Philadelphia is starting to crack down on unlicensed Airbnbs and Vrbos, which is bad news for 85% of units in the city

• Philadelphia is enforcing a law that requires Airbnb and Vrbo hosts to license their properties.
• The city estimates nearly 1,700 short-term rentals are at risk of being removed from the platforms.
• How Philadelphia fares with regulation could impact how other cities proceed.

Philadelphia is sending out notifications this month to Airbnb and Vrbo hosts with unlicensed properties stating they may have to cease renting out the pads.

The city is beginning to enforce a 2021 law that requires all short-term rentals to be licensed. Formerly, only units that rented out more than 90 days a year were required to be licensed, according to Philadelphia news station WHYY. In order to obtain a license, properties must meet certain requirements like being up to code and acquiring lead paint certificates. 

By the city's own estimate, the crackdown could shut down 85% of all short-term rentals in the city — or nearly 1,700 units. 

Hosts will have five business days after receiving the notice to either properly register their unit or convert to long-term stays of 30 days or more. If no action is taken, a host's listing will be removed, according to the city's Department of Licenses and Inspections. 

Philadelphia is just one city contemplating the future of short-term rentals. Following the sector's explosive post-pandemic growth, residents across the country brought concerns over bad hosts or housing availability to local governments. How Philadelphia, the country's sixth-largest city, moves forward with regulation could set the tone for the way other cities follow suit.

Philadelphia will begin dual outreach, first to Airbnb and Vrbo to take down illegal listings, and then to hosts themselves. 

"It's something that needs to be controlled and something that needs to be under supervision." Mayor Jim Kenney told Philadelphia radio station KYWNews. "And if people could act responsibly in their business dealings, we wouldn't have to do this. But that's not the case." 

Councilmember Mark Squilla, who introduced the measure, told WHYY in 2021 that "by doing this we will have more control over the bad operators."

Airbnb, for its part, is working with the city. "For months Airbnb has worked closely with the City of Philadelphia to ensure they have the necessary tools and support to effectively enforce their current rules, including the ability to identify listings that may be unlicensed for removal," an Airbnb spokesperson told Insider. "We've also developed and distributed materials and messaging to our Hosts to make them aware of the new rules and how to comply."

Licenses are one of the variety of ways that cities and towns have attempted regulation, as opposed to a cap on the number of rentals or raising taxes on owners. 

Ahead of the Super Bowl, Phoenix suburb Scottsdale, Arizona, enacted a similar license crackdown.

Scottsdale Councilmember Solange Whitehead told Insider that issues over short-term rentals had reached a boiling point. "We have people in cul-de-sacs that no longer have neighbors," she said. 

In Bozeman, Montana, where short-term rentals nearly doubled during the pandemic, some locals have called for a permanent ban. Host Michael Rutkowksi told Insider that the town should start with enforcing the licensing requirements already on the books.