The ability to rent out your property to travelers has never been easier with the advent of websites such as AirBnB, VRBO and HomeAway, among many others.
Through these sites, property owners are able to rent out a spare room, an apartment that’s rarely used, or a vacation home. However, as short-term rental options are becoming more common, cities across the country are responding in different ways. It is important for property owners to be aware of where their city stands.
Ranging from near-outright bans of the practice to embracing the concept, there appears to be no unified front. Many cities, including Cleveland, have largely remained silent on the regulation of short-term rentals. Their municipal codes do not yet expressly permit or prohibit them. Only time will tell as to which option proves to be the most successful.
Cities that choose to regulate short-term rentals often have a licensing requirement. Denver requires that property owners obtain both a lodger’s license and a short-term rental business license if they are looking to rent out their property. The fee is $50 for every two-year period for the lodger’s license and $25 each year for the short-term rental business license. New Orleans distinguishes between the nature and location of the rental property and requires a fee of $50 to $500 a year, depending on which license is required. Fort Lauderdale recently lowered its short-term rental fees by a significant amount. While a standard vacation registration application used to cost $750, it now only costs $350.
Some cities focus on location, density and time period requirements in regulating short-term rentals. Time period requirements can come in the form of the number of days a property can be rented out in a year or on a consecutive basis. The requirements also address the minimum amount of time for the rental.
For example, Chicago prohibits rentals of less than 10 hours. Palm Springs limits the number of consecutive days a home may be rented out to 28. New Orleans restricts the renting of houses to no more than 90 rental nights per license year and bans short-term rentals entirely in the French Quarter. Las Vegas only allows rentals that are at least 660 feet from each other and even forbids short-term rentals in certain large areas outside of the central city.
Many cities also make the distinction between “hosted” and “unhosted” stays. A hosted stay is similar to the nature of a bed-and-breakfast. It is an owner-occupied rental where a guest rents out a room in the host’s home while the host is also living there and in a sense, acting as a chaperone. An unhosted stay occurs when a renter is renting out the entire apartment or house, and the host is not present. It is similar to a hotel, although the host may not even be present in the same city where the home is being rented.
Certain cities have regulations that distinguish between these two types of stays.
For instance, Fort Lauderdale offers a lower renewal fee of $80 for properties that are hosted compared to the $160 renewal fee charged for those rental properties that are unhosted. Las Vegas distinguishes between hosted and unhosted stays in its permitting requirements. An owner-occupied property in a permitted district with fewer than three bedrooms, located at least 660 feet away from another rental, may simply obtain a conditional use verification.
However, if a rental property does not meet these requirements, the owner is required to obtain a special use permit, which requires notifying neighboring property owners and engaging in a two-part hearing process before the planning commission and city council.
For property owners, it is especially important to be aware of your city’s regulations on short-term rentals prior to beginning the rental process. Many cities that have regulations in place have sections on their municipal websites outlining these requirements. Whether it be a license requirement or a limit on the number of days you can rent out your property, it is important to know the potential limitations and how you can comply.
This article was published in Crain’s Cleveland Business on October 2, 2017.