The “missing middle,” a term coined to reference the absence of affordable housing for those who need permanent living situations but who do not want to or can’t purchase a home. The groups who need these spaces the most, millennials and generation z, have struggled to find them at prices they can afford. The question is where have these places gone that are a necessary steppingstone in adult life and the answer is Airbnb.
In April 2022, the Atlanta City Council agreed to begin enforcements on short-term rentals according to Ordinance Z-21–85, which is the framework for regulating short-term rentals in the city. The ordinance was introduced in March 2021 as 20-O-1856 but was postponed for a year because of objections for concerned of how this would affect hosts who own rentals and make a significant amount of their income from them.
The businesses most affected would-be hosts who use Airbnb and VRBO which combined have over 7,000 registered rentals in the city of Atlanta. The ordinance includes a long list of requirements for host to complete before June 2, which is when official enforcements for the regulations begin. The regulations include: Host must be residents of Atlanta; register a license for each rental property owned, which will cost hosts $150 to apply for; and a tax of 8 percent for each rental property. Hosts risk a fine of $500 and the loss their license for up to a year for neglecting to follow these regulations or others in the ordinance.
The city council was prompted to begin regulating rentals to curb the rise in unaffordable housing. In 2020 they took note of the rise in the cost of housing, a nearly 70 percent increase from 2017 and an only 48 percent increase in income. Over 30 percent of renter’s income is spent on their housing. The previous solution to such a problem would have been to find cheaper housing but in the current market, rent prices are close to the mortgage on a house.
Purchasing a home has become an impossibility for many people in Atlanta, the median price of home rising close to 20 percent just a year’s time. “In 2022, the real estate market has seen a 16.6 percent increase in the last year and a 74 percent increase over the last five years,” according to Roofstock.com. There used to be a place in the market for those who make a limited income. These spaces are normally single occupancy apartments, duplexes, and triplexes. Builds like these have not been the norm in recent years but that is changing. Unfortunately, for all the wrong reasons.
According to the Atlanta Business Chronicle, “build to rent properties are hot”. Businesses and investors are capitalizing on the need for this type housing and buying lots to build then rent out these properties. One of the biggest businesses being short-term rentals. Many view this as smart business and while it might be, that does not change the fact that it is creating a gap in available affordable housing in the city of Atlanta.
Many use short-term rentals as their only source of income, owning multiple properties. “Essentially, this is our full-time business,” said Rich Munroe, tells the Atlanta Journal-Constitution. “The fact that we are completely shut out of this ordinance is definitely of concern.” Munroe owns 30 properties in the city and is a member of an organization of people who participate in short-term renting. Some feel that the legislation is targeting people who make their income from rental properties, and to put it plainly, it is.
The original proposal to deal with the problem was to the ban the practice outright because of the obvious issue with housing but to also take care of the complaints the city received of Airbnb hosts allowing large parties and disruptive guest to be in their properties. The ordinances also require that neighbors are notified that hosts are opening their home for rent and no more than two properties can be licensed for rent, one being a host place of residence.
This will be a direct hit to the industry currently filling “the missing middle” in Atlanta and will hopefully be the beginning of housing the growing population.
