest evolution in the company’s cross-country expansion. Short-term rental hosts in Quebec who rent their properties using popular platforms like Airbnb®, HomeAway®, VRBO® and others now have access to an on-demand, pay-per-use insurance that fills a growing need in the marketplace, providing greater flexibility for an expanding segment of the population who rent their homes as participants in the sharing economy. 

Regulation & Legal Developments

Oceanside proposes limits on short-term rentals
SignOn San Diego - Business on Apr 24, 2019
New policy would beef up enforcement, set limits in residential zones Oceanside has proposed new limits on short-term vacation rentals that some people say have allowed “hotel homes” to disrupt older residential areas and bring chaos to beach neighborhoods where the rentals are concentrated. The city has more than 900 registered short-term rentals and estimates several hundred more are unregistered. 

Arlington will ban Airbnbs, other short-term rentals across most of city
Dallas Business Journal News on Apr 24, 2019
After years of contentious debate, Arlington City Council voted Tuesday to ban most short-term rentals across the city except for those in an area immediately surrounding the entertainment district. The new policy targets properties that are available on services like Airbnb or VRBO that host overnight guests in traditionally residential neighborhoods. The city council heard impassioned arguments on both sides of the issue, from hosts who say that the city is threatening their… 

What to know about Louisville's proposed Airbnb rules

Courier-Journal - Breaking News on Apr 23, 2019
Louisville's proposed short-term rental changes, expected to come up for a vote Thursday, are an attempt to have a "system that works," author Councilman Brandon Coan says. For months, he and other city leaders have pushed for stronger enforcement and more effective regulation of illegal operators of Airbnbs or other short-term rentals. The proposal makes a series of tweaks to existing rules, after going to the planning commission for recommendations and a series of hearings.

Monterey takes aggressive stand against short-term rentals
East Bay Times on Apr 20, 2019
To thwart homeowners from renting out their houses for short periods of time and consequently taking them off the market for long-term renters, the Monterey City Council is continuing its beefed-up enforcement of its short-term rental ban. The short-term rental industry in Monterey sprung from owners of second or third homes renting out the houses for vacationers and others for a price they could never charge long-term renters. Rental housing in the city is in short supply, and elected officials saw short-term rentals as one of a number of practices contributing to the shortage.

Airbnb removes listings from three PLG buildings after tenants sue landlords
Brooklyn Eagle on Apr 19, 2019
Airbnb removed all listings from three Prospect Lefferts Gardens apartment buildings just days after the landlords who own them were sued for allegedly harassing and terrorizing rent-regulated tenants. Ten tenants filed the suit against their landlords — Miriam, William, Richard and Michelle Shasho, along with their companies First Kings Management LLC and 611 Flatbush Ave. […] The post Airbnb removes listings from three PLG buildings after tenants sue landlords appeared first on Brooklyn Eagle . 

New York lawmakers weigh new rules for Airbnb 
Fox 5 NY - Local News on Apr 10, 2019
State lawmakers in New York proposed new rules Tuesday for regulating home-sharing platforms such as Airbnb that would replace regulations that cracked down on short-term rentals in New York City. 

Enforcement

Judge bars Miami Beach from turning off water at properties owing short-term rental fines
The Real Deal - Miami on Apr 16, 2019
The water will keep flowing in a single-family home in Miami Beach at the center of the city’s crackdown on short-term rentals. Following an evidentiary hearing earlier this month, Miami-Dade Circuit Judge Jennifer Bailey upheld an earlier ruling that Miami Beach cannot shut water off at 3098 Alton Road because its owner owes $201,500 in illegal short-term rental fines.

Taxation

Rules, taxes for HomeAway, Airbnb rentals may change 
Austin Business Journal - Commercial Real Estate News on Apr 23, 2019
City leaders may soon reevaluate how that ordinance taxes companies such as Airbnb and HomeAway. 

Gavel slams: Airbnb not eligible for privileged tax treatment

eTurboNews on Apr 15, 2019
A report released on behalf of the American Hotel and Lodging Association (AHLA) calls on state and local government leaders to reject Airbnb’s future pursuit of voluntary collection agreements (VCAs) and look to the Wayfair decision as a pathway to cancel current VCA agreements and bring Airbnb up to code with current industry tax standards and regulations. 

Hawaiian legislators approve plans to tax Airbnb and other short-term rentals 
USA Today - Top News Stories on Apr 10, 2019
Hawaii's House and Senate both approved separate bills on Tuesday and will combine them later this month. If passed, the law would require the short-term rental website to collect and pay taxes on behalf of property hosts. 

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