| As lawmakers decide how to regulate the growing short-term rental marketplace, affordable housing advocates lamented a loss of units for traditional tenants and asked officials to develop a system that gives local officials oversight of their communities’ housing stock.
The Joint Committee on Financial Services, chaired by Rep. Aaron Michlewitz and Sen. Jamie Eldridge, held its final hearing on Michlewitz’s bill (H 3454) that would require Airbnb hosts and others offering short-term rentals to register with the state, establish a tiered taxation structure, and set health and safety standards for the units.
The first two hearings on the bill were held in Lenox and Barnstable, and speakers Tuesday repeatedly highlighted to the committee that different regions of the state have different needs, housing stocks and economies that may warrant discrete approaches to policy-making in the short-term rental arena.
“Nothing in this legislation should preclude a city or town by ordinance or bylaw from regulating short-term rental operators or imposing penalties for violations of those ordinances or bylaws,” Massachusetts Affordable Housing Alliance Executive Director Tom Callahan said. “Airbnb should not be a shortcut for developers and real estate investors to operate illegal hotels in residential neighborhoods. Our neighborhoods deserve better and our housing affordability crisis demands better oversight for this largely unregulated industry.”
City officials from Boston and Cambridge said they are looking to impose local regulations while also addressing a housing shortage, a situation advocates said is exacerbated by the prevalence of short-term rentals that can be more lucrative for owners than a long-term lease.
Mei Qun Huang, a former Chinatown resident, told the committee that after her apartment building on Johnny Court was sold to new owners who wanted to hike her rent by more than $500 a month, her family moved out and the unit was turned into a short-term rental for tourists, as was the apartment downstairs.
“In recent years, a lot of the residents of Chinatown are facing similar situations as me because of gentrification,” she said through a translator. “A lot of the long-time residents and families are being forced out of the community, out of the neighborhoods, and a lot of the Chinatown rental housing markets turned into short-term rentals.”
Michlewitz said the committee is “grappling with” the distinction between a “smaller, mom-and-pop Airbnb-er” and the people and companies that rent units at a higher volume.
Airbnb Policy Director Will Burns told the committee there are ways to limit the effect short-term rentals have on the housing market, including capping the number of nights a home can be rented out and limiting the number of units any one entity can list. He said different jurisdictions approach the issue in a various ways, such as Chicago’s method of offering separate registration systems for homes where the owner is renting out their primary residence and for vacation rentals that are not owner-occupied.
“The commonwealth could put some sort of guardrails or framework around how municipalities can regulate short-term rentals, and then sort of leave the lion’s share of the regulatory power to the municipalities,” Burns told the News Service. “Municipalities may want to allow more room nights rented, maybe Boston wants a higher cap than Cape Cod, so you want to allow for regional variation. You have vacation rentals in Cape Cod and the Berkshires, you have different needs in places like Boston and Cambridge, so a one-size-fits all approach for the state may not make sense.”
Michlewitz’s bill establishes various local options where cities and towns can set their own restrictions on short-term rentals, including limiting hosts to renting out only their primary or permanent residence, limiting the number of days per year a unit can be rented, and requiring commercial or business occupants to obtain a license from the municipality before offering a unit for short-term rental.
It taxes short-term rentals of an owner’s primary residence at 4 percent, while setting a tax rate of 8 percent for hosts who rent for more than 60 days a year and/or have multiple short-term rental units and 5.7 percent for professionally managed rentals like corporate housing.
The Senate version of the fiscal 2018 budget, now before a conference committee, proposes a 5 percent occupancy tax on short-term room rentals in hopes of generating $18 million in revenue, with a local option of up to 6 percent or 6.5 percent in Boston. Michlewitz’s bill includes a local option of varying amounts for each of the three tax levels.
The state’s occupancy tax for hotel rooms is 5.7 percent, with a local option of 6 percent and 6.5 percent for Boston. The state also imposes a 2.75 percent convention center financing fee on room occupancy for hotels and motels in Boston, Cambridge, Chicopee, Springfield, West Springfield and Worcester.
Robert Rivers, the general manager at the Millennium Bostonian, said his hotel pays a total of around $2.6 million in city, state and convention center taxes in the average year. He described levying those taxes on short-term rentals as a matter of fairness and said registration requirements would help hotels understand who their competition is and how to respond.
