When running a vacation rental, it is important to be compliant with the rules and regulations that govern this type of business in your local community. Not just to be a good citizen and neighbor, but if you operate illegally, you risk incurring huge fines or your vacation rental being shut down. That said, rules and regulations vary greatly from city to city, but here are some basic steps you must always take to ensure that you are complying with local law.
1. Know the regulations in your local community
The first step in being compliant is figuring out what the exact rules and regulations are in your community. Not all places have specific short-term vacation rental ordinances, and many communities regulate the practice of home-sharing and short-term rentals through their zoning, business licensing and hotel ordinances. When searching for answers, you may therefore have to first locate these rules before you can even begin to understand what the requirements are.
If you find it hard to navigate the local ordinances, you may consider contacting your local government directly. When doing so, you will find that the rules vary considerably from community to community. Some cities have very detailed orders restricting for example the number of days you can rent out or the amount of people that can stay with you, or placing a restriction on rental activity in certain neighborhoods or types of housing. Some cities have even outright banned vacation rentals! On the other end of the spectrum, some cities and counties have no such restrictions at all.
2. Get the required permits/licenses and pay your taxes
Most cities in North America require short-term vacation rental hosts to have some sort of permit or license to be allowed to operate. While the exact permit/licensing requirements can vary, it often does not matter if you are renting out only one room or an entire house, ten days a year or year-round. Put simply, if you want to list your property on a vacation rental platform, you first need to get hold of the proper permit or license. The exact names of these will be subject to change, but they are often called a ‘business license’, a ‘land use permit’, a ‘lodgers tax license’ or a ‘TOT certificate’. In many areas, you may even have to get more than one of these, as different ordinances require different registrations.
As with the permits, the rules concerning taxation greatly depend on where your vacation rental is located. It can be per night or per person and collected on the local or state level. In some bigger cities like Portland, OR and San Francisco, CA, Airbnb is now automatically collecting taxes. However, for most platforms and in most other cities, it will be up to you to collect, report and remit lodging taxes from your guests. Failing to do so can lead to steep penalties.
3. Be a responsible host
Besides the local rules pertaining to licensing and taxation, you and your guest will also need to comply with your community’s noise, parking, trash and other ordinances. Most of these are common sense rules, created to address everyday issues such as vehicle storing, garbage disposal and noise pollution. While common sense, it is best practice to notify your guests about these rules both in the contract and by posting signs on the inside of your property’s external doors. This way, you will minimize the risk of having to deal with possible complaints from neighbors.
Another important thing to keep in mind is ensuring the safety of guests at all times. For example, make sure your vacation rental is equipped with smoke detectors and fire extinguishers and always inform your guests of what to do in case of emergency. This kind of information can also be included in your vacation rental agreement and welcome pack.
By following these simple steps, you should be ready to run your vacation rental in a responsible and compliant way. The key lesson to take away is that rules and regulations are not uniform across the world. The first step is always to understand what the current vacation rental rules are in your community and then ensure you follow these rules. Add some common courtesy to this and you are all set to make the most out of your vacation rental!
About the Author
Ulrik Binzer is the founder and CEO of Host Compliance, the industry leader in short-term rental monitoring and compliance solutions for local governments. A pioneer in the short-term rental enforcement solution space, Ulrik developed the first compliance monitoring tools and now uses his expertise and insights to help local governments across North America implement, monitor and enforce short-term rental regulation.