Regulating Short Term Rentals:Council Files Walsh’s Motion Establishing Guidelines

Boston City Council filed Mayor Martin J. Walsh ordinance on Wednesday, Jan. 24, establishing guidelines and regulations to better track and regulate short-term rentals in the City of Boston.

As a new global industry that has a strong presence in Boston, short-term rentals provide both economic opportunities for residents and alternative temporary accommodation options for visitors.

The new regulations put forth in the ordinance aim to capture the growth of Boston’s growing home-share industry, while including deterrents to help prevent operators from monopolizing Boston’s housing market with short-term rentals.

In addition, the regulations are aimed to provide a standardized framework for regulating these units that meet the evolving needs of the industry, provide protections for occupants and minimize the impact on surrounding neighbors of these units.

The ordinance was filed to the Committee of Government and Operations, and a hearing date is yet to be set.

“Preserving Boston’s affordability is key to keeping our communities stable, and ensuring every person and family who wants to live here can afford to do so,” said Walsh. “This ordinance is an important step towards our goal of reducing housing costs by creating disincentives to taking units off the market for use as short-term rentals.”

“It also allows for the continued use of short-term rentals in scenarios that are non-disruptive to our neighborhoods and support our tourism industry. Boston is a great place to live and visit, and we look forward to responsibly incorporating the growth of the home-share industry into our work to create affordable housing for all,” Walsh added.

The regulations include provisions that restrict the number of nights that a unit can be booked per year, and require that each unit register with the City of Boston and pay an annual license fee.

The ordinance takes a three-tiered approach to classifying short-term rental units:

Limited Share Unit: consists of a private bedroom or shared space in the operator’s primary residence, in which the operator is present during the rental. The fee associated with this classification is $25 per year.

Home Share Unit: consists of a whole unit available for a short-term rental at the primary residence of the operator (unit in which operator resides for at least nine months out of a 12 month period). The fee associated with this classification is $100 per year.

Investor Unit: consists of an entire unit available for a short-term rental in a whole dwelling that is non-owner and non-tenant occupied. The fee is $500 per year.

“We are really pleased to see the Mayor’s office take the time to work on this,” said Steve Fox representing the Alliance of Downtown Civic Associations (ADCO). “The Walsh administration was waiting for the state legislature to pass the rules with the taxation scheme so that the City can plug in their rules later, but I’m glad to see the Mayor start to tackle this now. The City and the Mayor can’t afford to wait any longer because who knows if the legislation will ever go through.”

Fox said that one of the key issues for ADCO, which includes neighborhoods from the North End, to Beacon Hill, Fenway and the Back Bay is that the ordinance creates an investor category.

By allowing the investor category to continue, Fox said, the displacement and all the other problems seen today will continue to exuberate and grow.

He also said that many residents had some concerns over the 90-day limit because there are still around 45 weekends of the year. Just renting out on Friday and Saturday nights could be profitable enough to keep the unit out of the housing stock.

Fox said continued talks need to happen in order to shorten the limit – New York City has a 30-day limit and after speaking with other ADCO members, he said residents would like to push it to closer to a 60-day limit.

In a newsletter, City Councilor Michelle Wu said that the “investor unit” category is still a large loophole that companies will use to displace long-term tenants. Even with the 90-day limit, a corporation could buy a building, rent it out 45 weekends of the year (Friday and Saturday nights) and perhaps make enough money to keep it as Airbnb-only.

Fox noted that other notable cities, New York City, Los Angeles, and San Francisco have had City Councils phase out any investor class in short-term rentals. “If we have an investor class it would mark us as the exemption compared to what the rest of the world is going in terms of dealing with this,” said Fox.

Fox said they liked the hospital exemption that will allow people to stay in short-term housing as they support family members in the Boston hospitals.

In addition, the regulations provide protections for the occupants of the short-term rental unit by prohibiting any property with outstanding housing, sanitary, building, fire or zoning-code violations from being listed.

To assist with the enforcement of regulations, booking platforms will be required to provide the City with monthly data and information relative to the short-term listings that detail the location and occupancy numbers.

Data shows that the availability of short-term rental units has a direct correlation to housing costs. A 2016 study by UMass Boston found a 0.4 percent increase in rent prices due to increases in Airbnb listings, and a nationwide UCLA student also found a 0.42 percent increase.

In addition to rent increases, the commercialization of short-term rentals in residential dwellings and residential neighborhoods has the potential to reduce availability of long-term housing for owners and tenants alike, and is contrary to the City’s goal of adding 53,000 units of housing across a variety of income levels by 2030.

“We are very pleased that Mayor Walsh has addressed the issue of AirBnB and other short-term rentals in the city,” Suzanne Besser, President Beacon Hill Civic Association. “The ordinance he proposes is a good beginning and we are interested in continuing the discussion with him to ensure that such rentals benefit homeowners without disrupting neighbors’ lives or encroaching upon our much-needed housing stock.”

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