Arizona law to crack down on short-term rentals like Airbnb and VRBO

By Judy J. Beasley Last updated Nov 22, 2021

Neighbors struggling with short-term rentals will soon have a reprieve. But will that be enough?

Gov. Doug Ducey on Tuesday signed a bill allowing more regulation of short-term rental operators in the state.

Residents across Arizona have raised complaints about the increased noise, garbage and traffic in their neighborhoods after a 2017 law extended protections for short-term rentals.

The new law, House Bill 2672, was sponsored by Representative John Kavanagh, R-Fountain Hills, and discusses ‘party houses’ or short term rentals that were used for special events.

Kavanagh said short-term rentals used exclusively for weddings and other large events were not what was intended in the original law.

“It was sold as an invoice to allow individual owners to earn extra money,” Kavanagh said. The Republic in October. “Sadly, it turned into big investment groups pooling their money, buying houses and setting up party houses, and hosting drunk golf outings.”

To get it passed in the Senate, the new law was reduced from the original bill introduced by Kavanagh. The stipulations including restrictions on rentals owned by investors and limits on the number of guests have been removed.

“In Arizona, we respect the right to do whatever we want with our property without undue government interference,” Ducey said in a statement accompanying his signing of the bill. “I am open to corrective measures if this bill is applied too widely.”

The law comes into force 90 days after the end of the legislative session.

What is the new law for?

The new law now allows municipalities to restrict rentals to overnight stays and prohibits events that would otherwise require a permit, such as weddings.

It would also require vacation rental owners to provide contact details for a person responsible for handling complaints:

Short-term rental owners should provide the city or town with contact information and respond to complaints in a timely manner.
If a violation occurs, cities or towns must notify the Department of Revenue and the landlord of the short-term rental of a violation within 30 days of the violation.
If owners have provided contact details, cities or towns should make a reasonable effort to notify owners of any citation or violation.
Rentals cannot be used for special events or for any event requiring a permit or license, such as weddings or banquets.

Under the new law, owners of short-term rentals cannot operate without a sales tax license. Anyone operating a short term rental in Arizona must list the sales tax license number on all listings for the property.

Online hosting operators can be fined between $ 250 and $ 1,500, and sometimes more, if violated.

Rentals increase in Arizona

Data from Denver-based research firm AirDNA shows that the Airbnb market has exploded in Arizona in the past five years.

At the end of 2014, Phoenix only had 687 properties for rent listed on Airbnb, and only 245 of those were rented for even one night in December of that year.

By March of this year, that number had climbed to 4,224 listed properties.

Eighty percent of Phoenix Airbnb listings are for the entire house, and the properties listed were occupied 83% of the month for an average daily rate of $ 247 for people renting an entire house. Studios and one-room rentals had an average price of $ 126, comparable to a hotel room.

Scottsdale is a smaller city but still had more registrations as of March 5,379, according to AirDNA. Occupancy rates were around 73% in that city, with an average daily rate of over $ 400 for an entire house and $ 178 for a room or studio comparable to a hotel.

Sedona experiences housing shortage due to 2017 law, with 20 percent of their housing stock now rented on short-term terms.

Sedona had 2,095 listed properties in March. The occupancy rate reached almost 75% for entire units and 68% for rooms and studios comparable to a hotel. The average daily rate in Sedona was $ 250 for entire homes and $ 159 for single rooms.

Do cities apply their rules?

Local authorities have always retained the right to apply the rules relating to noise, traffic control and other neighborhood nuisances.

But do they apply them?

The Scottsdale city code limits short-term rentals to a maximum of six adults and their children, but local law is not easily enforced, a city official said. The Republic last month.

Raun Keagy, director of the city’s district planning services, said one advertisement alone is not enough for the city to name homeowners for breaking a rule.

Even seeing 18-20 people in a house is not proof that they all spend the night there, which would violate the city’s occupation rule, he said.

“There are rights to privacy and against illegal searches and seizures. It’s extremely difficult to prove,” Keagy said. “If we receive a complaint, we send them a compliance notice stating that they can only have six and they will generally change their advertising.”