If you're running a short-term rental (STR) business anywhere in the US in 2022 and you're not plugged into the regulatory discussions currently happening in your jurisdiction, you need to drop what you're doing and drive down to city hall right away.
The STR industry is growing fast, and it’s certainly been a bright spot in the hospitality sector recently. But local governments from Hawaii to Florida have had the benefit of seeing the impact of STRs on their communities for a while now, and they're reviewing everything from zoning laws to property taxes, restrictions, even outright bans. It's a debate that can get emotional. Without a seat at the table, you can be sure that the new regulations coming out of that process won't be in your favor.
"Advocacy is not something you can sleep on," said Dana Lubner, STR advocate and Head of Leadership Development at Rent Responsibly, in a recent industry podcast. "You can't achieve fair regulation, or benefit from it, or prevent unfair regulation, if you're not plugged into what's happening in your community and local government. If it hasn't come for you yet, it's only a matter of time."
How should you get prepared? Before your next meeting with city officials, you need to brush up on the following 3 regulatory trends.
Trend #1: Increased focus on affordable housing
There’s a housing crisis brewing around the country. Rent in Fort Myers is up 29% this year, according to Florida Atlantic University, 28% in Miami and 22% in Tampa. It’s not just a Sunshine State phenomenon: average rent for a one-or two-bedroom apartment is up 20% in Knoxville and 18% in Charleston. Living in Jersey City will set you back $5,500 every month.
STRs are far from the main culprit. Population migration caused by the pandemic and the rise of remote work is creating a spike in demand in many areas that were previously too far for people to commute from. Supply chain issues and surging material costs aren’t helping new housing developments. And the backlog of permits in short-staffed zoning and planning offices isn’t exactly helping. But that hasn’t stopped many local governments from pointing the finger at the STR industry and imposing crippling restrictions.
In New York City, for example, it’s illegal for a unit in an apartment building to have paying guests for less than 30 days. In New Orleans, in the French Quarter, the minimum stay is 60 days. While the state of Florida prevents local jurisdictions from banning STRs outright, cities like Miami Beach are using zoning laws and keeping many single-family residential areas out of the picture. And to prevent outside corporate operators from taking too many housing units off the market—and to make sure most STRs are run by local owners—some areas are capping the number of permits they’re approving each year and imposing strict local management and primary residence requirements.
Trend #2: New caps, moratoria and bans
Breckenridge is one such community where the local city government recently imposed a cap on STRs. Passing that ordinance just before the opening of the 2021-22 ski season was a bitter experience for city officials. In nearby unincorporated Summit County, 30% of the housing stock is currently taken up by STRs, and only 10% of those are run by locals, according to county documents. The board of county commissioners there just enacted a 9-month moratorium on all STR permits.
Ski country is far from the only place where a moratorium is currently in place. In Hawaii, registrations in Honolulu are suspended until Oct 2022. Maui County has a moratorium on transient accommodations in place until Jan 2024. Chattanooga has hit the pause button on non-owner occupied applications until at least Jan 2023. Local governments everywhere are giving themselves time to gather data, listen to constituents, evaluate their options and design more effective regulations.
Trend #3: Inconsistent taxes and tax assessment rates
One area where city and county officials are getting really creative is with lodging taxes. Take a look at your Airbnb host account, or your Vrbo owner account, and depending on where you operate, you’ll see line items for state and county sales taxes, occupancy taxes, tourism taxes, discretionary sales surtaxes, marketing district taxes, visitor’s bureau taxes, local option transient rental taxes, even hotel taxes in some districts. Or (and that’s even worse) you might not see those line items at all because in many cases, the platform isn’t responsible for collecting them—you are.
For operators active across multiple jurisdictions, lodging tax requirements can be all over the place. And to make matters worse, not a day goes by without new tax proposals. Steamboat Springs, for example, is proposing a new 9% STR lodging tax on the November ballot this year to subsidize more than 2,000 housing units for the low- and moderate-income residents who keep the tourism industry humming in the region. And STR properties in the state might soon be assessed at the commercial tax assessment rate (26.4%) rather than at a much-lower residential rate (6.9%).
The heat is on
“Policymakers need to hear from the experts, from the public, and weigh their options,” says Ashley Hodgini, Regional Government Affairs Manager for Vrbo parent company Expedia Group. Nobody wants “knee jerk regulation that caters to the emotional whims of a small vocal minority and ignores legitimate alternative policy solutions, usually to the detriment of the government's own tax base and the economy at large.”
There’s still hope for you to affect the outcome, and we’re here to help: You can learn how to stay compliant and on top of the latest regulatory discussions in your area with the Fyllo Regulatory Database for short-term rentals.