Considering regulation of short-term rentals in light of the sharing economy: Part 1

Short-term rentals are sometimes perceived as nuisances in neighborhoods, but the emergence of the sharing economy suggests communities may want to offer something for everyone in terms of lodging experiences for visitors of all kinds.

A short-term rental is generally defined as a commercial use of a residential property for a period of less than 30 days. Short-term rentals are an important land use activity to address in communities that have a significant tourism economy. In Michigan, short-term rentals are typically thought of as vacation properties rented either during the endless beach days of summer or the snow-filled ski and snowmobiling winter days characteristic of northern latitudes. However, this conventional thinking is sometimes associated with neighborhood opposition to short-term rentals resulting from unruly tenants, late night parties, and parking problems.

Given the growth in the sharing economy in recent years, only thinking of short-term rentals as ‘vacation rentals’ is not a complete assessment of the topic. Increasingly, travelers of all kinds are looking for different lodging experiences other than the conventional hotel or motel. These days, short-term rentals are also used by business travelers, patients and family members staying for medical treatments, and the casual passerby.

Communities that want to offer something for everyone in terms of lodging experiences for visitors of all kinds will want to allow short-term rentals to some extent in the community. Beyond the lake properties or those with trail access nearby, housing in traditional neighborhoods close to downtown are also attractive locations for visitors to stay. Short-term rentals near downtowns and traditional centers may offer a lodging option that is missing, as some hotel chains have located in more suburban locations on the outskirts.

With the sharing economy in mind, a community will need to decide if regulations related to short-term rentals will address renting individual rooms in owner-occupied homes through services such as Airbnb, FlipKey, and HomeAway, in addition to bed and breakfasts and renting entire homes or condominium apartments (e.g. ‘vacation rentals’).

Part two of this article explores the regulatory options for communities and offers some considerations related to definitions, process of approval, and review standards for short-term rentals.

Michigan State University Extension helps communities learn how to improve their social and economic appeal to create and retain jobs. Community leaders are given the tools they need to have a positive effect on their cities, villages, townships, counties and the whole state.

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