Short-term rentals, enabled by platforms such as Airbnb and VRBO, are a big businesses, a boon to hosts, often greatly advantageous for guests, and, for the most part, unregulated in Connecticut. Someone, and we suggest that it be the Connecticut Office of Policy and Management, needs to take the initiative to draft model regulations for local governments and work with the General Assembly in developing a statewide statutory and regulatory scheme that appropriately enables short-term rentals while protecting the interests of all the stakeholders.
In 2018, Airbnb alone supported 3,800 hosts in Connecticut, who earned a total of $35 million in accommodating about 170,000 guests. That’s almost a 50 percent increase in the number of guests from the year before and a 40 percent increase in revenues. The hosts averaged $6,700 from their short-term rentals during 2018. Money like that cuts both ways. It might enable someone to stay on in their home and to live more comfortably. On the other hand, it might incentivize owners to hold properties for short-term rental, rather than sell them to others who would live there full-time or rent them to families for the long-term. A consequence of that is loss of affordable housing.
The state of Connecticut made out as well; Airbnb contributed $5.2 million to the state’s coffers from the time it began collecting the 15 percent hotel tax on July 1, 2016, through June 30, 2018.
Short-term rentals are mostly unregulated in Connecticut’s 169 cities and towns. More often than not, whether and where they are allowed at all ends up being an interpretation of the regulations, with many communities trying to fit the square peg of short-term rentals into the round holes of bed-and-breakfasts, boarding houses or home occupations. The city of Hartford has some regulations, but as of August 2018, no one has applied for the approval required of anyone who wants to rent for more than three periods over more than 21 days in six months, and the city is not pressing for hosts to register. Compliance with local registration requirements has generally been low across the country. Honolulu, for example, estimates only 29 percent registration compliance.
Simsbury, probably more as a holding action and hopefully not a long-term strategy, has simply banned short-term rentals completely, shutting down 17 Airbnb hosts and most certainly others operating from other platforms. Not regulating or total prohibition are not the answers.
There are profound differences between an elderly single person renting out a back bedroom two or three days a month while they are there in the home and the business operator who owns rows of houses or apartment buildings and turns them into ersatz hotels with the alchemy of short-term rentals. How often the property is rented, whether the property is owned by the individual host, whether it is the only property they own and rent out and whether it is a whole house rental or partial rental are all considerations. Some rentals might not be regulated at all; others might be strictly prohibited in some areas. It all depends.
The most important concern has to be safety. It is essential that any short-term rental comply with fire and safety codes, but that is not going to happen unless the hosts register and subject themselves to an inspection.
Some states, like our neighbor to the north, Massachusetts, have statewide legislation, and many municipalities across the country, such as Boston, have developed regulatory programs. Some local regulations have been around so long that they are in their third-generation, such as those in Austin, Texas.
Here in Connecticut we first need to take a hard look at creating state enabling legislation addressing life safety and taxes. Careful attention needs to be paid to limiting state preemption over local regulation.
Second, the Office of Policy and Management—welcome aboard Jonathan Harris as undersecretary of comprehensive planning and intergovernmental policy—in cooperation with the Department of Housing, or someone else at the state level, needs to gather up all of the good information that is out there from the work done by others, and by municipalities across the country, and develop model local regulations with a menu of choices so that the regulations can be easily and closely fitted to local needs.
We need to move quickly.