Nashville’s Short-Term Rentals Like Airbnb Will Soon Face Regulation

Airbnb rentals are now illegal in Nashville, but city officials are working on changing that. Credit: Airbnb

Nashville city officials have promised to introduce new regulations as early as next month for short-term vacation booking services like Airbnb, which have been wildly popular in the city despite being technically illegal.

Airbnb, and others like it, allow travelers to rent private homes or rooms at whatever price they’d like. According to its website, there are nearly 1,000 such rentals available in the city. Nashville was recently named the company’s fastest growing destination, giving the question of regulating Airbnb increased urgency.

Echoing the debate pitting traditional taxi companies with ride-sharing services like Lyft and Uber, hotel owners and hospitality officials have said that companies like Airbnb are operating with an unfair competitive advantage.

Nashville currently bans short-term residential rentals other than historic bed-and-breakfast locations, which require a special license and are subject to heavy regulations.

Otherwise, hotels and motels offering short-term stays pay taxes (generally 6 percent occupancy tax) and are not permitted to operate in residential neighborhoods.

Councilmember Burkley Allen says the city is losing out on a significant amount of tax revenue and that Airbnb providers, by skipping special licenses and city regulations, have created an uneven playing field. At the same time, though, she says Nashville shouldn’t totally discourage their approach. It’s the balancing act cities around the country are now facing by trying to at once embrace and regulate the sharing economy.

As Allen puts it:

“Trying to figure out how to incorporate the sharing economy without squelching it, and not saying we’re not going to allow it, but sort of acknowledge it’s there.”

She says that whatever can be brought into the fold will contribute to the economy. In San Francisco, where Airbnb is based, the company has agreed to pay the city’s 14 percent hotel tax. Allen says she and other council members are looking at cities like Chicago, Portland and Austin, which have come up with ways of regulating short-term rentals.

The regulations will likely result in a new ordinance.

“We sort of got a new animal, and we’re trying to figure out how to define it and where to put it,” Allen said.

Allen is holding a community meeting on Monday to solicit feedback from property owners, Airbnb operators, businesses and others.

She said whatever the rules end up looking like, they will be phased in slowly to give people who offer Airbnb rentals time to catch up.

Marie Aberger, a spokesman with Airbnb, said the company is prepared to work with Nashville officials on the regulations.

“Home sharing helps hosts in Nashville pay their bills and make ends meet and brings travelers to neighborhoods that haven’t benefitted from tourism in the past,” she said. “We have reached out to local officials in Nashville and look forward to continuing to work together to make the city stronger for everyone.”