Short Term Rentals: Regulations to Consider

While renting out a room or your home when you are not using it to make extra income is not a new concept, when it went highly main stream with sites like Airbnb, HomeAway and VRBO, regulators started to take notice and spurred by complaints from the neighbors and the hotel industry, home owner associations, cities and states are taking steps to create regulation.

If you are considering offering a room for let in your own home, converting a rental property or purchasing property for the purpose of short- term rental, then you need to put on your business person hat and do your research to find out what you can and can’t do.

With regulations changing on a regular basis and many cities having no online information, this can be a daunting task and with every city having different rules, it’s not possible to list out a set of rules.

Our goal with this article is to give you regulatory considerations in general so you can do the home work on your particular property or location.

Home Owner Association:

Some HOA’s have rules about rentals in general, some have rules about short-term rentals and some have no rules at all. It is important to verify with the Home Owner Association or the Property Owners Association what their rules are be for a home, condo or apartment unit. Some HOA’s are retro actively changing their rules to prohibit short term rentals and have been challenged. You don’t want to buy a property in an area governed by a Home Owner Association only to find that it’s against the rules or to have the rules changed on you.

Other associations in vacation areas may have built the entire area as a resort and then sold units to home owners with the plan that the association would manage the entire resort, offer amenities and property management of the units when the property owners are not in residence.

County or City Planning and Zoning:

Some municipalities may have restrictions on the zoning required for a short-term rental. Or they may have specific size requirements that may make your shortterm rental fall into a different category, such as a Bed and Breakfast and governed by different rules and regulations.

Business License

If you are doing business within city limits, you may need to check to see if you need some sort of a business license. And while you are at it, check with the Health Department and or the Fire Department to see if there are any health and safety requirements that must be met.

Sales and Other Taxes

As you rent short-term, you will be required to obtain a Sales Tax License with your state and to collect Sales Tax and remit. In some states, some rental platforms will collect this and pay it for you, but it may not. So check. You may also have local income taxes, like the Kansas City Missouri 1% tax that may apply or Tourism Taxes.

The Neighbors

Some areas may require you to get approval of your neighbors

Kansas City Missouri as an Example

Found on the city website at kcmo.gov/planning/short-termrentals, the guidelines provided are of not much help.

First you have to determine if what you plan to do is short term rental, which is defined as offering a property in the right zoning for less than 30 consecutive days PLUS not (renting for less than 30 consecutive days and providing meals),

• Defined as a hotel and

• Providing lodging and board in an accessory to a principle residence.

Second you click on a little sign to get to a questionnaire to find out the answers to various questions that ultimately give you a permit application type to fill out.

What type of zoning

It seems that if the property is zone residential there are a lot of questions, but if it is zoned anything other than residential you can have a short-term rental and you are directed to a Registration Application.

If your zoning is Residential then it wants to know if it is an R-7.5 or R -10, then it wants to know if it is a Registered Historic Landmark or in a Registered Historic District. If so, then it directs you to get a Special Use Permit Application

If your zoning is not R-7.5 or R-10, then it wants to know if the property’s owner or tenant on lease plans to reside in the property for 270 days per year. If you answer yes it then wants to know if it is a Carriage House, Multi-Family or a Single Family which then directs you to an Administrative Approval Application.

How Often Will You Live There

If you answer that you do not plan to reside in the property for at least 270 days then it wants to know if you are going to rent out Seasonally – less than 95 days per year, or Year-Round.

Seasonal or Year-Round Rentals

If you answer Seasonally, it takes you back to the Carriage House, Multi-Family or Single- Family Questions. If you answer Year- Round you also get the Carriage House, Multi-Family or Single-

Family questions, but then it wants to know if you have the consent of 55% or more of the adjacent property owners. If you answer yes, it directs you to an administrative approval application and registration. If you answer no, then it directs you to a Special Use Permit

We suggest going to the website to test a specific address.

The site does not list out any fees, however the Kansas City Star Reports that All hosts will pay a onetime administrative fee of $259 and then $175 annually. Hosts in historic districts or in certain other circumstances must apply for a $596 special use permit. Violations a fine $200 for a 1 st time violation and up to 10 days in jail

An online search of individual metro cities turned up no other information on regulations for short term rentals other than Prairie Village requiring a permit.

Vacation Destinations

If you are considering a Vacation Rental property, there are a couple of other things to consider.

First, all the same rules and regulations as above do apply. Some Cities, Subdivisions and Home Owner Associations may or may not allow. You may need to have permits and you definitely need to pay taxes.

But in some vacation destinations there may be entire resorts or condo complexes designed as vacation rental, where a person can buy their own unit for their own use part time and then rent it out to vacationers when not in use. Some of these resorts may or may not allow you to manage on your own outside of the resort’s onsite management. And may have restrictions on how the unit is to be furnished when on their rental program.