From New York to Los Angeles, America’s short-term rental business shows no signs of slowing down, and the Asheville area is in the running to lead the pack. A June 26 report from financial technology company SmartAsset named the city the second-best place for investors to rent their homes short-term: The average Airbnb rate here is 3.69 times the average daily rent. The study also found that, for the second year in a row, the Asheville area had the highest percentage of Airbnbs as a share of local housing stock in the entire country at 3.56%. SmartAsset’s analysis didn’t include other popular home-sharing services such as HomeAway, VRBO and others.
Amid concerns that STRs are contributing to housing shortages and rising home prices, Asheville City Council attempted to rein in the practice last year by voting to implement the city’s strictest regulations to date. But despite the law — and a $500-per-day fine for violators — hundreds of illegal rentals still operate throughout the city.
While the current ordinance allows legally permitted homestays, through which residents can rent up to two rooms while living in the same house, it restricts entire home rentals of less than 30 days within almost the entirety of Asheville city limits. Property owners who wish to establish a new whole-house STR must receive conditional zoning approval from City Council.
In unincorporated areas of Buncombe County, short-term rentals of up to two single-family residences encompassing a maximum of 9,000 square feet are allowed; no permit is required. Woodfin, Weaverville, Black Mountain, Montreat and Biltmore Forest have their own ordinances relating to STRs, according to the Buncombe County Planning and Development department.
To ensure that homeowners adhere to Asheville’s regulations, Planning and Zoning Administrator Shannon Tuch says the city uses a blend of complaint-driven enforcement and hands-on investigation for identifying illegal STRs.
“The majority of our zoning enforcement, in general, is done through complaints. People complain about something or they see something they don’t think is right, and they check with us and we investigate it,” Tuch explains. “Short-term renting is really the only area of zoning enforcement where we actually do some proactive enforcement.”
That city-initiated work, Tuch says, includes creating a database of STRs as they appear on rental sites such as Airbnb and VRBO. Asheville has contracted with Host Compliance, a San Francisco-based software platform, to compile such a database since fall 2016; the service currently costs taxpayers around $26,000 annually.
Ulrik Binzer, founder and CEO of Host Compliance, says his company finds STRs by scouring listing information from 54 different online rental sites each day. The company then cross-references the data with other publicly available information, such as pictures, names and phone numbers, to determine where the property is located and who it is operated by and shares the findings with clients.
“I would say that we’re very accurate,” says Binzer. “When we have found the property, we then document that match to prepare a case for the city. We potentially then have the smoking-gun evidence [of noncompliance] that they need in order to prosecute that case.”
More than 250 cities across the country have sought assistance from the company to crack down on STRs. In Asheville’s case, Host Compliance has provided much-needed help in organizing and pinpointing listings rather than waiting for neighbors to complain, Tuch says.
“When Host Compliance first contracted with us, the number of notices that went out increased dramatically, because we now suddenly had all of the addresses. Beyond that initial flush of activity, it’s been relatively steady,” Tuch says. “And also the number of homestays and listings in general has steadily increased, so we have a pretty large database now.”
Crunching the numbers
According to data provided by the city on July 1, Asheville has 1,172 listings currently advertised on Airbnb that meet the definition of a STR. Of those listings, 57% are legally permitted, 24% are not in compliance with the ordinance and 19% have yet to be classified by Host Compliance.
Around a quarter of those noncompliant listings are associated with a homestay permit, according to a city spreadsheet. Tuch says the city takes additional steps to verify the property owners before sending a notice of violation, she didn’t comment on the percentage of listings on which the city has taken action.
“I think you need to actually really review the information. You have to identify that there’s a violation. You have to identify the address. You have to have proof that there is illegal renting going on,” Tuch explains.
Binzer, however, points out that many cities using Host Compliance also subscribe to an automated process that notifies homeowners when illegal listings are identified. Given Asheville’s size, he says, Host Compliance could send automatic notices of violation to illegal STR operators on the city’s behalf for around $15,000 per year, with the option of adding a 24-hour hotline to manage resident complaints for about $12,000 annually. He estimates that those additional services could bring the number of illegal rentals down substantially.
“We have places that have 95%-100% compliance,” Binzer says. “I’m not going to tell them how to run the city, but the point is that if you were to send a letter every time someone is found to be in violation, you’d probably have a higher level of compliance. It’s just a question of policy. You basically have to decide if you want the problem solved or not solved.”
But Tuch maintains that there are limitations to the data Host Compliance can provide. While the service cuts down on the most tedious aspect of enforcement — identifying potential rule breakers — city officials should still make the final judgement on whether properties are violating local ordinances, she says.
“Just looking at a listing and making a conclusion that it meets the definition of a short-term rental and proceeding with the notice of violation, I don’t think, is doing a thorough job,” Tuch says. “I think if we use their services, it could result in notices that are not accurate. We are the stewards of that information, and I don’t think we feel comfortable delegating that to a third party.”
Tuch says that even with Host Compliance, Asheville isn’t always able to identify illegal rentals. Some STR operators muddy the city’s database and attempt to circumvent the rules by providing false information on permit applications and frequently relisting properties on multiple sites under different names.
“One of my biggest frustrations with enforcement is the people who work so hard to break the rules — people who know what the rules are and are being deliberately evasive,” Tuch says. “They’re really investors using their investment properties to build their wealth rather than thinking of the housing security for people who live in them. There’s a lot of people who are operating lawfully, and it’s not really fair to them, and it’s not fair for people who are trying to live in Asheville.”
Binzer agrees and says that there will always be property owners who choose to sidestep city ordinances. However, he adds, those operators will more than likely not appeal to the average visitor.
“In Asheville, where the regulations are pretty restrictive, there will always be certain operators that are going try to go underground and do shady things, and those will be hard to rein in,” Binzer notes. “The good news is that, if you try to hide everything from your listings and try to be stealthy, most people don’t really want to do that. They’ll just check into a hotel instead, because who wants to be a criminal when they go on vacation?”
Despite the illegal STRs that still fly under the city’s radar, Tuch says that Asheville is continuing to make strides in enforcement and that it’s important to consider the time, money and resources that would be needed to police compliance more aggressively.
“In general, I think the effort has been good. I think we are doing better than most cities by comparison,” Tuch says. “There’s always more you can do, but whether that’s a good use of resources or a priority, I couldn’t really answer that.”