Short-Term Rental Legislation

Prior to the pandemic, the short-term rental or vacation rental industry was burgeoning. The idea of having a home-like environment to enjoy while traveling was increasingly appealing for leisure as well as business. However, with the massive travel restrictions that came about due to the COVID-19 crisis, the industry took a big economic hit. Additionally, local governments that had already been concerned with noise and other large gathering problems expanded their regulatory focus to include health-related issues. As a result, short-term rentals have become a seriously hot legislative topic, particularly at the local level.

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The Short-Term Rental Origin Story

Short-term rental and vacation rental accommodations are actually nothing new. Travelers in America have been using private homes for vacation or business travel lodging for nearly a century and a half – and even longer abroad. Generally, these short-term rentals have been more convenient and less expensive than a hotel.

By the middle of the twentieth century, with travel made easier by a new and growing interstate highway system, renting a vacation home became a customary tradition for many. Newspaper ads and listings for short vacation rentals began appearing regularly.

The Vacation Rental Management Association (VRMA) was established 1985, and the first online booking service, Vacation Booking by Owner (VRBO), was launched in 1995. By 2015, the “sharing economy” grew strong and dramatically impacted several industries including transportation, staffing, and hospitality. The vacation rental industry was estimated to be worth as much as $85 billion.

With so much economic potential, the short-term rental or vacation rental business is no longer reserved primarily for large cities or high-tourism locations. It is in nearly every town, providing accommodations for overnight or stays that are weeks long.

Industry growth brings a growth of concerns

With this exponential business growth, a tremendous growth of concern for local governments has also occurred. Without proper legislative regulation, homeowners can rent their property (or even a piece of it; a single room, for example). This can and has led to increased traffic in residential or previously less-busy areas, a rise in noise and nuisance complaints, problems with improper solid waste disposal, property maintenance issues, and more.

Additionally, some communities have seen homes and apartments in entire areas purchased by vacation rental investors. This has further raised concerns regarding zoning and affordable housing. With a housing crisis that already preceded the pandemic, purchases of homes and apartments for use as short-term rentals only exacerbates the problem.

Short-Term Rentals and a Long-Term Pandemic

The advent of the COVID-19 pandemic brought stay-at-home orders and travel restrictions. Short-term rentals saw a sharp decline in bookings. However, with the development and distribution of vaccines, the desire and ability to travel has returned. Vacation rentals are seeing an upturn of demand again.

So as the COVID-19 crisis extends into a third year, regulatory concerns for short-term rentals now also include disease control. To mitigate further spread and reduce risk of infection, health standards, such as cleaning protocols and proof of vaccination are being reasonably considered.

Local Government Legislative Response

In light of the resurgence of the short-term rental and vacation rental business, local governments are taking a close look at their current ordinances regarding housing and in-home businesses. Municipalities are determining what changes need to be made to existing regulations and what new ordinances may need to be adopted to reflect their own community’s stance on these rental properties.

Legislative topics and chapters that are getting the most attention include:

  • Peace and good order
  • Noise
  • Traffic laws
  • Sanitation
  • Zoning
  • Business licenses
  • Property maintenance
  • Health regulations

And a few communities are going so far as to outright ban short-term rental businesses.

Useful examples of short-term rental legislation from the eCode360® Library

If your community is interested in legislating to regulate vacation rental or short-term rental businesses, here are some useful examples that can be found in our eCode360 Library:

Updating your municipal code is vitally important

As local governments continue to adjust and transform digitally to the ever-shifting needs of the COVID-19 era, keeping municipal codes updated has become more essential than ever. It’s important to sustain orderly and accessible knowledge of the most current regulations and resolutions in a timely manner.

We encourage our clients to submit code updates as soon as possible to make sure constituents and local government officials are always referencing and working with the most up-to-date resources. Clients can send legislation to [email protected]. General Code can also work with you to set up a schedule for submitting and codifying your ordinances.

Best Practices for Managing Your Codification Budget

Many of our client communities find it helpful to be on a code update schedule to help manage their budgets throughout the year. Our Client Care Advocates can work with you and explain the options and benefits of scheduled code updates. Give them a call at 800.836.8834 or send an email to [email protected]. They’d be happy to help or answer any other codification questions you might have.


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