Case Study : New York City In 2023 , New York City enacted Local Law 18 , imposing some of the most restrictive short-term rental laws in the world . This law required Airbnb hosts to be physically present during a guest ’ s stay and limited rentals to a maximum of two guests for stays under 30 days . The intention was to free up housing stock for long-term rentals and reduce rising rent prices by discouraging property investors from renting out entire apartments for short-term stays .
The result ? A mass exodus of Airbnb listings . Thousands of hosts , unable to comply with the new law , removed their properties from the platform . While city officials hoped this would increase rental availability and lower prices , housing costs in New York remained high . Instead of seeing a sudden drop in rent , landlords simply rented out properties at higher longterm rates or left them vacant while waiting for legal loopholes or future policy changes .
Furthermore , the demand for short-term stays didn ’ t disappear — it shifted . Travelers still needed flexible accommodation , so instead of staying in New York City , they booked properties in neighbouring areas like New Jersey , which still allowed short-term rentals . This shift resulted in economic losses for New York businesses that rely on tourism spending , while benefiting neighbouring regions that saw increased visitor numbers .
Case Study : Edinburgh Edinburgh , Scotland , a city known for its annual Fringe Festival , introduced strict regulations for short-term rentals in an attempt to balance tourism demand with local housing needs . Under the new policies , landlords were required to obtain licenses , meet safety requirements , and comply with detailed inspections before being allowed to rent properties on platforms like Airbnb .
While these measures were intended to prevent overtourism from disrupting residential neighbourhoods , they inadvertently led to a severe accommodation shortage during major events .
The Fringe Festival , which attracts performers and visitors from across the world , depends heavily on short-term rentals . With fewer Airbnb options available , hotel prices skyrocketed , leaving many visitors unable to afford accommodations in the city . The issue became so severe that Edinburgh ’ s city council temporarily relaxed the regulations to prevent the festival from being negatively impacted .
This case highlights the challenge of imposing blanket regulations that do not account for seasonality or local tourism demands . Instead of creating a sustainable balance , Edinburgh ’ s strict policies ended up hindering the city ’ s biggest cultural event , showing that rigid regulations can sometimes do more harm than good .
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