Have you ever awakened in the middle of the night and stumbled into the bathroom only to find a stranger there? If so, then either you were very drunk the night before and forgot who you brought home or you may be renting part of your home with Airbnb.
Airbnb, Inc. was founded in San Francisco in August 2008 as a peer-to-peer (P2P) service to make short-term housing available to business and vacation travelers who prefer the ambiance of a home to the sterility of a hotel. Properties are now available to rent in nearly 200 countries worldwide.
Eight years later, however, we are still struggling with the legality, security and logistics of having strangers in our homes, which prompted the Short-term Rental Regulation and Housing Protection Act of 2015 (DC B-414) to be introduced in the D.C. Council on Sept. 22, 2015 by then-Council member Vincent Orange. The bill would regulate transient housing accommodations offering stays of less than 30 days and is still under review by the Council.
In the interim, the Department of Consumer and Regulatory Affairs (DCRA) instructs a would-be Airbnb landlord to follow the current procedures for licensing a single unit property such as a house or condominium or, if applicable, a two-unit property such as the elusive rowhouse with English basement rental unit sought by many of today’s real estate buyers.
Each D.C. rental property must be properly licensed, meet the requirements of the D.C. Construction Codes and fall within the guidelines of any restrictive covenants placed on the property by a condominium, cooperative or homeowners association. Potential Airbnb landlords are often disappointed to find that their condo, co-op and HOA rules require a minimum lease of 12 months and that short-term rentals are prohibited.
A Basic Business License (BBL) is required for each property. An application for a two-year BBL must be filed with additional supporting documents and fees totaling slightly less than $200.
If you own your property as an entity such as a corporation, limited liability company (LLC) or partnership, then you may need to register with the Corporations Division of the DCRA before filing your BBL application.
If you plan to rent a D.C. property but are no longer a D.C. resident, then you must designate a registered agent (a person or entity physically located in the District) to receive official documents on your behalf.
Your BBL application package must also include a Clean Hands Self-Certification form indicating that you owe no more than $100 to the District government, so pay those outstanding taxes and tickets before filing.
You may also need a registered Tax ID number, obtained by completing and filing a Combined Business Tax Registration Application with D.C.’s Office of Tax and Revenue. (You didn’t think you’d get away without paying taxes, did you?)
A visit to the Rental Accommodations Division (RAD) of the Department of Housing and Community Development (DCHD) will be necessary to register your rental property and apply for a rent-control exemption.
Once your application is approved and your license is issued, your property will undergo a DCRA housing inspection to ensure it meets city codes for the health and safety of your tenants. Any violations must be corrected within 45 days from the date your BBL was issued.
Yes, the process of legalizing your rental unit is a lot to take on, but before you curl up into the fetal position, here’s the good news: There are companies you can pay to do all this for you.
Pay just $399 for a single unit, including filing fees, and firms like rentjiffy.com will handle the paperwork and inspection for you. For a nominal additional amount, they will even be your registered agent. And with a bit more money and time, they can help with a two-unit property that requires a Certificate of Occupancy.
But wait, before you sign up as a host:
• Check with your insurance company to determine what additional coverage will be necessary for providing short-term housing and dealing with potential damage to your property or injury to your guests;
• Speak with your tax adviser about the requirements for claiming rental income, depreciation and related tax deductions;
• Think about how you want to secure the property to prevent unauthorized access and monitor activities when you’re not there; and
• Read the District’s tenant’s rights laws in case your short-term guest decides to stay indefinitely.
To be sure, red tape and risks are involved, but the financial rewards may outweigh them – if you can handle the stranger in your bathroom in the middle of the night.
Valerie M. Blake can be reached at 202-246-8602 or Valerie@DCHomeQuest.com. Each Keller Williams Realty office is independently owned and operated. Equal Housing Opportunity.