Newport, Rhode Island, bans short-term rentals in residential zones

Short-term rentals are no longer allowed in residential zones in Newport, Rhode Island, after the City Council passed two ordinances to amend the city’s zoning code.

Licensed short-term rentals already in operation are exempt from the new ban, and owners in residential zones that live in a property full time as their permanent residence are permitted to rent up to two rooms to no more than four people.

One of the new ordinances officially adds the term “short-term rental” to the zoning code, while the other specifies where vacation rentals may operate. Under the new law, short-term rentals, defined as rentals of fewer than 30 days, may operate in General Business and Waterfront Business zones by registering with the city, which includes a $100 application fee. However, vacation rentals in Newport’s Limited Business District on Lower Thames Street must acquire a special-use permit. 

Previously, vacation rentals were also allowed in four residential districts, as long as operators obtained a special-use permit from the Zoning Board of Review. Now, they’re not allowed at all unless operators already have a valid special-use permit.

In addition to local registration requirements, Newport short-term rental hosts who list their properties on vacation rental marketplaces such as Vrbo and Airbnb are now required to register with the Rhode Island Department of Business Regulation, according to a new state law. The law went into effect after the General Assembly overrode the governor’s veto on January 4.

The state will create a short-term rental database with the information submitted by registered hosts about their rental properties. Short-term rental marketplaces must remove any listings that are not registered by June 1. Hosts with online marketplace listings who fail to register will face a fine of $250 for the first 30 days, $500 for 31 to 60 days, and $1,000 for 60 days or more. Vacation rental marketplaces also face fines for listing unregistered short-term rental properties. 

Rhode Island hosts must also register with the Rhode Island Division of Taxation, collect lodging taxes from their guests, and file lodging tax returns.

If a short-term rental operator goes through a marketplace for all guest payments, the marketplace is responsible for all lodging tax obligations for that property. Hosts who collect payments from short-term rental guests directly are responsible for their own lodging tax compliance for those transactions.

MyLodgeTax can help Rhode Island vacation rental hosts automate and simplify tax compliance. For more on lodging taxes in Rhode Island, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.