Tech-Enabled Tourism fighting a continued legal battle in North Carolina

September 11, 2019

     Websites like Airbnb, VRBO, and HomeAway have quickly become household names, known for their short-term rentals that are easily reserved on their websites and mobile applications. These popular sites are an online marketplace that allow hosts to earn an income from their properties, whether that might be an empty house, apartment, room, or shared space. The websites are an intermediary that connect hosts to travelers that are looking to stay in the area and have expanded the market for travel accommodations to cities small and large, from New York City to Banner Elk, North Carolina.

     Guests enjoy the ease of booking on their websites and many individuals prefer to stay at these short-term rentals because they can be less expensive for more space and provide a unique experience by staying in a home rather than a hotel. As these sites have grown, short-term rentals have boosted the economy in cities by providing more lodging, promoting tourism, and giving local homeowners additional income. However, local governments have become concerned about the negative impact of these short-term rentals on the local communities. A large number of rentals in a city may contribute to housing shortages and lessens the possibilities for individuals to make an area their permanent home. Current residents are also concerned about introducing short-term rental properties and tourism into residential neighborhoods. Among these concerns are worries about increased numbers of cars on the street, loud neighbors, and safety risks.

     Several cities, including Chicago, New York, and San Francisco, have passed legislation aimed at regulating short-term rentals. In attempts to control these companies, cities have taxed them, limited the number of days places can be rented, limited the rentals to certain zoning areas, and have even banned short-term rentals in their communities. Despite numerous regulations, local authorities have had difficulties enforcing the laws because of the high volume of rentals, hosts, and different websites. Authorities are needing to turn to data searching tech tools in order to find and monitor illegal rentals.

      Larger cities have had ongoing legal battles with short-term rental companies and some, such as San Francisco, have developed a cooperative partnership with websites like Airbnb. Other cities have spent years working on regulatory legislation and are still struggling to create and enforce laws with the desired effect. New York City created some of the strictest legislation, banning short-term rentals unless the host is present, but thousands of illegal rentals continue to proliferate in the area.

     North Carolina cities have also seen an increase in the number of short-term rentals over the past few years. Travelers are drawn to the state’s coasts for beautiful beaches, like Wrightsville, mountains for hiking, like Asheville, and cities for work, like Charlotte. In Wilmington, North Carolina, local authorities have spent years holding public meetings and debating legislation to regulate the short-term rental economy. When these companies originally began to host in Wilmington, the city’s land development code did not apply to these types of rentals. In January, whole-house rentals were approved to be in residential districts, but not without limitations. These whole-house rentals may not allow events, must be 400 feet from another rental, and must register with the city annually for a cost of $300, along with several other requirements.

     In addition to Wilmington, some North Carolina cities have passed legislation regulating short-term rentals, while others have left it to zoning ordinances already in place. In Raleigh, North Carolina, authorities have agreed to allow short-term rentals, but not of entire homes. The new legislation requires hosts to notify neighbors, purchase a rental permit, limit guests to two adults, and does not allow for events to be held at rentals. Hosts that are in violation of these regulations risk being fined $500 a day.

     Although Raleigh began to finalize the new legislation in May, “Governor Cooper signed into law Senate Bill 483, a one-page clarification to the Vacation Rental Act” in July, which may preempt the new legislation. The new senate bill prohibits local governments from requiring hosts to obtain a permit to rent their property, which is one of the requirements of the new rental legislation. The developments of these legislations are quickly changing and the interaction of the two will be addressed in the coming months.

     The popularity of short-term rentals has continued to grow despite the increasing legal battles between the companies and the cities they conduct business in. As more rentals continue to pop-up, more regulations do as well, and the legal issues will continue to abound. The legal community, as well as homeowners and rental hosts, should keep a close watch on cities like Raleigh that not only have legislation pending, but also have conflicts with current state rental and zoning regulations. The results of new rental legislation passed will have a broad impact that will reach not only local authorities but also short-term rental companies, homeowners, rental hosts, and travelers.

Chloe Altieri

September 11, 2019