Knowing where prohibited buildings are can prevent costly investment mistakes.
When Chicago hosts consider buying properties to list on Airbnb, location is key. Under the Shared Housing Ordinance enacted in 2016, the city has excluded at least 2,024 buildings from short-term rental activity as of May 27. But figuring out where they are isn’t easy.
By understanding the reasons behind these bans on home-sharing, hosts may lower their investment and regulatory risk in a tricky market.
This interactive map of prohibited buildings is updated in real-time from the City of Chicago’s database.
Fewer new buildings are banned each year
Based on our analysis of the city’s House Share Prohibited Buildings List, buildings excluded from rental activity in Chicago are most likely to have 10 to 100 units: While 24% of prohibited buildings have fewer than 10 units and 27% have 101 to 1,000 units, 49% of banned buildings have 10 to 100 units.
The number of newly prohibited buildings decreases each year. In the second half of 2016, the city banned 951 buildings from short-term rentals. Throughout 2017, that number dropped slightly to 848. Last year, the city added 179 buildings to the prohibited list. This year, as of May 8, the city had excluded 44 buildings from short-term rental activity under the Shared Housing Ordinance.
The yearly decline makes logical sense: When the Shared House Ordinance first went into effect on July 15, 2016, the owner or authorized agent of cooperative buildings, condominium buildings or buildings governed by a homeowners association was given the right to exclude short-term rental activity in their building. This move caused a large number of buildings to enter the prohibited buildings list, but the trend eased over the years, according to city data.
Unwelcome guests: Home-sharing hosts vs. Chicago
While the Shared Housing Ordinance tightened regulations on vacation rentals in Chicago, the burgeoning home-sharing industry continues to spark debate on how the city should balance the interests of hosts and the concerns of neighbors frustrated by guests who don’t take care of the rental space.
In 2017, Marty Quinn of the 13th Ward was the first alderman to declare his ward off-limits to Airbnb and other home-sharing services. In Quinn’s ward, where several horror stories have captured lawmakers’ attention, this ordinance attempts to squeeze out new Airbnb units in select precincts near Midway Airport. In many cases in the U.S., restrictions on vacation rentals come at the request of hotel operators and industry lobbyists to protect these businesses from being overrun by competition and to prevent people from transforming homes into illegal and rowdy hotels.
Lack of vetting leads to complaints
Most of these buildings on the prohibited list are large apartments, condos and complexes with 10 or more units, says Alex Cross, broker associate of Best Chicago Properties. These buildings are banned mainly because people submitted complaints to the Department of Business Affairs and Consumer Protection that hosts who rent out properties for Airbnb are not properly vetting their guests and making sure they take care of the place, Cross says.
“That ends up leading to a bad name for people who do the right thing or vet their guests,” Cross said. “There are millions of stays per year, and it only takes one or two bad ones for people to think that Airbnb is destroying the world.”
In terms of where to invest, there is no right or wrong neighborhood. Hosts need to do their research and find a property that allows for Airbnb listings, Cross says.