Austin, along with several other Texas cities, struck out against illegal sublets and passed legislation that banned short-term rentals in an attempt to respond to a housing shortage that has become more acute with the growth of the city. As the state capital, tourist destination, college town, and cultural and economic center, the demand for affordable short-term lodging clashed with the need for affordable long-term housing. Airbnb and private rentals offered visitors a more authentic Austin experience than staying in a chain hotel.
Austin Strikes Out Against Illegal Sublets
Regulations passed in 2012 limited short term rental (STR) density to 3% for neighborhoods, while requiring STR hosts to obtain a $285 annual permit and pay hotel taxes directly to the state and city. By 2016, neighborhood associations who wanted to keep their areas free from transients, who often brought noise and disruption with them, succeeded in pressuring City Council to ban Type 2 rentals of all but owner-occupied property and phase out current licensed operators by 2022. The restrictions were met with anger by Texans dependent on the income from lucrative rental property and with lawsuits that challenged the constitutionality of prohibiting short-term rentals on the grounds that such measures are discriminatory toward renters.
In May 2017, the Texas Legislature passed SB 451 that overturned local laws banning short-term rentals, while allowing local areas to restrict renting to sex offenders and prohibit selling alcohol or illegal drugs to guests. As Austin and other cities dial back their own restrictions in compliance with state law, Airbnb announced that it would collect state and city taxes at the time of guest booking which ensures that the governmental entities will be able to get the money owed to them.
Even though new laws may sanction more liberal home sharing and subletting policies, Texas landlords must still be on guard against illegal sublets. Monitoring services comb listing sites for unauthorized listings and alerts landlords can then take quick action against renegade tenants.
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