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Airbnb Will Soon Operate Legally in San Francisco The new law, which received initial approval from the city, is expected to take effect in February and comes with a number of requirements for hosts using the site.

By Laura Entis

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Airbnb has operated in San Francisco for six years now. But officially, it's done so illegally – although widespread, short-term rentals are prohibited in the city, as they are in many other cities across the country.

It looks like that's finally going to change, in San Francisco, at least. New legislation, which seeks to legalize and regulate short-term rentals in the city and is scheduled to go into effect in February 2015, just received initial approval from the San Francisco Board of Supervisors, who voted 7 to 4 in favor of the new law, the San Francisco Business Times reports.

This vote of support comes after two years worth of efforts from David Chiu, the board's president, to regulate short-term rentals, which are popular with many residents but raise concerns for the city, including reports of landlords evicting tenants in order to convert apartments into hotel operations.

Related: Coming Soon: Hotel Tax on Airbnb Rentals in San Francisco

The new law aims to address some of these issues by introducing a list of requirements for renters. Under the legislation, the San Francisco Business Times reports, hosts must be permanent residents of the city, register with the Planning Department, and have at least $500,000 in liability insurance coverage. More importantly, the law only permits hosts to rent out their primary residences, i.e. the place they've occupied for 275 days out of the last year -- a stipulation meant to block landlords from evicting tenants in order to rent out rooms on Airbnb and, as Chiu wrote in a column, "take much-needed housing off the market."

Airbnb pronounced the board's approval "a great victory." More strident amendments had been proposed by board members, including an annual cap on room rentals at 90 days.

A second vote on the ordinance is expected to take place in late October, after which the law will go to the mayor's office to be signed, according to the San Francisco Business Times.

Related: 3 Lessons Learned From the Sharing Economy

Laura Entis is a reporter for Fortune.com's Venture section.

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