With STR laws already on the books, local governments focus on enforcement
- Oct 3, 2023 | Jennifer Sokolowsky
Over the past several years, the rise of the short-term rental (STR) industry has sparked increasing scrutiny from local governments. Lawmakers at every level, from state to small town, have created regulations for STRs as they seek to balance the needs of STR operators, tourists, and residents and neighborhoods — while getting their share of tax revenues.
But some local officials have found there’s a big difference between putting laws on the books and having those laws followed. Now, many communities have turned their focus to enforcing the rules they already have.
New York City may be the highest-profile example of this trend. After years of legal battles, it recently put into place a registration law to help the city enforce long-standing limits on short-term rentals.
According to the New York State multiple dwelling law, which went into effect in 2011, short-term rentals of less than 30 days are only allowed in multifamily buildings if the permanent resident lives in the unit while guests are staying there. New York City regulations also prohibit short-term rentals in one- and two-family homes. Short-term rentals are allowed if the host is present in the home while paying guests are staying there.
One of the biggest obstacles to enforcing STR rules is finding and documenting cases where STRs are operating illegally — and this has been true in New York City as well. Its new registration ordinance, which went into effect on September 5 after delays due to legal challenges, is designed to address this challenge.
The ordinance requires hosts to register with the city and include the registration number in any advertisements, a common requirement for STRs at the local level. However, the real enforcement change involves the rules for short-term rental marketplaces such as Airbnb and Vrbo. STR hosts must inform the city if their vacation rentals are listed with an STR marketplace. Marketplaces are also required to register with the city, include registration numbers in listings, and verify registration numbers prior to processing transactions.
Since the vast majority of short-term rentals are listed on one of the major marketplaces, this has had a dramatic effect, with the number of short-term Airbnb listings available in New York City falling 70% between August 4 and September 5.
New York City isn’t alone in trying to enforce STR laws through short-term rental marketplaces. In Philadelphia, the city’s Department of Licenses and Inspections is cracking down on unlicensed STRs. The department announced this summer that it’s requiring STR marketplaces to delist properties that don’t have city-issued licenses.
Governments are also looking to technology to aid them in enforcement. In August, city leaders in Savannah, Georgia, approved the purchase of software that will help the city identify STRs operating without a license. This is a tactic many other communities have adopted in recent years.
Some cities are driving enforcement with public commitments and investment. In Santa Barbara, California, the City Council allocated $1.175 million toward a short-term rental enforcement pilot program. The City Attorney’s Office and Finance Department announced that they’re gathering data on short-term rentals throughout the city, including those operating illegally. City officials said they would start by working with operators on voluntary compliance, then turn to civil administrative citations and fines, or criminal prosecution, for operators who don’t cooperate voluntarily.
Governments are also meting out heavier penalties for STR operators and marketplaces that break the rules. Kansas City, Missouri, approved a new law this year that spelled out new consequences for violations. The city can revoke STR registration for a year for one code violation; properties with three or more city code, state, or federal law violations determined to be a threat to public health and safety can have their registrations revoked for three years. Violators can be fined up to $1,000 per instance, with each day counting as a new violation.
In several communities, this trend toward greater enforcement means that STR operators are less likely to break the rules without getting caught, and that the penalties will be more severe if they’re found violating the law. To protect themselves, STR hosts need to keep on top of the latest laws that apply to their properties. These regulations can include, among other requirements:
- Licensing and permits
- Where STRs can be located
- Whether an STR must be the primary residence of the host
- How many STRs a host can operate
- How many guests can stay at one time
- Rules on noise and large events
- Obligations for hosts to collect and remit lodging taxes
Hosts are responsible for knowing and following the rules — or being prepared to face the consequences.
MyLodgeTax can help vacation rental hosts automate and simplify lodging tax compliance. For more on short-term rental taxes in your state, see our Vacation Rental Tax Guides. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.