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Posted on 10/28/2024 by David M. Dion

Is it time to regulate STR’s?

The Debate over Short-Term Regulations

I’ve been regularly following the debate over whether or not to regulate Short Term Rentals (otherwise known by the acronym “STR’s)”.  But that’s not actually the right question because rentals are already subject to regulations in Vermont. The proper question is, should there be a State of Vermont required Rental Registry in Vermont? And the conclusion I repeatedly come to is a bit surprising to me. That’s because generally speaking I believe there are already far too many real estate related regulations in Vermont.  And the requirement to be on a Rental Registry before allowing any property with one or more bedrooms to be rented would have far reaching impacts. That’s because it would then be much more difficult for rentals to fly under the radar.

Rules and Regulation Chaos

Look I get it. Without rules and regulations, we have chaos.  But over the years I’ve come to believe regulations in Vermont have become excessive and overly restrictive and unnecessarily burdensome. This is not just mouthing off but rather based on over four decades of real estate permit related work.  In two of the most outrageous cases the permits sought took over 20 years to resolve. But there was nothing particularly complicated about those cases. Instead, it was simply zealous opposition based on an overtly anti-business and anti-development culture. And one of the unfortunate consequences of that culture back then is today we now have an untenable housing crisis in the Mad River Valley.

Rental Registry Needed

However, despite these past experiences I find myself somewhat surprised to conclude short term rentals, indeed all residential rentals very much need to be better regulated, and mandating a Rental Registry is the logical way to go about it. Here’s why:

Since short-term rentals gained increased popularity, I’ve been hearing the argument that short-term rentals really have no negative impact on seasonal and/or year-round rentals. Among the reasons given are some property owners state they would otherwise not rent at all if there was no option to rent short term. And no increase in the supply of short-term rentals presumably has no impact on seasonal or yearly rentals. But this is mostly just a thinly veiled excuse to oppose to any sort of regulation.

If the property owners were being forthright then they might simply say if renting short-term was going to be subject to any sort of regulations, then they would choose not to rent. This is a specious argument and veiled by the true underlying reason which is many of those property owners know they would not be able to comply with health and fire and safety codes. In my opinion, if a property does not meet fire and safety codes then the property is likely not suitable for rent in the first place.  It’s really that simple.

Should the Fire Marshall be the Answer?

But here’s the regulatory rub. Admittedly, I have great trepidation every time I learn a State of Vermont Assistant Fire Marshal is going to inspect a property.  That’s because the moment that individual crosses the threshold the property owner will then be subject to whatever recommendations (more often demands) are made. In my experience the Assistant Fire Marshals these days do not have a very good demeanor or bedside manner. Maybe they are not supposed to. But I find at times the recommendations are extra-ordinarily expensive and/or burdensome to comply with, and at times appear to be totally unnecessary.  It’s unfortunate for everyone because this results in more and more real estate agents and attorneys advising property owners to think very carefully before allowing a Vermont Assistant Fire Marshal inspection of their property. And that is not good for anyone.

But here’s the thing. The prospect of encountering an ill-tempered Vermont Assistant Fire Marshal who may end up costing you a lot of money is no reason to not follow the rules. If you don’t like the rules, then seek to get the rules changed or don’t rent.

In theory all residential rentals must follow certain local and state rules. But it is exceedingly difficult for an enforcement agency like the Vermont Department of Public Safety (as an example) to know a property is being rented. As a result, the great majority of rentals fly under the radar. However, if all rentals were required to be on a mandated rental registry, then enforcement of the rules would become easier simply because the enforcement entity would know the property is being rented.

Over my 40 years in the real estate business, I’ve seen many instances wherein the property owner either is not aware of the rules or is aware of the rules but consciously ignores the rules or is aware of the burdens a Vermont Assistant Fire Marshal might place on a property before allowing a rental to take place. And this all leads to an effort to fly under the radar. Those are all scary propositions.

Our Expert Opinion on STR Regulations

At Mad River Valley Real Estate we find ourselves frequently educating property owners about the need to follow the Vermont Fire & Building Safety Code. Indeed, as just one example every single-family residence must have code compliant smoke and carbon monoxide detectors before a sale and transfer of title can take place.  Alarmingly, many properties do not. And if the property owner tells us those rules are not for them, then that property owner is not for us, and we decline the business.

Recently, MRVRE made the decision to no longer offer rental related services.  This is because we would need to ensure our clients adhere to Vermont’s newly created Residential Rental Housing Health & Safety Code. Admittedly, it’s a burdensome code. But our policy decision to not offer rental related services does not mean a property owner should avoid following the rules. Again, if you don’t like the rules, then don’t rent your property.

For these reasons, I suggest STR’s (indeed all rentals) need to be better regulated by mandating a rental registry.  It all really comes down to consumer safety.  If there is no regulatory framework for oversight on rentals then tenants are potentially put at great risk. And often the tenants do not even know it.

Let’s end the debate over whether or not to regulate STR’s because they are already regulated for starters. And let’s focus on establishing a rental registry as a gateway to responsibly regulate not only STR’s but all rentals.

Let’s also inspire the Vermont Assistant Fire Marshals out there to bring more common sense to the work they do. Of course they should be well versed in the Vermont Fire & Building Safety Code and the Residential Rental Housing Health & Safety Code. But they should also be better trained to work with property owners in a far more supportive and advisory role and a far less badge flashing law enforcement officer role. Then we all win. And when it comes to consumer safety there is nothing wrong with everyone winning and everything right about it.