Short term rentals are so popular because the operators aren’t in the business of operating a short term rental.
They are in the business of asset appreciation, and a short term rental is a twofer: you increase the housing shortage by removing a unit from the market, while maintaining an revenue stream to offset the cost of depreciation.
The business model is completely built on rent seeking and would collapse rapidly if it was just legal to let housing supply meet demand.
Instead, there are no voters in the jurisdiction to change the laws, because the vast majority of the electorate all gains from the rent seeking behavior.
The people who suffer are the minority who literally were not alive when the housing shortage began.
The fix is to require residential properties be owned by individuals and place a limit on how many homes one household can own (3?) without incurring luxury taxation.
Then we can let the short/long term rental market sort itself out and also allow people to invest in real estate at a reasonable rate.
It doesn't matter if one person owns 20 properties in a neighborhood to engage in rent seeking behavior or if 10 people own two properties. The result is the same. The problem is that the market is broken, there is a shortage, and the shortage is perpetuated by cartel-like behavior by the local homeowning electorate.
Given that we probably won't fix that, I think that if you want to operate a B&B, you should be allowed to operate a B&B, but if you are going to get out of the business of operating a B&B, you should have a cool down period of 3-5 years (enough for the operator to take on real market risk).
That means that the business must only be in the business of operating as a B&B and until that cool down period ends, and then can be converted back into a residence. This is a non-trivial amount of time, and it means that people in the business of short-term rentals can't necessarily just causally operate them, because if there is a housing slump, they won't be able to exit their position quickly.
This is a massive disincentive to folks trying to operate a B&B to facilitate asset appreciation, but is not a significant impediment for people who want to operate a B&B as a going concern.
This solution invites all kinds of problems, like black and grey markets for housing, but that's because this isn't a real solution. The real solution is to just legalize density and let people build as many residences as they want on property they own. It also helps to have a property tax that incentivizes maximal utility of real estate and disincentivizes hoarding.
It obviously matters because then demand for housing speculation will be bounded by population density instead of greed, and corporations will not be able to do things like own double digits of the housing supply in some large metro areas:
My point isn't that I don't think a luxury tax isn't a horrible idea, I just don't think it'll solve the problem. If there is a profitable way to remove housing to create a shortage, there is an economic incentive for everyone who is able to participate to do so. So, it doesn't matter if one entity owns 1000 house or 500 people own 2 houses, the incentives are there to remove housing from the market.
Sure it does since luxury tax can be 10%-25% of property value.
Let's see who wants to hold on to property then. And if they do they are paying their dues to society.
When they are "removed" and owned by more people, presumably this is a more efficient allocation of the same amount of houses to more people, which is a solution for the housing problem.
Again, it doesn't matter if one person owns 1000 houses or 500 people own two and rent one of them. The incentive system is to increase the shortage, and without addressing that incentive then the population of homeowners (most of the electorate) will not support increased development.
They are in the business of asset appreciation, and a short term rental is a twofer: you increase the housing shortage by removing a unit from the market, while maintaining an revenue stream to offset the cost of depreciation.
The business model is completely built on rent seeking and would collapse rapidly if it was just legal to let housing supply meet demand.
Instead, there are no voters in the jurisdiction to change the laws, because the vast majority of the electorate all gains from the rent seeking behavior.
The people who suffer are the minority who literally were not alive when the housing shortage began.