Made increasingly popular by websites like AirBnB and Home Away,
the availability of short term rentals have arguably been a boon to the Maine
economy (to the tune of over $26 million in
2016). Not only does this model within the sharing economy allow
individuals to rent out unused rooms to supplement their monthly budgets, but
they increase the availability of cheaper rooms and apartments for would-be
vacationers. Maine does, after all, support a nearly $6 billion tourism industry.
However, short term
rentals present a bevy of problems that municipalities across Maine have only
recently begun to tackle. The three most prevalent are:
1. Zoning Violations: Seekers of short term rentals are often
attracted by the opportunity to stay in a quiet, established neighborhood,
rather than at a generic hotel. Therein lies the problem; short term rentals
often violate the neighborhood’s underlying zoning . Most units listed on
short term rental websites are based in single-family residences, either as the
rental of a single room, or more often, the rental of an entire residence —
effectively converting single family residences into a lodging houses, a
use that is often prohibited in residential districts. This dynamic can
also turn quiet
residential streets into boisterous ones, with
previously-occupied homes morphing into small hotels each and every week,
prompting consistent complaints from neighbors.
2. Code Violations and Under-regulation: When they were constructed, most short
term rental units were inspected and approved as single-family or multi-family
residences. Because of this, local Code Enforcement Officers almost
certainly did not ensure that the homes were outfitted with
the necessary life safety equipment, think smoke detectors and CO detectors, or
that they had the necessary points for ingress and egress required of
traditional lodging units like hotels, motels, and inns. As such, short term
rental units likely create compliance issues that other
lodging accommodations would not. Their owners also may not carry
sufficient commercial liability insurance to protect them should any issues
arise. These complaints are often brought by members of the State’s hotel
industry, who do have to comply with stringent, and often
costly, regulation.
3. Housing Stock Shortages: It has been argued that the proliferation of
short term rental units has harmed the year-round rental housing markets in
Maine’s larger towns and cities. For example, consider a real estate investor
who purchases a small house in a quiet Portland neighborhood. He or she could
rent it to a local resident for $2,000 a month, or the house could be listed on
AirBnB for $100 a night, leading to a much larger return. This sort of profit
margin has prompted out-of-state investors to swoop in and scoop excess housing
stock — and while this approach could work for the investor, it leads to
that house being taken off the year-round market, leading to a general increase
in the price of rental housing. Housing advocates have connected these dots,
pointing out that if unchecked, short term rental units could create negative
effects for those struggling to find affordable housing.
So what is a municipality to do? Not surprisingly, those Maine
towns that have tackled these issues have come up with a number of different
approaches. Portland,
for example, has recently considered a new set of regulations that would
endeavor to rein in the rapid growth in short term rentals. Included would be
an annual registration and inspection requirement (to promote safety), and a
city-wide cap on units that are not owner-occupied (to combat an ongoing
housing shortage). Towns in York County, like Ogunquit, have also added an
annual registration requirement and are ramping up enforcement against owners
who don’t comply. Others, like Rockland,
have required planning board approval for any short-term rental of an entire
residence, rather than a single room within an owner-occupied house.
Yet not all Towns are going along for the ride. Many coastal and
ski-resort towns, that rely heavily on tourism for general revenue,
have decided to simply let short term rentals be, judging that a “the more the
merrier” approach was best. Instead of adding new regulations, they remain
content dealing with issues posed by short term rentals on a case by case
basis, and using existing parking, noise, and nuisance ordinances to do the
heavy lifting.
The bottom line is that municipalities have only recently begun
to grapple with the opportunities and issues that short term rentals present.
There is certainly no “one-size-fits-all” approach, but municipalities across
Maine should give some thought to this new area of the law. Although most
short-term rental issues may seem to only affect larger towns
and cities, all municipalities should look at taking steps to better understand
the unintended impact that this new type of property can create.
Of course, increasing
regulation can also present problems for those who wish to rent their own
homes. Regardless of which side of the equation a party is on, Bergen &
Parkinson is eager and ready to help.
For more information, contact Ben McCall at
207-985-7000, or by email at bmccall@bergenparkinson.com.
