Last Updated: November 21, 2021
When it comes to short term rental zoning, communities have to decide on a policy that fits their history and ideals. This issue is especially likely to arise where tourists or a seasonal population are interested in temporary rentals of single-family residences, without the owner being on the premises.
With the rise of the sharing economy, online businesses such as Airbnb have made renting out a home, or just a room or two, an easy option for homeowners, even in areas not considered especially touristy. So this problem is increasing in frequency and potential for controversy.
Of course it is not a new issue where seasonal tourism is high, but the question has become newly relevant for many towns and cities that have never been seen a demand for short term rentals before now. This applies to areas that are near tourist attractions in large cities, but which have never thought of themselves as tourist destinations until now. What we have to say on this page applies to these sharing services as well.
Often the question is handled through the zoning ordinance, but sometimes a stand-alone ordinance may be enacted governing the conditions under which such a land use is permitted. We think it best to handle any regulation of short-term rentals within the zoning ordinance.
Commonly the short term rental zoning provisions define short term as less than 30 days. The same concept may be called transient rentals, or short term transient rentals. A few examples of a seasonal zoning regulation have been found as well, in which different regulations apply if the rental is for more than 30 days but less than 180 or so.
If the zoning ordinance is where short term rentals are regulated, the ordinance of course will spell out which zoning districts allow such a use. Sometimes ordinances require a special use permit, which usually leads to the same level of public hearings and action by the governing body equivalent to the process required for a rezoning.
We think the best provision would be to require a conditional use permit in any residential zoning district, which allows the city, township, or county to address concerns about extra vehicles, hours, noise, trash removal, frequency of turnover, and more. Then if the local government thinks that its comprehensive plan requires strict adherence to a single family model in some districts, conditions such as a minimum number of nights' stay for each tenant, a maximum number of nights of rental each year, and the presence of the owner-occupant on premises can be required.
In any event, the zoning ordinance is likely to set forth standards for short term rental zoning. Topics regulated might include:
If the rental of homes for a short time is not covered in the zoning ordinance, or the town or city does not have a zoning ordinance, a separate law sometimes is enacted. Probably it would deal with the same types of limitations and requirements described above, as considered appropriate and necessary by the local government.
If your town is targeting regulations toward Airbnb and its competitors, you may want to discuss a requirement that the building is owner-occupied. This prevents the situation of an off-premises owner who may be conscientious but not aware of tiny problems that might arise each night. Yet it also allows homeowners with plenty of space and parking capability to be able to earn some extra income in a manner relatively harmless to the neighborhood.
A number of European cities, led by Paris, have adopted a registration process for the short term rentals, since prior to the licensing requirement they largely had been avoiding paying taxes required of hotels and other formalized lodging. Additional pushback in European cities has come from those who claim that the short term rentals of rooms and apartments have become so lucrative that there is a loss of rental housing stock available for the local population. From some reports we have read, there is merit in this claim. We encourage you to think about the potential for loss of affordable housing for your own residents if short-term rentals become a significant factor in your community.
Resort cities and towns in the U.S. face a similar problem in that out-of-town visitors are willing to pay a premium for rooms that once were rented to seasonal employees, who now have nowhere to live. Each city in this situation has to wrestle with its moral and practical responsibility to provide housing for the seasonal workers who make the tourism industry possible.
We expect that the 2020-2021 COVID-19 pandemic has softened the appeal of short-term rentals, but any lasting impact will depend on how the public perceives the safety of staying in a residence other than a hotel and even on how quickly leisure travel recovers over a period of many months or years. This factor may give municipalities who have not yet addressed the issue some additional time to consider an appropriate response, but we think that at some point the popularity of this element of the sharing economy will continue on its overall upward trend.
In the case of both short term rental zoning and free-standing transient rental regulations, many communities that are aware of the connections between tourism and economic development have a tendency to begin with minimal regulation and to add requirements on the basis of particular problems that arise. If the town becomes divided over the issue, however, of course the regulations are likely to be more strict and more creative.
Still other towns choose to ignore the issue that some residents or property owners rent out homes for a very short term, considering this practice to be the prerogative of the property owner. Be aware that there will be resistance if you try to limit property owners' flexibility. As an example, see our exchange with a site visitor about being forced to stop renting through Airbnb.
We see the opposite tendency in towns that do not consider themselves to be tourism oriented. Often they are very suspicious of allowing people to rent out rooms in their residence for a few days, thinking that it undermines the sanctity of single-family residential neighborhoods. They have a good point actually.
Some municipalities have asked planning or code enforcement staff members to monitor the big short-term rental websites to find any properties offered for stays in their jurisdiction. If you have had the policy debate and determine that you cannot allow this land use, it should be relatively easy to find property owners who are in violation, as they have to advertise to be known.
We advise you to think this through before it becomes a big issue though. There may be some zoning districts and even some particular lot configurations where any potential disruption would be minimal, but where the economic benefits to property owners could be real.
Particularly in an unattractive real estate market, allowing short term rental zoning is probably not a bad idea, as long as the percentage of the housing stock devoted to this use is small. From the community perspective, short term rental use is probably preferable to a house going into foreclosure.
Some apartments run themselves, in a sort of absentee bed and breakfast situation. However, we recommend that it is best to require a meaningful stay if there is no on-premise owner or manager. Our advice would be to require a stay of at least three days but preferably five to seven.
This allows the neighbors to monitor the situation better. If new people can come in every night, neighbors will tend to shrug their shoulders about anything strange they see. But each community will need to evaluate its own situation to determine how to address home sharing.