I started paying attention to short-term rentals years ago because they were where I lived, breathed and reported on two big trends: the rise of platforms like Airbnb and the scramble by cities to protect housing affordability. What looked like a sharing-economy boon for travelers quickly revealed itself as a policy headache for neighborhoods losing long-term homes. Over the past few years, I've watched municipal leaders experiment with zoning tweaks, tax abatements and other incentives to convert short-term rentals (STRs) back into affordable housing. Some approaches work better than others. Below I lay out what cities are doing, how the tools operate in practice, and what tenants — or landlords interested in the public good — can do.

Why convert short-term rentals into affordable housing?

Short-term rentals can remove units from local housing markets: a condo that could house a family becomes a nightly vacation unit. That reduces supply, pushes up rents, and changes neighborhood dynamics. Converting STRs to long-term affordable housing aims to recapture supply, stabilize rents, and preserve community. But conversion takes more than wishful thinking — it requires aligning zoning, taxes and incentives so owners find it worth their while to switch.

How zoning tweaks encourage conversions

Zoning is the tool cities use first because it controls land use. Here are common zoning strategies I’ve seen:

  • Rezoning to allow multifamily or mixed-use: Cities can reclassify areas to permit more housing types, increasing the number of legally habitable units and making conversions easier.
  • Overlay zones and incentives: An overlay is a special set of rules applied to a particular area. It can require a share of new or converted units be set aside as affordable in exchange for higher density or faster permitting.
  • Limit STRs in certain zones: Some cities cap or ban short-term rentals in residential zones, pushing owners to convert existing STRs or face noncompliance fines.
  • Use permits and conditional approvals: Requiring permits for STR operations gives cities leverage: owners can be offered a pathway to long-term use in exchange for simpler zoning approvals or grandfathering.

    • These zoning levers work best when paired with financial incentives because many STR owners profit more from nightly rates than from long-term tenants. Which brings us to tax abatements.

    Tax abatements and financial incentives that make conversion viable

    Tax abatements reduce or defer property taxes for a set period. When structured right, they can bridge the gap between STR revenue and lower long-term rents. Common designs include:

  • Time-limited abatements for conversions: A city might offer a 5–10 year property tax abatement to owners who commit units to affordable rents for a set period.
  • Property tax credits linked to affordability: Instead of reducing assessed value, some programs give annual credits if the unit remains rented at specified affordable levels.
  • Rehabilitation grants and low-interest loans: Many STR units need upgrades to meet long-term housing codes; grants or loans cover conversion costs and are paired with abatements.
  • Transferable tax benefits: In some programs, smaller landlords who can’t use tax credits sell or transfer benefits to developers who aggregate conversions — that helps scale projects.

    • There’s a key political calculation here: abatements are politically sensitive because they reduce short-term revenue. But the trade-off cities make is between immediate collections and long-term housing stability. Effective programs set clear accountability (ex: regular inspections, deed restrictions) to ensure units remain affordable for the promised period.

    Examples from the field

    Different cities tailor these tools to local markets. Here are condensed examples to show how they combine zoning and taxes:

    City Policy mix Result
    City A STR permit caps + 7-year tax abatement for conversions Rapid voluntary conversions in tourism-heavy neighborhoods
    City B Overlay zone allowing added density in exchange for 20% affordable units New developments convert previous STR stock into mixed-income buildings
    City C Grants for unit rehab + requirement to list units on long-term rental registries Lower-cost conversions but slower uptake without stronger tax incentives

    These examples simplify nuance, but they show that pairing regulatory limits with carrots (tax breaks, grants) is more effective than either approach alone.

    What tenants and prospective renters can do

    If you’re someone looking for stable, affordable housing — or a renter worried about STRs in your building — there are concrete steps you can take:

  • Know local rules: Learn whether short-term rentals are allowed where you live. Cities often publish STR registries or permit lists.
  • Organize neighbors: Tenant coalitions can press city councils for targeted abatements and zoning changes. Evidence from the ground — like a block with many STRs — strengthens cases.
  • Use tenant data: Document when units flip between STR and long-term use. That helps advocacy groups make the case for conversion programs.
  • Support or propose pilot programs: Some cities respond to narrowly tailored pilots. Tenants can ask councils for pilot abatement programs in neighborhoods losing the most long-term housing.
  • Push for transparency: Demand that owners register STRs and report vacancy rates. Transparency makes enforcement and targeted incentives possible.

    • For renters confronting landlords who want to switch to STRs, local tenant protection laws matter. Eviction protections, relocation assistance, and right-of-first-refusal rules can create breathing room while policy catches up.

    What landlords who want to do the right thing should consider

    Not all STR owners are getting rich; many are small landlords who rent spare rooms or a second property. If you’re a landlord weighing conversion:

  • Run the numbers: Compare net income from STRs versus long-term rents after taxes and occupancy. Abatements can change the calculus — sometimes dramatically.
  • Consider longer-term stability: Long-term tenants reduce turnover costs and vacancy risk. That can be worth less-than-STR nightly rates.
  • Use preservation tools: Put deed restrictions or covenant agreements in place that secure affordable rents and can make properties eligible for certain grants.
  • Work with housing nonprofits: Partnering with a community land trust or housing authority can help you access financing and give you predictable returns while serving the public interest.

    • Practical obstacles and trade-offs

    No policy is perfect. Zoning changes can spark NIMBY pushback. Tax abatements reduce municipal revenue and must be tied to enforceable affordability standards. Conversions can be administratively complex — tracking affordability, inspections, and compliance requires staff and funding. Cities with weak housing markets may not be able to entice owners with abatements alone.

    That said, thoughtful programs combine:

  • Clear eligibility rules to prevent gaming;
  • Timely data collection so cities know where STRs concentrate;
  • Community engagement to address neighborhood concerns; and
  • Partnerships with non-profits and private actors to scale conversions.

    • I've seen successful pilots where cities start small, learn quickly, and adjust program terms — shortening or lengthening abatement periods, tightening occupancy rules, or expanding rehab supports. The most promising models treat the conversion of STRs as one tool among many to preserve housing affordability, not as a silver bullet.

    If you care about housing stability where you live, push your local officials to pair zoning with financial incentives and strong accountability. And if you’re a landlord, consider whether contributing to long-term housing stability could be profitable and socially valuable — especially when the policy environment shifts. The stakes are high: we can either let entire blocks become part of a transient hospitality economy, or we can use smart, targeted policy to keep homes for people who live and work in our cities.