As the Massachusetts legislature is on the cusp of possibly passing the short term rental tax, the debate over short term rental is heating up. In a world where it seems there is no middle ground in debates anymore, a lot of information and truth is lost while each side tries to be more right than the other, and the debate around short term rental is no different. Misinformation and lack of knowledge about what’s really going on out there causes angst for people who fall on both sides of the issue. I have had the advantage of working with people who support and those who oppose short term rentals, and this allows me to dispel some myths, expose some truths, and describe first-hand how I see short term rentals playing out in the neighborhoods.
General Observations
Airbnb recently aired a radio piece while they were engaged in their battle with Boston. As part of that airing, a woman described how, when she fell on bad times, her ability to rent a room in her home on Airbnb saved her from financial ruin. Airbnb positioned itself as an example of how a hard working, law abiding person can get creative to make ends meet. It can be that; I believe Airbnb probably did help this woman stay afloat during tough times. In my observation, this story is the exception and not the rule.
While personally inspecting locations I have also seen, more often than not, that many short term rentals make use of attic or basement space that is finished without the benefits of permits or basic egress and life safety. On a very recent inspection of one unit in a two-family house, which was being rented solely for short term rentals, the four bedroom unit was converted to a 10 bedroom unit. Neighbors became irritated with the constant arrivals and departures of guests at this rooming house, which no amount of due diligence could have informed them about before they purchased their own properties. The last straw was when an ad was posted on Craigslist for a part-time housekeeper for a “hotel.” Short term rental platforms do not qualify or inspect the locations that are offered on their site, and if property owners ignore code requirements and skirt oversight agencies then who is looking out for public safety?
The Zoning Law
A recent land court decision lent some guidance to the people on the regulatory side of this issue. In the case Lytle v. Swiec (Mass. Land Ct. May 23, 2017), the building commissioner for the town of Hull issued a violation notice for a violation of the town’s zoning by-law, stating the use of the structure as a transient/commercial use was not an allowed use in a single family district. In Massachusetts, zoning is inclusive. To be allowed, the use must be listed in the town’s table of uses, with a few exceptions. The homeowner in the Hull case appealed the violation notice to the Zoning Board of Appeals. The Hull Zoning Board of Appeals upheld the building commissioner’s decision, so the homeowner appealed to land court. Now first understand the function of land court: if the zoning board did not act arbitrarily or capriciously and the interpretation of the zoning by-law under appeal is reasonable, then the court will give deference to the town to interpret is own zoning by-law. The land court held that the interpretation by the Hull building commissioner and the Zoning Board of Appeals as to short term rental was reasonable.
The Regulation Debate
Most municipalities have lodging regulations, which pertain to hotels, motels, bed and breakfasts, as well as dorms and lodging houses. In order to be relicensed and ensure the occupants renting rooms are safe, these occupancies are inspected annually by fire, building, and health departments in most towns. Airbnb…no license, no inspections. Let’s step back and understand basic building code. The construction methods and life safety systems (fire sprinkler, fire alarm) in buildings are based on who is in the building and how familiar they are with the building. Repeat renters aside, short term rental occupants obviously are not familiar with their surrounding. This opens the door for accidents to happen. The nay sayers will argue: well if it’s a single family home then everyone will be able to get out. Wrong! People die all the time in fires that are in single- and two-family dwellings,
The Complaints
Do not get me wrong; regardless of what town you are in, we have our share of beautiful, well maintained, code-compliant houses and apartments out there being used as short term rentals as well as less-than-luxurious but still code-complaint extra rooms. What’s wrong with those units being rented as short term? Put building code aside for a moment. The objection for most complainants and for the anti-short term rental crowed (and the two may not agree all the time) is that these units/houses change in the fabric of one- and two-family neighborhoods.
The majority of complaints arise from the car services shuttling in and out night to night and week to week. This is not the intent of residential neighborhood zoning. People who pay property taxes, which in some communities amounts to very large sums of money, did not agree to deal with the noise, the constant guessing about who’s next door now, or the fact the home is no longer occupied as a single-family dwelling. Zoning is put in place to have like uses built in proximity to one another. Zoning is really a quality of life law.
The Emerging Market
Now enter the entrepreneur utilizing the short term rental platform as a form of investment. We have had many situations where an investor purchases a building specifically for short term rentals — maybe a single family, maybe a multi-family, or maybe a condo building with either two or possibly several units. The same issues arise. New renters arrive sometimes daily, often at all hours from the airport, not knowing what door they are supposed to go to, and knock on neighbors’ doors. These are not hypotheticals, these are real life examples. In a town where I worked there was recently a million dollar four bedroom home being occupied entirely by short term rentals. A local “agent” held the keys and did the housekeeping. So far you must be thinking, “this author is definitely anti-short term rental.” Wrong! I, like most of the people I grew up with, got out of the city to spend a week in Marshfield or in New Hampshire. These areas are compatible with short term rental, and there has long been a registration process for these types of uses. As you merge short term rentals in a densely populated city where these processes do not yet exist, though, the conflict starts to arise.
Taxes
Hotels pay a tax on their room rentals. Short term rentals (as of today) do not. Since they do not pay tax on the rooms, they can offer lodging at a cheaper price than hotels. Municipalities that rely on hotel taxes look at the prospect of short term rentals becoming the norm and see a reduction in the dollar amount of taxes they receive from hotels. New York City has had a long-running battle with Airbnb. The city cites safety concerns as well as loss of hotel taxes. The new proposal that has gone through the state legislature will even the playing field in this respect, however, at last check the bill is proposed to be amended heavily. Stay tuned.
In Summary
I, believe it or not, am not opposed to short term rental. Regulated correctly, it can and will be an asset for the users, both on the consumer and provider side, as well as for the municipalities that choose to allow it. The idea of requiring the units to be owner occupied satisfies the needs of the woman on the Airbnb radio spot, even though there are still people who strongly argue against over-regulating a commercials issue of needing the extra income to stay afloat. But what about people who travel for their jobs or want to sublet on a nightly basis? Is there a valid way to regulate this so that people on both sides of the debate are protected? Like anything new there will be a learning curve, and like any regulations there will be bad behavior on the part of both the providers and the municipalities. Just because the tax passes does not make short term rentals legal in all municipalities. Each municipality will need to adopt rules and regulations around the use. It will take some time for each town to understand how the short term rental space works successfully in its community, and there will not be a one-size-fits-all approach. I do believe in the near future, just as the taxi/Uber debate has waned, you will see the acceptance and coexistence of short term rentals.
What are your thoughts about short term rentals? Tax, no tax, inspections? Reach me at mike@massconstruction.org, and let’s connect on linkedin.
Mike also teaches Massachusetts CSL test prep and can be found at: http://www.codesafema.com
Great article—I’m following this debate closely and am anxious to see how it plays out. I do not, however, think the Uber/taxi debate has been resolved.
good point Melinda. I guess not resolved but subsided.