On Jan. 1, Philly will start enforcing new rules for Airbnb and other short-term rentals

Beginning Sunday, Philadelphia will have a fresh regulatory regime for Airbnb and other short-term rental properties.

Since 2015, the city has required many short-term rental owners to obtain zoning permits for businesses operated out of their own homes. Investment properties where a host doesn’t live have always been illegal without a hotel license, although countless people unknowingly broke that law.

In both cases, the rules were rarely enforced.

Then in 2021, as controversy swirled around bad actors in the sector, City Council passed a bill that sought to tighten oversight. Now many people who have built businesses around short-term rentals say the change, paired with a sluggish schedule at the Zoning Board of Adjustments (ZBA), will doom their livelihoods.

“This is financially really impacting me because this is 100% of my income,” said Angela Romero, who owns a triplex in East Kensington where she lives in one unit and rents out the other two.

“I don’t know how I’m going to be able to live, and it’s giving us a very short time frame for us to figure out how to pivot,” Romero said.

Previously, owners who lived in the same building as their rental space had to get a zoning permit only if they were renting the space for more than 90 days a year. The regulations were not strongly enforced, including on owners who illegally operated short-term rentals units where they did not live.

The new law requires a “limited lodging operator” license for short-term rental hosts who live in the unit. The paperwork is inexpensive, but it means that hosts have to comply with a variety of other requirements, such as obtaining lead paint certifications and ensuring their properties are up to code.

Owners renting properties where they don’t also live must get a hotel license. In both cases, hosts will have to provide a license number confirming that these permits have been secured to online brokers like Airbnb and VRBO. The companies will be liable for any violations. The city expects that means the tech platforms will not allow those without licenses to list their properties.

The bill was introduced by Councilmember Mark Squilla in February of 2021 and signed by Mayor Jim Kenney in June of that year. It was meant to go into effect in April 2022, but city policymakers agreed to delay its implementation until the summer and then again until 2023.

“Eventually, it has to go into effect,” Squilla said. “We passed this [over a year ago] and gave them until July. Then we gave them another six months. If we do it again, six months from now they’re going to say there’s still people who didn’t know. It’ll just keep continuing on and on and on.”

The short-term rental industry got the city to push back implementation last year by arguing that some hosts had not been notified and that delays at the ZBA would make it impossible for many hosts to get legal before the deadline.

A trip to the ZBA is often necessary because under the zoning code, short-term rentals in units owners don’t live in can operate only in areas of the city where hotels are allowed, which typically are in denser commercial areas like Center City or University City. In other areas, they must seek a zoning exception to secure their newly required licenses.

Wait times at the ZBA have soared during the pandemic, with appeals taking five to six months to complete. If a hearing is continued, as they often are, it can add months to the process. So far only 247 people have received a “Limited Lodging Operators License,” and 164 have received a hotel permit, out of an Airbnb host count in the thousands.

“What’s coming to a head right now is whether we are about to ban 70% or more of short-term rentals,” said Theron Lewis, founder of the lobbying group Philadelphia STR Association. “People are trying to apply for a variance, but [the ZBA is] not able to see anybody until February or later. If something doesn’t change, these people are going to lose their businesses.”

According to Lewis, at least 2,000 of his members have been struggling to meet the new law. He said the STR Association’s membership is 70% women-owned businesses, 60% nonwhite-owned, and 40% retired.

“It’s really folks that are the most vulnerable that have been affected by this,” Lewis said.

But Squilla said options are available for those who aren’t able to meet the new requirements in time. They could become traditional landlords, renting their properties to those looking for a home. They can rent for 30 days or more at a time, although demand for such a time span is admittedly smaller.

Squilla said these changes need to be put in place. For too long the market has been functionally unregulated, which has allowed bad actors to flourish. Although there may be some pain now, he said, getting everyone licensed and up to code will ensure that there is safe and sufficient housing for the 2026 national semiquincentennial and the World Cup.

“We’re not anti-rentals; we want more rentals,” Squilla said. “We want everybody to be in compliance because we have these big events coming. If there are issues, we can address them before that happens. We cannot keep pushing the ball down the road.”