Regulatory Gaps in Short-Term Rental Platforms: The Absence of Uniform Regulations Across Indian States

Short-term rental platforms like Airbnb and Booking.com have rapidly grown in popularity in India, driven by the country’s thriving tourism industry, urbanization, and increased preference for flexible and affordable accommodation. However, this sector operates in a fragmented regulatory environment, with significant disparities in rules and oversight across states. These gaps pose challenges for hosts, guests, and platforms alike.

The Current Landscape

India’s short-term rental market is projected to grow at a compound annual growth rate (CAGR) of 14% between 2022 and 2027, reaching a market size of approximately $6 billion by 2027. Despite this growth, the legal framework governing short-term rentals remains ambiguous and inconsistent.

Key Observations:

1. State-Level Variations:
2. Taxation Ambiguities:
3. Safety and Security:
4. Platform Responsibilities:

Impact of Regulatory Gaps

The absence of a uniform regulatory framework has resulted in several challenges:

• For Hosts:
• For Guests:
• For Platforms:

Learning from Global Models

Countries like Japan and France have introduced national-level policies to regulate short-term rentals:

• Japan: Hosts must register their properties, adhere to occupancy limits, and meet safety standards under the Minpaku Law.
• France: A unified tax system ensures hosts pay appropriate occupancy taxes, and platforms are required to report earnings to tax authorities.

India can take cues from these examples to streamline its regulatory environment.

Recommendations for Addressing Regulatory Gaps

1. National Policy Framework:
2. Collaboration with Platforms:
3. Simplified Taxation:
4. Mandatory Verification:

Conclusion

The rapid growth of short-term rental platforms in India highlights the need for a coherent regulatory framework that benefits all stakeholders. By addressing the current gaps and learning from global best practices, India can unlock the full potential of this sector while ensuring compliance, safety, and sustainability. The time for action is now.