Short Term Rentals – Moving Forward to a Solution for Raleigh

Raleigh IS moving towards legalizing short term rentals. Raleigh’s short term rental task force recommended three types of short term rentals. As Council and the residents consider what is best for Raleigh, here is how the task force’s recommendations compare with those of Asheville, Austin, and New Orleans.

Asheville

In June 2017 Raleigh’s Short Term Rental Task Force delivered a report containing definitions and recommendations for regulating short term rentals. Since that time we have obtained more information including what City Council recently learned from a trip to Asheville where we met with Asheville’s Mayor and city officials.

Raleigh’s STR Task Force recommended three types of short term rentals referred simply as Type I, Type II, and Type III:

Type I rentals – defined as short term rental of less than 30 days in which the owner or property manager is present during the entire period of the rental.

Type II rentals – defined as short term rental of less than 30 days in which the owner or property manager is not required to be present during the entire period of the rental, but must reside on the property for more than 180 days of the year.

Type III rentals – defined as short term rental of less than 30 days where neither the owner or property manager resided on the property.

It is instructive to compare these definitions to what Asheville has implemented. One type of short term rental is called a “homestay.” Homestays are rentals of up to two guest rooms where overnight lodging is provided for compensation in a residential district. Homestays are stays limited to less than 30 days and are managed by a full-time resident of the property who is present and residing in the home when lodgers are present.

In order to be “present during the homestay term,” the full time resident shall be at the property overnight and not away on vacation, visiting friends or family, traveling out of town for business or personal reasons, etc. during the homestay term. However, the full-time resident may be temporarily absent from the property for purposes related to normal residential activities such as shopping, working, attending class, etc.

Asheville’s homestays most closely correspond to the Task Force’s Type I rentals. Asheville allows other short term rentals that are for 30 days or less that are not homestays. Those short term rentals are referred to as short term vacation rentals (STVRs) and are restricted to certain non-residential districts that allow lodging. STVRs most closely correspond to the Task Force’s Type III rentals.

Asheville does not provide short term rentals that correspond to the Task Force’s Type II. However, if a property doesn’t meet the homestay requirements, an applicant can submit a conditional use zoning for a STVR. My interpretation is that this would be the mechanism for allowing whole house rentals in residential districts.

Aside from the general definition of a homestay, Asheville has several requirements for them:

  • No activities other than lodging shall be provided
  • No additional displays of goods, products, services, or other advertising shall be visible from outside the dwelling
  • No additional off-street parking is required
  • Only one homestay shall be permitted per lot/parcel
  • Homestay permits shall be limited to one person at any given time
  • No signage shall be allowed for homestays
  • The length of stay of guests shall not exceed 30 days
  • Exterior lighting shall be residential in nature and shall comply with the lighting requirements of the UDO
  • The homestay owner or operator shall maintain liability insurance on the property, which covers the homestay use and homestay guests
  • The homestay owner or operator must pay any applicable taxes, including occupancy and sales taxes, to the appropriate governmental entity
  • The homestay must be reviewed annually and inspected for compliance

To compare, let’s consider the details of what the Task Force recommended for Type I rentals.

  • A Type I short term residential lodging facility must have a resident manager. The resident manager may be either the property owner of the Short Term Residential Lodging Facility or another person appointed by the property owner.
  • This resident manager must be domiciled on the premise for at least 181 calendar days per year and must be present in the dwelling unit throughout the rental period. Proof of address of the resident manager and telephone number must accompany the application.
  • There shall be a maximum of five total bedrooms permitted within a Type I short term residential lodging facility.

There are no caps for either Asheville’s homestays or Type I rentals.

Austin

Austin also defines three types of short term rentals: Type 1, Type 2, and Type 3.

Type 1 are owner-occupied or associated with an owner-occupied principal residence. Austin includes the rental of an entire dwelling unit in their definition of Type 1. Austin also defines Type 1 to include only part of the unit, at a minimum a sleeping room (with shared full bathroom), is limited to a single party of individuals, and the owner is generally present during the rental.

Austin requires the short term rental applicant to prove that he or she owns the property as their primary residence.

Type 2 are not owner occupied single family or duplexes. Austin places a cap on the percentage of STRs allowed to legally operate in each census tract of the city. Type 2 rentals are only allowed in certain commercial zoning districts:

  • Central Business District (CBD)
  • Downtown Mixed Use (DMU)
  • Planned Unit Development (PUD)
  • General-Retail – Mixed Use (GR-MU)
  • Commercial Services – Mixed Use (CS-MU)
  • Commercial Services – Vertical Mixed Use (CS-V)
  • General Retail – Vertical Mixed Use (GR-V)

Type 3 rentals are also not owner occupied but are limited to multifamily properties such as apartments and condos. They include the rental of an entire unit. Applicable geographic caps must be adhered to. It appears that the distinction between types 2 and 3 is that Type 2 rentals are limited to certain commercial districts whereas that restriction isn’t stated for Type 3 rentals.

New Orleans

New Orleans also defines three types of short term rentals:

  • Accessory Short Term Rentals
  • Temporary Short Term Rentals
  • Commercial Short Term Rentals

Accessory rentals are owner occupied and limited to three bedrooms. The owner must be present during the rental.

Temporary rentals require an in-town property manager who is available at all times while the unit is rented. Temporary rentals are limited to 90 nights per year. Occupancy is limited to 2 guests per room with a max of 10 guests, whichever is less. Entire units can be rented.

Commercial rentals are limited to 5 bedrooms and 10 guests. The owner/occupant does not need to be present during the rental period. There is no limitation on the number of rental nights per license year. Commercial rentals must be in a non-residential zoning.