A new study from the R Street Institute, a free-market think tank with a pragmatic approach to public policy, gives Detroit an A-minus grade for its regulatory structure regarding short-term lodging rentals. The report grades are based on whether a legal framework exists, the level of restrictions, taxation, licensing, and enforcement.
Short-term renting is exploding in popularity. People sign up through companies or websites — like Airbnb or HomeAway — to rent out an extra room or a house for a short period. If you live in a city that is going to host the Super Bowl and have extra space, renting out a room for two nights gets you extra money and saves the renter from higher-priced or less convenient lodging options.
Detroit’s high ranking comes mostly because it isn't trying to regulate short-term renting at all; it is simply allowed. The study says, “Detroit has taken a permissive approach to short-term rentals, though it has remained officially silent as to their legality.” The highest-graded city, Savannah, Georgia, gets an A-plus because it explicitly allows short-term renting with minimal regulatory constraints.
Right now in Michigan residents who offer short-term rentals or peer-to-peer ride-sharing are in a legal gray area. But just as taxi cab companies are working to shut out their Uber and Lyft competitors, hotels and lodging interests see peer-to-peer renting as a threat.
The best approach for consumers would be state legislation that explicitly legalizes short-term renting and ride-sharing, with minimal regulatory restrictions.
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