Home-Sharing Works for Residential Neighborhoods

by Christina Sandefur
August 29, 2018

Earlier this year, Anthony Graziano asked in the Miami Herald, “When is a house not a house anymore?” That might seem like an odd question. Yet city officials often justify restrictions on homeowners who want to offer their homes as short-term rentals—levying draconian fines, imposing arbitrary rules, and destroying livelihoods—by claiming that home-sharing is commercial activity and therefore inappropriate for residential neighborhoods.

But long-term rentals or month-to-month tenancies don’t transform a house from residential to commercial simply because the occupants pay the homeowner money in exchange for staying there. So why should home-sharing – offering one’s home as a short-term rental, perhaps through an online platform like HomeAway or Airbnb—be any different? Graziano concludes that drawing such lines is arbitrary—if a long-term rental or owner-occupied home is considered a residential house, there are “no moral, health, safety or general welfare defenses that would allow zoning to control short-term rentals of a similar use.”

If a homeowner has the right to decide whether to allow someone to stay in her home, then she should have a right to receive payment in exchange. As Jason Brennan and Peter Jaworski put it in their book Markets without Limits: Moral Virtues and Commercial Interests, “the market does not transform what were permissible acts into impermissible acts.”

The same rule applies to time limits. Whether a person rents a home for one year, two months, two years, or for just a few days, that does not make the home any less a residence, or change the residential nature of the neighborhood.

There’s nothing magic about home-sharing, and using a home as a short-term rental doesn’t transform a house to a hotel. For zoning purposes, what matters in determining whether a use is residential (as opposed to commercial) is how a home is being used—i.e., whether the residents operate like a “single-family” unit—not the financial relationships or sleeping arrangements or length of occupancy.

For example, the Pennsylvania Supreme Court found that a group of elderly residents who lived together, shared kitchen facilities, and paid dues to participate qualified as a single-family residence. The court held that in determining whether a rental is consistent with the local zoning scheme, “the focus . . . should be directed to the quality of the relationship during the period of residency rather than its duration.” It also rejected the idea that a contract to pay dues transformed the residential living arrangement into a commercial use.

The relevant question should not be whether an owner is renting her home on a short- or long-term basis, but whether the owner or tenants are causing nuisances. And that should be the focus of any regulations aimed at home-sharing. Rather than outlawing short-term rentals or subjecting them to excessive and discriminatory regulation, government officials should focus on eliminating noise, traffic, and pollution—regardless of whether those problems are caused by an overnight guest or the homeowner himself.

Arizona’s Home-Sharing Act, passed in 2016 and based on Goldwater Institute model legislation, prevents cities from punishing responsible home-sharers rather than going after actual crimes. The law requires cities to take a fair approach and treat home-sharing the same as all other residential occupancies, without regard to the duration of the rental. Other states, such as Indiana and Tennessee, have adopted similar approaches. The Goldwater Institute continues to work in courtrooms and capitols nationwide to ensure that government addresses legitimate nuisance concerns without stifling the sharing economy and violating our constitutionally protected property rights. Because your house isn’t just a house: It’s your castle.

Christina Sandefur is the executive vice president at the Goldwater Institute.