Two radically different approaches to short-term rentals

If you’re a homeowner trying to navigate short-term rental laws in the Pacific Northwest, your experience will vary wildly depending on which state or county you live in.

In an encouraging display of free market principles, Idaho lawmakers started an important conversation by introducing a pair of bills —SB 1162 and SB 1163—that would prevent local governments from targeting and punishing homeowners who choose to rent out their properties on a short-term basis, generally defined as units rented for less than 30 days. Though not adopted this year, Idaho lawmakers are potentially willing in the future to recognize and support short-term rentals as valuable sources of tourism revenue and economic growth.

Meanwhile, Washington legislators are hard at work creating scapegoats instead of solutions. Rather than confront the genuine causes of housing shortages that fall within their control, like restrictive zoning laws, environmental regulations, and onerous labor and permitting requirements, Washington lawmakers have chosen to target homeowners who offer short-term rentals.  

SB 5576 originally proposed a statewide 6 percent excise tax on short-term rental income. After significant pushback from property owners concerned about the negative economic impacts, the proposed tax was revised to a maximum of 4 percent and shifts the taxing authority to local governments. This move isn’t generosity—it’s political strategy. Like all new taxes, legislators sometimes lower the rate and narrow the base to get around opposition. Once in place, the tax can easily be expanded or increased. Predictably, hotels are exempt, leaving only single-family rentals to bear the new tax burden.

Washington’s complex network of short-term rental regulations has expanded significantly in recent years. Owners must now carry at least $1 million in liability insurance, obtain a state business license, and navigate additional licensing requirements at the city or county levels. This is where things get problematic: some counties impose strict caps on the number of short-term rentals allowed, effectively creating government-sanctioned monopolies where early entrants gain exclusive benefits. Other localities bury property owners in layers of regulation—multiple permits from different agencies, annual inspections, hefty fees, extensive safety checklists, and long approval times that can stretch into years. For local governments, cumbersome bureaucracy becomes an effective alternative to an outright ban.

Local governments’ eagerness to aggressively target, tax, and restrict the rights of short-term rental property owners highlights exactly why Idaho’s proposed bills are so important. Property rights aren’t a policy detail; they’re the backbone of a free society. Or as John Adams put it, “The moment the idea is admitted into society, that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”

Short-term rentals are often scapegoated by policymakers looking to deflect culpability for their own failed housing policies. From Miami to Los Angeles, local governments frequently champion harsh restrictions and taxes on short-term rentals under the guise of addressing housing shortages. Yet these same officials consistently ignore the bigger factors driving housing affordability, such as input and labor costs, restrictive local zoning codes, burdensome environmental review processes, and overly complex building permit procedures. It is wrong to blame a small subset of citizens as the cause of a shortage, where multiple economic and political factors are in play.

Lawmakers also rarely pause to consider why property owners are increasingly opting for short-term rentals over long-term leases. The answer often lies in state laws that heavily favor tenants, making eviction of problematic renters costly and complicated. Landlords facing capped rents, limited security deposits, and stringent eviction regulations naturally prefer the flexibility and less regulatory hassle of short-term rentals.

Local governments might be best suited to handle many community-specific issues, but there must be clear limits when they start infringing upon fundamental property rights. Local governments, often influenced by vocal minorities, should be restricted from targeting property owners with punitive measures and heavy-handed regulation.

Idaho’s approach looking to establish statewide standards and protections would ensure a predictable regulatory environment. Property owners gain assurance that their rights won’t change dramatically from county to county. Washington’s patchwork, by contrast, creates an uncertain and hostile environment that discourages investment, reduces housing supply, and ultimately harms property owners and the local economy. One state is trying to solve the problem. The other is just pointing fingers.

Property rights form the bedrock of American economic freedom. Idaho’s legislators deserve praise for understanding these rights, while Washington’s approach of blaming and punishing property owners for decades of legislative policy failures should be rejected.  The path to affordable housing isn’t more government interference—it’s respecting the rights of the homeowners who make the housing market work.