The Impact of Short-Term Rental Bans on Dallas and the Global Mobility Industry

Annie Erling Gofus - Aug 22 2023
Published in: Public Policy
| Updated Aug 22 2023

The complex landscape of short-term rental regulations and their ripple effects on housing, tourism, and economic growth. 

After the conclusion of COVID-19 pandemic lockdowns, the short-term rental sector witnessed an exceptional period of growth. In the year 2021, Airbnb witnessed a staggering 85% surge in average earnings for its hosts, signifying a remarkable rebound. Subsequently, in 2022, the industry reached a historic milestone with nationwide availability of 1.4 million listings, as reported by the analytics site AirDNA. The remarkable expansion and recovery in the industry were further underscored by Airbnb’s first-ever profitable year, generating an impressive $1.9 billion in revenue during that period. 

In popular travel destinations, a segment of the local community has united in opposition to short-term rentals, expressing concerns about their increasing presence in their neighborhoods. They argue that this surge in short-term rentals brings about a range of issues, from minor nuisances like noisy parties to more significant challenges, such as hindering regular people from purchasing homes. These short-term rentals have faced accusations of driving up housing prices, displacing local residents, burdening community resources, and contributing to the problem of over-tourism. 

Various jurisdictions have implemented bans or strict regulations on Airbnb hosting for different reasons. One major concern is the impact on tax revenues usually collected from lodgers, though Airbnb has attempted to collaborate with cities to address this issue. Additionally, there are worries about Airbnb’s competition with traditional hotels and bed-and-breakfast establishments in the accommodation sector. In other areas, concerns arise over the lack of regulatory oversight compared to hotels, potentially affecting health and safety standards. Some individuals also complain about short-term guests causing disruptions in multi-dwelling buildings by disregarding common area rules and creating noise disturbances for permanent residents. 

Cities and towns find themselves in a challenging position, seeking to strike a balance between addressing these concerns and acknowledging the economic benefits that vacationers bring, all while respecting the rights of property owners. 


Cities Around the World Are Banning or Restricting Short-Term Rentals 

From Europe to the United States, cities are taking measures to address the impact of short-term rentals by implementing restrictions. In various European cities like London, Barcelona, and Berlin, bans or limitations on short-term rentals have been put in place to mitigate their effects. In the United States, over 20 cities, including New York City, have implemented restrictions or bans on certain aspects of short-term rentals. 

In these places, city councils are progressively implementing ordinances aimed at regulating short-term rentals. These measures often mandate hosts to secure licenses and pay registration fees, and some regulations also impose restrictions on short-term rentals within business districts. 


One of the most recent bans was recently passed in Dallas, Texas. 

 In a decisive 12-3 vote, the Dallas City Council reached a significant resolution in June, opting to ban short-term rental properties in single-family residential neighborhoods. This decision marks the culmination of years of contentious debate surrounding the presence of platforms like Airbnb and Vrbo in such areas. While the prohibition applies to single-family zones, short-term rentals remain permissible in residential communities and business districts. 

As part of the new regulations, the council has mandated registration and plans to enforce hotel tax on short-term rentals, aiming to bring them in line with other lodging establishments. Moreover, the regulations stipulate that hosts must provide off-street parking and adhere to the city’s noise ordinance. 

The rules took immediate effect, but their enforcement will officially commence on 14 December. To ensure the effectiveness and appropriateness of the regulations, a council committee will conduct a comprehensive review of the laws and their impact in two years. 

The Dallas Morning News reports that if the plan commission’s recommendations are adopted, the city could potentially outlaw up to 95% of the currently registered short-term rentals. This new ban has the potential to heavily impact the global mobility industry in the Dallas area. 


What Do Short-Term Rental Bans Mean for Dallas and the Global Mobility Industry? 

Critics argue that these bans are unjust and infringe upon property rights, restricting individuals from utilizing their homes, condos, apartments, or land as they desire. They contend that as long as property owners willingly choose to rent out their spaces, there is no harm caused, making state intervention unnecessary and unwarranted. 

It can also be argued that excessive regulation of platforms like Airbnb, Vrbo, and other short-term rentals also may have adverse effects on the economy. These bans may lead to a decline in tourism, resulting in higher prices for vacationers and less convenient accommodations for families. Moreover, Airbnb bans have the potential to discourage capital investment in communities, further impacting the overall economic growth and development. 

In a recent interview with Worldwide ERC®, Sheila Benavides, an account management analyst at Cartus, shed light on the impact of the short-term rental ban in Dallas, with a particular focus on families relocating to the area. Benavides emphasized the challenges these families face in finding suitable housing, especially those with children or pets, as options like Airbnb often serve as their primary choice. 

“The only available option for families is often Airbnb short-term rentals,” Benavides said. “Finding a three-bedroom or larger accommodation for families with pets is incredibly challenging.” 

The ban could also impact interns, as finding affordable and suitable housing for them can be quite challenging. Airbnb and similar rentals provide a flexible and cost-effective solution to accommodate multiple interns together. 

According to Benavides, companies are expressing concerns about the ban’s potential negative effects on employee relocations. Specifically, Benavides believes that Dallas’s short-term rental ban could have an impact on relocation timing.  

“Currently, there are several factors affecting the housing market, including rising interest rates that might affect buyers,” Benavides said. “Consequently, families may find it challenging to sell their homes in some areas.” 

If a relocating employee struggles to find temporary housing to bridge the gap between selling their old home and buying a new home, they may delay the move.  

“This situation could lead to a delay in relocating, and families may have to keep their children in school until they can find suitable housing,” Benavides said. “The timing of relocations, especially during school breaks, may become crucial.” 

Benavides advocates for more practical guidelines and stresses the importance of having clear definitions for short-term rentals to avoid confusion and unnecessary restrictions. 

“We believe it’s essential to voice our concerns and advocate for more realistic guidelines when it comes to short-term rental bans,” Benavides said. “While we understand the need to address safety concerns, it’s crucial not to mix all short-term rentals under the same restrictive rules. Instead, we should consider implementing sensible regulations that take into account the unique needs of different locations and businesses.” 

Furthermore, Benavides discussed the ban’s potential economic consequences on local economies, urging policymakers to carefully consider various factors before implementing such regulations.  

In light of the short-term rental ban in Dallas, taking a proactive stance is crucial. Engaging with local and state governments becomes essential to ensure they thoroughly assess the potential impact of such bans. Unintended consequences may arise, potentially deterring businesses from relocating to certain areas, ultimately affecting economic growth and opportunities for both companies and employees. A thoughtful and balanced approach to crafting these laws is imperative, addressing safety concerns while considering the needs of businesses and individuals alike.