D.C. Takes Legal Action Against Rent-Controlled Apartments Treated Like “Hotel Rooms”

Momentum is building in D.C. to finally take a stand against commercial operators running hotel businesses out of residential apartments. Concerned neighbors and residents whose communities are being disrupted and whose rent prices are skyrocketing are finally being heard.

The Washington Post reports D.C. Attorney General Karl Racine filed a lawsuit Friday against Ginosi USA Corp for violating the District’s Rental Housing Act, which prohibits apartment units being converted into transient rentals.  At least two of the four apartment buildings in question are rent-controlled properties, according to the lawsuit.

Ginosi guests have spent a total of 42,053 nights at one of the four Washington apartment buildings it operates in, according to their website. That’s not home sharing, that’s big – illegal – business.

“My office is using all the tools available to us to preserve affordable housing for District residents,” Racine said.

A new video airing on TV this week put out by Share Better, a coalition of neighborhood and community activists, put a spotlight on these concerns. “[Commercial operators] buy up our homes, sometimes entire buildings, kick out tenants, and make more money renting to tourists. And we end up with higher rents and less affordable housing,” one resident explains.

This lawsuit adds fuel to the effort to stop commercial operators using Airbnb to run illegal hotels. The D.C. Council held a hearing Wednesday to discuss sweeping restrictions on short-term rentals. The proposal under consideration was introduced by Council member Kenyan McDuffie and would limit hosts to renting out only one unit, and only the home they actually live in, for a maximum of 15 nights per year. The proposal tries to clamp down on commercial operators like Ginosi that run de facto hotels (but without the basic business regulations that hotels must abide by) out of housing units that could otherwise be used for full-time residences.

A swell of evidence has added urgency to these calls for action. Just last month, a new CBRE Hotels’ Research Americas study found that in alone, hosts with 20 or more units earned nearly a quarter (24%) of multi-unit host revenue. What’s more, revenue generated by hosts renting out multiple, entire-home units increased by 134% in the last two years, now totaling almost $31 million.

These long-overdue, common-sense regulations would protect true home sharing while providing residents protection against illegal hotels.

Stay tuned.