Airbnb and other STRs or rentals of less than 30 days are illegal in Clark County. But with Assembly Bill 363 or AB363 taking effect on July 1, 2022, will the Airbnb Las Vegas landscape grow?
The county’s residents, real estate investors, and online STR platforms are waiting for the bill’s final version, pending the incorporation of ordinances based on a public survey among the county’s residents. The survey, which officially ended on January 31, 2022, aimed to strike a balance between the residents’ quality of life and the investors’ needs.
What Is AB363?
AB363 is a bill sponsored by Assemblywoman Rochelle Nguyen that aims to fix the disparity brought on by a previous short-term rental bill, AB321, which allowed the use of online hosting platforms like Airbnb. Although AB321 required the hosting platforms to submit quarterly reports, the bill encouraged a total ban in Clark County. At the same time, short-term rentals remained loosely regulated, if not unregulated, in other areas.
For instance, short-term rentals in Las Vegas were restricted to owner-occupied properties. In Henderson, restrictions were also imposed along with a prohibitive annual registration fee of $820. In early 2021, Washoe County began requiring homeowners to apply for short-term rental permits, charging a steep $700 to $760 for each new license. Additionally, the county allowed multiple STRs per owner based on certain conditions, limited guest occupancy based on the property area, and imposed quiet hours. On the other hand, there is no short-term rental ordinance in North Las Vegas.
Assemblywoman Nguyen asserts the inconsistencies in regulations led to the non-compliance of STR operators, and worse, according to her, the state failed to collect tax revenue from the errant operators.
What Are the Provisions of AB363?
AB363 includes most of the provisions of AB361 on permits, tax collection and remittance, reporting, and penalties for permit infractions. However, key players in the STR business are in disagreement over a few additional provisions. The provisions include the following:
- STRs using single-family homes must be at least 500 units apart.
- Any single-family STR must be at least 2,500 feet apart from the property line of any resort hotel.
- STR owners can only hold a maximum of five permits.
- STRs in a multi-family property must set a 25% cap.
- STRs must be a minimum of a two-night stay, except for units occupied by the owner.
- Multi-family dwellings must limit occupants to a maximum of 16.
- Penalties will be meted out to STR owners who violate noise and occupancy regulations.
- STR owners must make a local representative available 24×7 to attend to rental issues that may arise.
As of this writing, there is no certainty on whether the bill will override the current mandate that requires the homeowner to occupy the rental property in keeping with the bed and breakfast concept.
Sectors who favor the bill cite the imposition of stricter regulations to limit real estate investors from buying multiple properties for STRs and the opportunity to provide low-income earners with more affordable housing. They also believe that with the noise limitation regulation, there will be less disruption in the lives of other residents who simply want to relax in the comfort of their homes. Additionally, the bill requires STR owners to collect taxes similar to what hotels and resorts in Nevada charge their guests.
As expected, STR owners and operators are against the bill, especially the tax provision, because it will increase the rates excessively and put them out of their business.
What the Bill Means to Airbnb Las Vegas
Legalizing STRs in Clark County should be good news to real estate investors looking to start an Airbnb Las Vegas, Clark County being coextensive with Las Vegas. However, the restrictions brought forth by the passage of AB363 will pose the following problems for Airbnb Las Vegas:
Reduced Inventories for STRs
AB363 reduces the distance between single-family units used as Airbnb rental from 660 feet to 500 feet, translating into more houses available for STR. With properties within the vicinity of resort hotels taken off the inventory for Airbnb, competition for an Airbnb rental property in adjacent places will increase, scaling up property prices. However, the slight improvement in inventory may be offset by the additional restriction of maintaining the distance from the property line of any resort hotel. Understandably, the restrictions will make it harder for STR investors to locate a good property, but Mashvisor can help ease those difficulties for you through its property finder.
Higher Rental Rates
According to Mashvisor’s latest Airbnb analytics, the average daily rate in Las Vegas is $197. But with taxes that match those charged by hotels and resorts, Airbnb guests will pay higher fees for their vacation rentals, with the average daily cost likely reaching upwards of $200 to $250. However, it will not translate to more income for the hosts. Eventually, the increase in fees may significantly lower the demand in the area and shrink the local market.
While it is true that higher rental rates discourage travelers, it doesn’t mean that you can’t find a lucrative investment property in Las Vegas. You may look at your options for a profitable investment using our real estate investment tools.
Limited Opportunities for Local STR Investors
The two-night minimum stay, the maximum limit of five permits, limited occupancy, and the distance that must be observed will limit the income potential of STR investors. However, since the current law requires the homeowner to reside in the rental property and the two-night minimum stay restriction is waived in that situation, you may opt for house hacking an Airbnb rental as an alternative.
The passage of AB363 intends to collect lodging taxes, provide affordable housing for Las Vegas locals, and shield neighborhoods from rowdy short-term rental occupants.
Although various sectors support the bill, real estate investors clamor for leniency. Their main argument: it will kill the short-term rental business in the area and hinder the recovery of the state’s tourism industry. They also claim locals who want to earn money through Airbnb Las Vegas will suffer a significant financial loss.
The short-term rental proponents’ apprehension regarding the bill is valid, and we can help you address them. With Mashvisor’s reliable data sources, we can help you find the right property and make a quick study of its income potential through our investment property analysis calculator and other tools.
Click here to learn more about how we can help you.