This past Tuesday, new short-term rental regulations were passed which will severely limit Airbnb Jersey City activity as well as the number of active listings across the city in 2020.
The Vote on Airbnb Jersey City Regulations
A short drive away from Manhattan, Jersey City, New Jersey is a hot tourist destination and an important city for the homesharing platform, Airbnb. As New York City cracks down on Airbnb, guests have been enjoying cheap alternatives in Airbnb Jersey City. And with local lawmakers legalizing short-term rentals in 2015, Airbnb listings have continued to grow to reach around 3000 in 2019. But despite its $4.2 million campaign, the company was unable to keep local voters from passing new strict laws this week.
Back in June of this year, local officials passed new restrictions against short-term rentals. However, supporters of Airbnb and other homesharing services managed to put the short-term rental regulations on hold until they were able to rally support in favor of a referendum.
However, despite all of these efforts, locals voted in favor of stricter regulations (69% of the vote). As was the case with other major cities that put in place strict ordinances against Airbnb such as Las Vegas and Los Angeles, opponents are concerned with the effect Airbnb can have on housing inventory and affordability. Others voiced concern over houses being run as hotels, affecting the quality of residential neighborhoods and disturbing local long-term residents.
While some locals voted against imposing stricter laws, citing that short-term rental sites like Airbnb help them to afford growing housing costs, Jersey City Mayor Steven Fulop said that the vote proved how locals really feel about the situation. He Tweeted the following, commenting on Airbnb’s campaign:
I just want to say publicly that you brought a campaign of misinformation to Jersey City…and #jerseycity showed you what they thought.
The New Airbnb Jersey City Laws for 2020
The new laws will go into effect in January 2020 and while they do not completely ban short-term rentals in the city, many current hosts will be forced to shut down. Here is a breakdown of what the new regulations include:
- Certain properties will no longer be eligible as short-term rentals, including rent-controlled properties
- If the owner does not live on-site, a property cannot operate as a short-term rental for more than 60 days out of the year
- Short-term rentals in buildings with more than 4 units are prohibited if the owner is not present
- Renters cannot serve as hosts
- New short-term rental permit rules which include an initial permit fee of $250 and a yearly renewal fee of $200
A 6% short-term rental tax was already put in place back in 2015, but now hosts will have more laws to adhere to. Advocates argue that these new regulations will likely eliminate 90% of Airbnb properties in the Jersey City real estate market.
Experts say that Airbnb’s plan to go public next year will be somewhat hurt as key markets like Jersey City continue to regulate or ban short-term rentals. This may put a damper on investor interest in the company. Airbnb holds that the homesharing industry is a major source of income for many locals and that the hotel lobby greatly influenced the new laws. Airbnb spokesperson, Christopher Nulty, responded to the Airbnb Jersey City regulations:
From the start of this campaign, we knew this was going to be one of the toughest fights we’ve faced, with the big New York hotel industry determined to fight home sharing, but we had an obligation to stand up for our community. Cities from Buffalo to San Francisco and Boston to Seattle have managed to pass comprehensive short-term rental regulations without punishing tenants or creating red tape and onerous registration systems. There are Airbnb listings in over 100,000 cities around the world and we will continue to do all we can to support hosts.
What This Means for Jersey City Real Estate Investors
According to Mashvisor’s data, Jersey City is a very profitable location for Airbnb rental properties:
- Average Monthly Airbnb Rental Income: $2,935
- Average Airbnb Occupancy Rate: 68%
However, for real estate investors in the Jersey City housing market, the potential to earn Airbnb rental income will now be severely limited. Still, you will be allowed to rent out on Airbnb for a few months out of the year in which you can make some money. And if you still wish to buy an Airbnb property, here are the best neighborhoods in Jersey City where you can make the most rental income:
- Average Monthly Airbnb Rental Income: $3,669
- Average Airbnb Occupancy Rate: 64%
- Average Monthly Airbnb Rental Income: $3,640
- Average Airbnb Occupancy Rate: 64%
- Average Monthly Airbnb Rental Income: $2,834
- Average Airbnb Occupancy Rate: 69%
- Average Monthly Airbnb Rental Income: $2,723
- Average Airbnb Occupancy Rate: 70%
Alternatively, you can consider using your Jersey City investment property as a long-term rental, which can also be profitable, with an Average Monthly Traditional Rental Income of $2,247 .
If you had your eye on an Airbnb Jersey City real estate investment for 2020 but are now reconsidering, search for a long-term rental instead. Find the best traditional (or Airbnb) investments now using Mashvisor. Here are the best neighborhoods in Jersey City where you can make the most rental income with a long-term rental:
- Average Monthly Traditional Rental Income: $3,347
- Average Monthly Traditional Rental Income: $3,084
- Average Monthly Traditional Rental Income: $2,675
- Average Monthly Traditional Rental Income: $2,313
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
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