Portland’s Airbnb Fiasco Shows Why Regulation Often Fails

The Oregon city's struggle to enforce restrictions on short-term rentals offers a lesson for other communities.

Many or all of the products on this page are from partners who compensate us when you click to or take an action on their website, but this does not influence our evaluations or ratings. Our opinions are our own.

Published · 3 min read
Profile photo of Sam Kemmis
Written by Sam Kemmis
Senior Writer
Profile photo of Giselle M. Cancio
Assistant Assigning Editor
Fact Checked

Destinations around the country are trying to crack down on Airbnb and other short-term rentals. From megalopolises like New York and Los Angeles to vacation destinations like Aspen, Colorado, and Honolulu, local governments are attempting to limit the effect that short-term rentals have on their communities in areas like the availability of affordable housing for locals and safety for visitors.

But enacting restrictions on Airbnbs is one thing. Enforcing such regulations in the real world is another. And few cities demonstrate the perils of trying to put the home-sharing genie back in the bottle better than Portland, Oregon.

10 years of trial and error

A decade ago, Portland began requiring owners of short-term rentals to get a license for their property. However, Airbnb failed to remove listings that didn't comply with this law, so in 2019, Portland demanded that the platform offer better data sharing to allow it to check its registry of licensed rentals against properties actually on the platform.

Yet a scathing report from The Oregonian newspaper in 2023 revealed that local officials lacked the staff and technical expertise to use the data Airbnb provided, leaving many unlicensed rentals illegally operating on Airbnb.

In an email, Scott Karter, audit and accounting manager for the city of Portland’s revenue division, said the number of currently operating unlicensed rentals on Airbnb is believed to be "several hundred and possibly over 1,000."

"As we work through this process, we will be able to get a more accurate figure. We are still in the early stages of this process with Airbnb," Karter said.

Airbnb added a required permit number field to its listings in December 2023. A follow-up report from The Oregonian found that hundreds of rentals added bogus permit numbers, including eight properties that simply used the example number on the Airbnb website.

“There are some individuals who work hard and creatively to circumvent the permitting process,” Karter said.

The city of Portland isn't penalizing hosts or Airbnb for noncompliance because it lacks the resources to identify which properties lack licenses and which haven’t had theirs approved. The upshot is a vacation rental Wild West, with some hosts following regulations, others avoiding them, and guests largely clueless about whether their rental is operating illegally.

Housing and safety

Portland housing advocates have been waiting 10 years for the city to enforce the rules it established to minimize the impact of short-term rentals.

Lauren Everett, an organizer with Portland Tenants United, says it doesn’t make sense to pass bond measures and take other steps aimed at increasing affordable housing “while allowing people to use houses as hotels.”

Illegal Airbnbs, like those currently operating in Portland, sap housing supply at a time of dire need, according to Everett. The city’s lackadaisical enforcement approach means fewer available homes for residents.

“It has become a way for people to extract rent without worrying about tenants' rights,” Everett says.

Yet Airbnb insists that its short-term rentals represent a minuscule segment of Portland's overall housing supply.

"The majority of hosts in Portland share just one home to supplement their income and entire home listings represent approximately 1% of the city’s housing stock," Jordan Mitchell, a policy manager at Airbnb, said in an email. "We are committed to continuing to work with the City to support compliance, including identifying streamlined solutions to help address their registration backlog and staffing shortages, to ensure local residents and small businesses can continue to benefit from short-term rentals.”

Another issue driving attempts at regulation is safety. Portland’s official short-term license process involves a safety inspection. Yet to speed up permit processing, the city has performed only 14 of these inspections since 2019, according to The Oregonian report. That means that the vast majority of rentals are operating with no local safety oversight.

The dangers of unregulated short-term rentals were highlighted last year in Montreal when a fire at an illegal Airbnb killed seven people. Montreal, like Portland, has struggled to enforce its short-term rental policies, even after stricter regulations were introduced following the deadly fire.

A cautionary tale

Portland was one of the first major cities in the U.S. to require registration of short-term rentals like Airbnb. Ten years later, it is struggling to enforce these regulations. And it's hardly alone.

The city of Santa Barbara, California, recently hired a team of special investigators to crack down on illegal rentals, which the team estimated there are about 1,300. The enforcement team collected $595,000 in fines from 40 properties in its first year.

Los Angeles also requires short-term rental operators to obtain a license with the city. But according to a report from the McGill University School of Urban Planning, nearly half of the city's Airbnbs were operating illegally in 2022.

The similarities between these efforts to regulate short-term rentals suggest that cities need to focus on how regulations will actually be enforced. Otherwise, illegal rentals will proliferate, irritating local communities and those hosts who are complying with the law.

And some suggest Airbnb should be asked to shoulder more of the burden.

“Airbnb is making money off these communities,” Everett says. “They should be the ones paying for enforcement.”


How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are some of the best travel credit cards of 2024:

Cards for Airbnb from our Partners
Citi Custom Cash® Card

on Citibank's application

Citi Custom Cash® Card
4.7
NerdWallet Rating
Rewards rate

1%-5%

Earn 5% cash back on purchases in your top eligible spend category each billing cycle, up to the first $500 spent, 1% cash back thereafter. Also, earn unlimited 1% cash back on all other purchases.

Cashback

Intro offer

$200

Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.

Wells Fargo Active Cash Card

on Wells Fargo's website

Wells Fargo Active Cash® Card
5.0
NerdWallet Rating
Rewards rate

2%

Earn unlimited 2% cash rewards on purchases

Cashback

Intro offer

$200

Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.

Wells Fargo Autograph℠ Credit Card

on Wells Fargo's website

Wells Fargo Autograph℠ Card
4.5
NerdWallet Rating
Rewards rate

1x-3x

Earn unlimited 3X points on restaurants, travel, gas stations, transit, popular streaming services and phone plans. Plus earn 1X points on other purchases.

Points

Intro offer

20,000

Earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value.

Points
See more cards for Airbnb
MORE LIKE THISTravel
Get more smart money moves – straight to your inbox
Sign up and we’ll send you Nerdy articles about the money topics that matter most to you along with other ways to help you get more from your money.