Online markets for overnight and short-term homestays (such as AirBNB and VRBO) have grown exponentially over the past decade, particularly in prosperous urban areas, tourist destinations, and near economic anchors that draw in visitors (like universities). As short-term rentals (STRs) have taken up a small but significant share of housing in some areas, the growth in the cost of long-term housing has risen considerably. Although there is no one cause for the rapidly increasing cost of housing, there is a growing body of evidence that suggests that the growth of STRs has fueled some of the price increases in some places. There is a growing concern in these STR-heavy markets that neighborhoods are slowly being turned into hotels, especially as the country faces a housing shortage generally.
Cities and towns can restrict STRs under state law. A growing number of communities, particularly in the mountains and along the seacoast, have done so in recent years. By 2022, over thirty cities and towns in the State had adopted some form of regulations restricting STRs. Many simply amended the Zoning Ordinance and added a definition and a new use category; some communities have required owner occupancy of a building with an STR; a number of municipalities also clarified the process for review. Some municipalities are allowing maximum occupants per room, maximum nights rented per year, fees for registration and inspection, and other restrictions.
STRs can take many forms. For example, they can be owner-occupied (where the owner rents a room or accessory dwelling for extra income). They can also be seasonal rentals by “snowbird” owners. They can also be owned by professional STR operators, who buy homes (sometimes many homes) for the express purpose of converting them to STRs. (The latter was increasingly common in the late 2010s and early 2020s, though that business model is becoming more difficult with increasing regulations, competition from the hotel industry, and higher interest rates.) Homes can operate as STRs sporadically or full-time.
There is not, however, one definition that is mandated and communities are mostly free to define STRs as they choose in their zoning ordinance. Your community may want to regulate all, some, or none of the variants of STRs, but it should consider as many variables as possible in its regulations, in order to prevent bad actors from gaming the regulations.
STR regulations can…