Avalara MyLodgeTax > Blog > State and Local News > As short-term rentals get back to business, regulators do too

As short-term rentals get back to business, regulators do too

  • Aug 4, 2020 | Jennifer Sokolowsky

guest with luggage enters short-term rental

Short-term rentals across the country have begun reopening after months of shutdowns mandated by state and local governments due to the COVID-19 pandemic. Those shutdowns also put debates about rules for short-term rentals on hold. But now that vacation rentals are getting back to business, cities are resurrecting proposals to regulate them.

In recent years, communities have been very active in creating new regulations for short-term rentals in response to concerns about their effect on neighborhoods and affordable housing. These measures include rules that govern where vacation rentals can operate, how close they can be to each other, how many guests they can hosts, permit and tax requirements, and more.

For example, the city of Long Beach, California, recently legalized vacation rentals for the first time with a new law that’s been under discussion since 2018. The ordinance requires short-term rental hosts to have permits and include permit numbers in advertisements. Operators are limited to one primary-residence short-term rental and the rules also restrict the number of short-term rental units within multifamily buildings. The new law also makes vacation rental hosts responsible for collecting the city’s transient occupancy tax from guests.

In Hawaii, a proposed measure would reduce the number of allowed vacation rentals on Maui. The Maui Planning Commission is considering a bill that would cut the number of short-term rental permits on Maui and Lanai from 349 to 278.

The cap wouldn’t apply to short-term rentals in apartment-zoned buildings not required to have a permit, currently numbering 5,575 units. The council has banned vacation rentals altogether on Molokai — and vacation rental owners have responded by filing a federal lawsuit.

In Santa Fe, New Mexico, a proposed ordinance would deny short-term rental permits for properties in residential areas within 75 feet of existing vacation rentals. The law would also require permit holders to be individual people, rather than limited liability corporations or trusts, and live within the city and be available at all times. Short-term rental operators would be limited to one permit per person, and vacation rentals could be rented to only one group or guest in a seven-day period. Existing short-term rentals would be grandfathered in for current owners, but the new rules would apply to future owners.

In Chicago, Illinois, Mayor Lori Lightfoot has proposed changes to the city’s vacation rental law that would eliminate single-night stays, require hosts to have a license in hand before they start renting properties, and beef up enforcement.

Arvada, Colorado, is considering regulating short-term rentals for the first time. The city is working on an ordinance that could limit how many short-term rentals each resident could manage and how many days a year they could operate.

Meanwhile, in the California Legislature, the state Senate has approved a bill that allows city and county governments to fine short-term rental operators up to $5,000 for breaking short-term rental laws. Currently, local governments can only issue fines of up to $1,000 for short-term rental infractions. The measure is now being considered by the state Assembly. The legislation was in reaction to a shooting at a vacation rental in Orinda, California, last Halloween in which five people were killed.

While pandemic-related vacation rental shutdowns have been reversed in most places, a few governments are shutting them down again amid concerns about COVID-19 spread, including Miami Beach, Florida. In Jackson, New Jersey, the township council is considering a new law that would require properties to be rented for at least 30 days, in response to a “mansion party” held at a short-term rental that 700 people attended. New Jersey Governor Phil Murphy has recently decried large house parties as breeding grounds for the virus.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.