Chicago Approves Crack Down On Vacation Rental 'Party Houses'

CHICAGO — A new ordinance approved by the Chicago City Council on Wednesday places tougher regulations on vacation rentals and aims to put a stop to rented "party houses."

The ordinance will be implemented and enforced by the Department of Business Affairs and Consumer Protection (BACP). In a news release, the council said it will prohibit visitors from booking vacation rentals for one night only.

The ordinance also requires the hosts of vacation rental listings to submit an application and register with the BACP before visitors are allowed. It also collects a registration fee from hosts and a tiered licensing fee from intermediaries like Airbnb and HomeAway.

Under the new ordinance, Restricted Residential Zones will be expanded, registered voters in certain areas will be given the power to decide whether to allow vacation rentals and the BACP will be given more power to shut down parties.

In a statement, Chicago Mayor Lori Lightfoot said with the ordinance, the city is "not only ensuring customers have the transparency they need but also making it easier for small operators to become licensed in our city.”

“By enhancing the city’s enforcement powers against bad actors and increasing regulatory oversight through BACP, we can further ensure this new and innovative industry remains safe for all of Chicago’s residents," she said.

According to the release, the city has 8,869 registered shared housing units through Airbnb and HomeAway.

The ban on single-night stays is set to take effect Oct. 17, and stronger enforcement against party houses, the expansion of Restricted Residential Zones and the new application process will take effect Oct. 17.

Under the new ordinance, the BACP will also collect a $125 one-time registration fee from rental hosts and a licensing fee from the rental company — think Airbnb.

In the tiered licensing fee schedule, companies with 499 or fewer units will pay $5,000 yearly. Companies with between 500 and 999 units will pay $7,500 each year, and companies with more than 1,000 units will pay $10,000.

BACP Commissioner Rosa Escareño said the new regulations are intended to keep up with the market's constant evolution over recent years.

“Over the last four years, we have worked tirelessly to oversee the evolving shared housing industry within the limits of the existing regulations,” Escareño said. “This ordinance will modernize the process, improve host registrations and enhance the city’s ability to hold problem actors accountable while preserving the innovation that is critical to this industry.”