The Two Reasons Strict Laws & Steep Fines Haven’t Stopped Tenants’ Illegal Sublets

In 2016, Berlin passed some of the most stringent laws aimed at stopping short term rentals through sites like Airbnb. Two years later, the city government is heading in the opposite direction. Why? Primarily because laws attempting to curb the influx of apartment sharing don’t stop tenants from continuing to do it anyway. In Berlin, there are reports that Airbnb simply continued to grow. Granted, it didn’t grow at the rates as cities with less restrictive laws, but it still grew nonetheless.

Berlin is not an isolated example of this phenomenon. Cities across the world have increasingly instituted ordinances aimed at drastically reducing short term rentals, all with similar results: tenants skirting the law and illegally subletting with little fear of retribution. Why? Two reasons – problems with 1) enforcement and 2) punitive focus.

Different cities, different enforcement issues, same results

Berlin

Six months after the city passed a near total ban on short term rentals, 1500 cases were in the process of heading to court on charges of illegal subletting. Once convicted, fines could be as high as 100,000 euros. While this seems like proof that the new law was being effectively enforced, the problem was that none of these cases had actually been to court yet. Berlin, while better than most cities at enforcing the new laws, had an extremely prolonged enforcement process that was hampering their efforts. It would take nearly 2 years before a tenant could face court charges for illegal subletting.

In addition to their drawn-out process of enforcement impeding their goal, Berlin faced a more general problem shared by other anti-Airbnb cities. “While the number of listings has fallen in some places, enforcement of the new law is so piecemeal and complicated that few areas have seen a significant difference.”

San Francisco

One year after passing laws prohibiting certain types of short term rentals and making sublets illegal without a permit, San Francisco had received about 1300 permit applications. The city had also filed 264 cases against short term rental violators and had won a little under half of those. Yet somewhere between 80-90% of the advertised rentals in San Francisco were still illegal. City officials claimed that the extremely ineffective enforcement of the new law was due to the fact that it was, well, new. Still, the head of the enforcing agency in the city admitted that proactively seeking illegal sublets was “time-consuming and staff-intensive.”

Denver

Nearly two years after Denver passed its own law regulating and restricting short term rentals, they were doing better than most cities in terms of illegal sublets: only 32% of the advertised rentals were illegal in 2017. Yet they faced their own unique problem with implementing the new law – they didn’t seem to know who should be enforcing it. While proper enforcement should have meant the city taking offenders to court, the Denver Auditor instead worried that the city itself could be on the receiving end of a lawsuit, because, “discrepancies between the law and enforcement could lead to public confusion on how to stay in compliance, as well as the risk of perceived inequity.”

Santa Fe

Santa Fe gets the award for best place to illegally sublet your apartment. Why? One year after passing a law to regulate the practice, the city had absolutely no enforcement officers in place. They created four new positions to enforce the law but had yet to actually fill those jobs with people.

Next week in part two of our three part discussion – why AirBnB loves inept enforcement and actively promotes it.

Remember, tracking down illegal sub letters is, “time-consuming and staff intensive.” Let us do the dirty work for you. Contact us today for a free demo!

Part 1 of 3.