Why You Should Avoid Illegal Rentals

Here at Cross-Pollinate we’re always happy to pass along travel tips and suggestions that are useful and enlightening.  When we started in 2000, hotel-alternatives were small fry and we, as well as others, were able to offer cheaper, more personal accommodations without creating ripples in the travel world or among local residents.

That is no longer the case.  Vacation rentals and home sharing is huge business now, and with big business comes big problems.  Because we believe an informed traveler is a happy traveler, we’d like to weigh in on the controversy surrounding legal vs. illegal rentals.

What is an illegal rental?

This can vary from city to city, but most major tourist destinations and dense urban centers have regulations that govern private room or apartment renting.  Basically any room, apartment or house that rents space without respecting these regulations is not legal.  Add to that the issues of taxes on income, hotel/occupancy taxes, and under the table employment – which are abuses of the systems we all depend on, made by both illegal and legal rentals.  Those who are technically authorized to rent their places might still fall foul of the law by choice or necessity, but those who aren’t authorized at all to be renting their properties are surely incapable or unwilling to abide by other laws that are all connected.

The situation, in a nutshell:

With the onslaught of vacation rentals flooding the market (mostly stemming from the enormous venture capital of Airbnb), online marketplaces are making it easy for guests to connect with hosts who conveniently, but illegally, are monetizing the extra space in their private homes.  This isn’t new, but it had previously operated in the shadows to the degree that most governments felt wasn’t worth going after.

Over the last 8 years, an influx of “shared housing” has created underground economies that are putting the squeeze on legitimate vacation property owners, while creating housing shortages that are driving up long-term rental prices.  In response to this trend, many cities like Paris, Barcelona, Berlin, San Francisco, New York and Santa Monica are starting to crack down, putting oversight and regulatory enforcement programs in place, or battling to have existing laws respected with cooperation from the sites who list them.

Why should you care?

The burden of the law shouldn’t be on the buyer, and in some cases even the residents themselves aren’t clear about what they can and can’t do legally, let alone travelers.  So it’s unlikely and unreasonable to imagine that a traveler can do due diligence and determine if a rental is legal or illegal, and if legal, to what degree.  Simply put, it’s not your responsibility to know or to care.

But with that said, we’ve seen some patterns of behavior that affect the traveler by those who aren’t professionals.  Whether illegal or legal, someone who depends on the reputation and longevity of their business will make different decisions than someone who rents casually or when they feel like it.  People who are concerned with the consequences will take more care than those who are either unaware of the consequences or simply don’t care.

Here are some practical reasons why we believe you should avoid illegal rentals when traveling:

• Cancellations. Booking an illegal rental puts you at risk of being stranded without a place to stay if a property owner is forced to comply with the law and removes their rental from the market.  I’m sorry to say that this happens all the time, and we’re often contacted by travelers who’ve had their accommodation “fall through” at the last minute.  By the time this happens, there’s usually little else available and often the price is higher than it was originally.

• Safety. Hosts who circumvent the rental permit process are also less likely to follow fire safety regulations, building codes and/or have the required insurance coverage for public lodging establishments.  If you don’t care about the law and preventing disasters, you really don’t care much about the people they might happen to.

• Scams. Statistics show that of the millions of vacation accommodations published online, about 10% of them are fraudulent ads. Many victims pay deposits for properties that don’t exist or arrive to find them occupied by the ‘real’ owners.

• The Backlash. The short-term rental boom is turning quiet neighborhoods into noisy tourists havens and apartment buildings into defacto hotels.  Understandably, this creates bad blood between neighbors (long-term vs. short-term) and guests are often on the receiving end of that anger. Encounters in the lobby or elevator with residents can be uncomfortable, to say the least.

The upside of apartment rentals in general is that they tend to be more affordable than traditional hotels, B&Bs and vacation accommodations – especially important for budget travelers.  Airbnb grew to its impressive size by creating a large portfolio of cheap options.  But as with all things, you get what you pay for: the savings you’re being offered is normally because a corner was cut somewhere else.  On a large scale, as it is now, this can have a huge negative impact on neighborhoods, economies and your trip.

Saving money is great, but if your precious holiday time is ruined, you may be throwing away a lot more in the end.  It really comes down to one question: Do the benefits of an illegal rental outweigh the risks?

Below are just some of the rules and regulations for the European cities that Cross-Pollinate has properties in:

• In Rome, Florence and Venice. All rentals must be authorized by the city and guests must be registered on arrival by the property owners/manage with the police department, as well as collecting a city tourist tax, which varies city by city.

• To have a holiday rental in Barcelona, an owner must obtain a license of occupancy (the number needs to be displayed in all advertising), comply with the same health and safety laws as hotels, and collect a Catalan tourist tax (per person, per night).

• In Paris, the law states that a flat must 1) be registered as a commercial property or 2) be the host’s primary residence.  Owners who take one property off the rental market to residents must purchase a second property to “balance things out”.  There is also a tourist tax to be paid to the city.

• Lisbon insists that owners register their property at the local tax office.

• Istanbul allows unrestricted short-term rentals and holiday rental-friendly London lets owners rent their homes for up to 90 days a year without obtaining a permit.