In town after town across the county, local officials are grappling with the proper way to approach the regulation of the short-term rental phenomenon that is changing the property rental landscape nationally.
Short-term rentals are typically defined as rental of a residential housing unit for a time period usually less than 30 days and never more than 90 days depending on the state and jurisdiction. These units could be an entire home, a condo, an accessory apartment, or even just a room within a house.
This kind of activity between a property owner and a renter has been around for a very long time. What has changed in the last decade is the digital empowerment of the transaction, making the connection between host and renter easier. Apps like Airbnb and Vrbo have created a new marketplace and the response has been explosive.
AirDNA, a short-term rental data analytics firm, lists 988 active rentals in the 08204 zip code that takes in Cape Island and some territory to the north of the canal; 39% of those rentals are listed on Airbnb, 47% on Vrbo, and 14% on both. The housing units are mostly entire homes with an average capacity of accommodations for eight.
These rentals come in all shapes and sizes, priced for seasonal or offseason renting. In the listings, one will find a bungalow in Strathmere for $300 a night after Labor Day. There is a North Wildwood condo at $227 a night in December. You can spend Thanksgiving in the county in a Cape May Point cottage for $385 a night. Summer is going to cost you, with a private room only in a Wildwood residence going for $345 a night in July or a four-bedroom home in the Crest for $900 a night in peak summer.
Now, with the volume of such rentals increasing rapidly, local governments are playing catch up with regulations. As ordinances are introduced at governing body meetings, the discussion is usually about the need to ensure that safety rules are being complied with, fire inspections being among the leading topics. Of course, one has to identify these short-term rental units before one can inspect them. This usually leads to some form of licensing rules, complete with license fees and penalties for failure to register.
Another argument made is that the expanding volume of short-term rentals places a heavier burden on the municipality for services from solid waste removal to policing. Those services, the argument continues, should be covered by user fees in the form of license revenue or occupancy taxes rather than being allowed to default to taxpayer money in the general budget. Towns that decide to do an analysis must not only look at added costs for services without also considering services the property owner is paying for but not receiving, such as for schools, which constitute half of the local tax burden in some communities.
Proponents of this surge in short-term rentals see significant value in the new trends and don’t want regulations to dampen growth. They point to the fact that such rentals provide visitors with the feel of a neighborhood rather than the impersonal experience of a hotel in a commercial district. They point to analysis that show a positive economic impact on the community and a boost for tourism.
Those less favorably disposed to the new lodging trend see an intrusion of tourism into their residential neighborhoods, bringing with it excessive noise, after-hours partying, and parking competition.
However one looks at regulating short-term rentals, the issues can be complex and it is important that local municipalities not treat them as simply new revenue sources.
We need to tease out the strategies that allow this new phenomenon to bolster tourism, extend the tourist season and permit homeowners to tap a previously unavailable revenue stream that helps pay the bills.
Simultaneously, we need to be open to the potentially negative impact of short-term rentals on a community. Ensuring safety is important. It is also important to protect neighborhoods from experiencing anti-social behavior and the noise and parking concerns more common in commercial hotel districts. Lastly, we cannot forget the potential longer-term impacts of this new trend on the housing stock in our communities.
An appropriate level of regulation will not be easy to identify and enact, but it is important that our local officials approach the problem with a true sense of its multifaceted nature.
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From the Bible – You have been called to live in freedom, Galatians 5:13
