As you hopefully know by now, renting out your condo on Airbnb may not be the best idea. Still, Airbnb in Chicago is growing. According to one study, 4,550 people in Chicago hosted over 165,000 guests last year, and made an average of $7,400 each for the year.
With this level of growth, it is not surprising that regulation of Airbnb is increasing. Hosts must currently pay 4.5% tax to the city, and the State of Illinois also plans to begin collecting tax from Airbnb hosts over the next year. This new taxation, may mean that Airbnb will no longer be considered “illegal”, in the local sense. The City of Chicago has an existing regulation making the renting of a room for less than 30 days illegal without a hotel permit, but the new taxation implies that the City authorities are willing to implicitly allow Airbnb hosting for the time being.
However, Airbnb’s changed legal status doesn’t resolve many of the other major issues with the service. Security is still a major issue, as hosts are effectively giving different strangers a key to their building every week. Hosts are also not protected from liability in case something happens to a renter in the condo—in these cases, Airbnb holds no legal responsibility and all the liability would fall on the host.
Most importantly, the majority of condominium associations in Chicago do not allow short term rentals (of less than one year), and an owner who rents out his or her condo on Airbnb would be in direct violation of the Association’s Declaration and bylaws. These restrictions have a lot to do with quality of life issues—your neighbors and fellow owners likely do not want a steady stream of strangers coming into the building, using the common areas, and causing wear and tear on the facilities. But buildings whose associations do allow short term rentals are also viewed less favorably by mortgage lenders. These buildings risk negatively affecting the interest rates on a loan or approval of the loan for future potential buyers in the building, which ultimately translates to lost value in the building.
And, if you’re a condo owner that has full-time tenants or roommates, you may want to make it clear that you don’t want them to sublet the apartment on Airbnb. One Chicago condo owner recently came home from a business trip to find an Airbnb couple in his bed, which his roommate had been listing on Airbnb in the owner’s absence without his knowledge.