Council's Proposed Short-Term Rental Law Could Rattle Cleveland's Airbnb Market

On most days in Cleveland, there are some 3,500 listings for short-term rentals, half of which are occupied on average, giving homeowners extra cash in their pockets, or real estate investors a leg of income.

Yet, not all those Airbnbs and Vrbos are one's common definition of short-term rentals: 44% percent of these units or apartments or homes, according to data from AirDNA, have a minimum stay of 30 nights or more.

At least for the time being.

Earlier this week, Cleveland City Council members Kerry McCormack and Jenny Spencer introduced legislation that would effectively ban all short-term rentals that allow guests to book over a month's time, along with a suite of rules that would require Airbnb and Vrbo hosts to register annually for detailed licenses, limit the number of guests that can be at a a rental, and restrict the number of short-term rentals in any given area/block/building.

The move, years after Council passed a lighter measure in 2016, is necessary, McCormack said, to weed out both bad actors herding good properties away from home-seekers and put the kibosh on noisy and unruly Airbnbers causing apparent havoc to neighbors.

"I will tell you, the amount of complaints, emails, phone calls from desperate residents who rightfully are furious because properties connected to them, in some cases next to them, are absolutely out of control," McCormack told Scene. "And the property owners could care less about them."
Council's push, McCormack and Spencer's introduced legislation tells, has wider implications in mind, those that echo the city's implemented Residents First laws that force the investor types to have local agents that the city could contact—and/or fine—if need be.

The idea, one can't ignore, is also one steeped in revenue. Cities don't receive nearly as much tax revenue from short-term rentals as they do from long-term, or year-round, renters.

Or, will a flood of Airbnbs, maintain the same culture. "Transient visitors taking the place of permanent residents can destroy the unity," the legislation reads, "communication and accountability between permanent residents ... and contributes to the shortage of affordable housing."

Besides making nearly half of all current Clevevland Airbnbs illegal, the new ordinance would treat those shorter-term stays with the type of formality your average apartment would receive.

All short-term rentals, even those spare guest room beds, would need to be licensed, with proof of payments for real estate taxes, a lease agreement and a floor plan detailing "emergency evacuation." (And proof of at least $300,000 in liability insurance.) Without a license, that rental couldn't be advertised—not on Airbnb, Vrbo, or elsewhere.

For McCormack, who can rattle off a long list of incidents of property damage or odd party shootings at Airbnbs in Ohio City, forcing a license should help curtail misuse and heinous behavior. And for any violations? A $150 fine, and $500 for any following.

"You got to be a good neighbor," he said. "And if you can't handle that ... I mean, our residents deserve a city government that can hold [bad actors] accountable so that they can live and maintain a quality of life and a peace of mind."

That is, of course, if Airbnb hosts listen to the law.

In 2023, New York City cracked down on nuisance Airbnbs and out-of-town capitalists by proposing a law limiting the number of rental days a guest could stay. Regardless, 10,800 effectively illegal listings stayed up for rent. And a 2019 investigation by NBC Bay Area discovered that nearly half of San Francisco's short-term rental hosts were lying on license applications claiming they lived at their property for more than 275 days a year (a restriction in place from a law made in 2016.)

The reasons for sideswiping legal threats are obvious. Your average Airbnb in Cleveland rents at a $157 per day rate, which could give that host $4,867 in monthly revenue, before fees and taxes. Say that same host had 20 units that rented up nicely throughout the year—and that's roughly $1.1 million in annual revenue.

Quite a difference from $1,200 a month, Cleveland's current median rent for long-term, full-time rentals.

"We'd have to rethink our business model" if similar laws were passed elsewhere in Northeast Ohio, Lindsey Reilly, director of operations at Reilly Properties in Cleveland Heights, told Scene.

Running about 25 listings in Shaker Heights and University Heights, Reilly's properties are mostly homes rented out (at $150 to $350 a day) to traveling nurses, Cleveland Clinic patients or in-town construction crews. Most come looking for "a couple of months" at a time, Reilly said.

Which means, if the Airbnb law passes, roads will diverge for anyone running similar businesses inside Cleveland city limits.

"You're gonna see hosts who adjust their business model and put up and shut up with it," Reilly said. "Or you're going to see hosts say, 'Well, screw this, I'm not going to do this, and I'm going to sell my house or figure out another long-term rental scenario."

Long-term meaning, Reilly said, operating like your typical Cleveland landlord, with a lease agreement on presumable month-to-month basis. Which could, she believes, lead to would-be Airbnbers turning to her business after other listings drop away.

"But if the market wants that, that's a whole other thing," she said.

The new Airbnb ordinance will head to Council's Development, Planning & Sustainability Committee in the next week or so, and could be entertained for passage by City Council in early June.

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