Rental property investment is nothing new. For years, short-term rentals have given travelers and remote workers a homier and cozier alternative to hotels. After the tightened restrictions of the COVID pandemic on hotels, short-term rental investment hit the roof. This significant rise continues to reign as the world is healing and returning to normalcy.
Undoubtedly, investing in vacation rental property continues to grow relentlessly, proving that it wasn’t just a pandemic adaptation. The accessibility and flexibility of these short-term rentals have transformed the tourism sector.
But, the sudden surge of vacation rentals has left several local governments with the problem of regulations. If you wish to invest in short-term rentals, here’s a practical guide to the effective regulations to adhere to.
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What’s It About Short-Term Rental Regulations?
As a short-term rental investor, you must do everything possible to succeed. It’s crucial to rely on the most perfect and effective short term rental strategy to benefit from high ROI within a short period. The reality is that; making real estate passive income takes work to achieve. Even with the skyrocketed prevalence of short-term rentals, only an ideal approach would get you to your desired destination.
But still, the rapid success of vacation homes is only good news for some. Ever heard that too much of something can be poisonous? Several widespread complaints about short-term rentals include;
- Hike in local rents
- Reduced availability of long-term rentals
- A flood of tourists
- Excessive noise
- Parking issues
- Trash and fairness problems.
Conversely, local governments must focus on competing priorities like; housing availability and affordability, community well-being, health and safety, and tourism impact. While these calls for laws and regulations on vacation homes, enforcement has been challenging. Here’s why.
Hosts and guests find some regulations challenging to understand because of the complexity or poor presentation. Also, most states need an organized procedure for inspecting people who do not comply with the regulations. Plus, it’s hard to tell how and when people use short-term rentals.
Regardless of the challenges, local governments still have a significant chance of passing regulations effectively. This will balance competing priorities, making way for enforceable community needs. Ultimately, guests and locals will enjoy the benefits of short-term rentals while reducing the negative impacts.
What’s The Solution? (Guide for Short-Term Rental Regulations)
Establishing a regulatory framework for short-term rental investments is vital for a steady and successful outcome- more like a win-win situation for guests, locals, and investors.
Here’s how to regulate vacation homes effectively.
Employ the Reliable Registration Systems
A framework that tracks and understands rental property investment strategies can help to easily define short-term rentals’ positive and negative impacts. Still, it helps lawmakers create data-driven regulations for verified issues and desired outcomes.
The best way to get a steady framework is through a registry. A reliable registration system must feature a data security system to protect registrants’ personal information completely.
Advantages of local governments using registration systems include;
- Identifying the exact number of short-term rentals
- Collecting tax revenue
- Improving communication and educational interactions
The registration system may need help with issues like awareness and ease-of-use. Fortunately, technological advances can help registrants to know and adapt to the process effortlessly.
Use Complaint Reporting Services
Several short rental platforms comprise reporting systems that help get problems to local authorities. Still, other platforms allow guests, the community, and authorities to report issues to the specific company. Aside from reporting issues, these platforms also ban problematic operators from hopping to another platform.
Another method of reporting service is the use of 24-hour hotlines. Phone hotlines address short-term rental-related grievances effectively. The hotlines help neighbors and residents report nuisance incidents like noise or theft. This way, there’s a direct contact for reporting issues to the vacation homeowner or manager.
Consider the Safety Standards
Those who want to buy a vacation rental property should know that it’s for residential use. Often, the regulations differ from those of hotels. Like any rental, vacation homes should comply with the local rental codes.
Governments often take the necessary steps to create safety standards for short-term rentals. Safety standards include;
- Fire alarm and safety equipment,
- Security cameras
- Security guards
- Unbreakable door and window locks
- Regular safe-focused meetings
Local governments also require short-term rental owners to sign a form agreeing to the local safety requirements. This helps to enforce and follow up on adherence.
Prioritize Insurance Requirements
An ideal rental property investment strategy should also adhere to regulations on insurance requirements. This critical area guarantees everyone’s safety and peace of mind.
Typically, homeowner’s insurance policies don’t directly include short-term rental investments, hence rising the need for more accountability on vacation homes. But, the problem lies in how authorities define the type of necessary liability insurance.
Short-term rental insurance policies may also initiate safety inspections for fire extinguishers, smoke alarms, and chimney cleaning. Still, some governments have opted out of allowing STR-specific insurance policies in their regulations. This is because of the danger to the city in case of incomplete or no coverage.
Among the top complaints against investing in vacation rental property are the nuisances. The locals and authorities have issues with excessive noise and limited parking due to the existing short-term rentals. According to a U.S. survey, South Lake Tahoe residents complained extensively about STR-related noise, trash, and parking.
Noise is among the most mentioned disturbances with vacation rentals. That’s why local governments are taking steps to prevent and reduce noise incidents.
Systems like hotlines and noise monitoring systems help in handling the noise issues at any time. Besides, some states have included the noise monitoring system as a vital requirement for short-term rental licenses.
Nonetheless, most governments have mutual nuisance regulations for all properties. They ensure that STR neighbors can report the violations and issues accordingly.
Still, lawmakers can endow the vacation rental regulations with specific nuisance prevention measures like;
- Garbage disposal systems
- Evidence of adequate parking
- Occupancy limits
- Selected responsible party
Short-term rental investment is increasingly becoming vital to tourist and transitional housing globally. The benefits regarding tax revenue and economic growth within communities are noticeable.
Nonetheless, cities must create and implement fair, effective, and customized regulations for vacation rentals. Regulations can positively impact the industry’s benefits and protect the local community from nuisance and safety problems.