Vermonters who operate short-term rentals through websites such as Airbnb will face “light” regulations this year, under a law introducing new requirements for rental hosts that just took effect.
Under legislation Gov. Phil Scott signed into law last week, hosts must comply with general health and safety standards and register with the Department of Taxes.
The tax department in turn will assign short-term rental hosts meals and rooms tax numbers — an effort to improve tax compliance in the industry. Hosts will be required to post these numbers on the websites where they advertise their rentals.
The Joint Fiscal Office estimates that short-term rental operators are failing to remit a cumulative $2 million in meals and rooms taxes to the state each year, even though paying the levy is already a requirement.
“A lot of people are just simply unaware that if they rent a room in their house to somebody that there’s a tax associated with it,” said Sen. Michael Sirotkin, D-Chittenden, who sponsored the bill.
The JFO estimates that there are about 6,000 individual short-term rental units in the state. About half of the rentals are offered by Airbnb hosts.
In 2016, the Vermont Department of Taxes struck an agreement with Airbnb on the meals and rooms tax: the company now collects and delivers the tax on behalf of its Vermont rental operators.
However, other short-term rental companies operating in Vermont don’t have the same mechanism in place for collecting the tax.
An earlier version of the short-term rental legislation would have required hosts to pay an annual registration fee of $65 and faced pushback from the industry as well as from the Scott administration, which had pledged to hold the line on new taxes and fees.
Administration officials eventually told lawmakers that the state would be able to carry out the administrative demands contained in the legislation without additional money, eliminating the need for a fee, Sirotkin said.
Under the new law, hosts will be required to post contact information for the Department of Health and the Department of Public Safety, so that residents who encounter possible code violations can report them.
The state will also send a “packet of information pertaining to the health, safety, and financial obligations of short-term rental operators,” to all hosts.
Sirotkin said lawmakers purposefully took a “light approach” to regulating the short-term rental industry in the legislation.
“We didn’t feel they needed as much oversight, such as a hotel or bed and breakfast where they’re serving food and providing other services,” he said. “But we wanted the health department to be contacted if people had any complaints.”
The Vermont Chamber of Commerce, which represents hotels and bed and breakfasts, urged the Legislature to pass a short-term rental bill this session.
In an emailed statement, the chamber’s vice president of tourism, Ronda Berns, said the chamber is in “full support” of the new law.
“The Vermont Chamber fully supports this bill as the first step in bringing a level playing field to Vermont’s licensed and regulated lodging industry regardless of size,” she wrote.
During the legislative session, Berns told senators in a statement that to not require unlicensed short-term rentals with one and two rooms or vacation rentals to comply with health and safety codes creates “a financial disadvantage for those licensed businesses following the laws of the state.”
Tom Piper, a South Burlington resident and Airbnb host, who had spoken out against the legislation when it was being crafted in March, said that without a fee, the new law doesn’t seem “particularly onerous.”
But he fears that with the new law on the books, lawmakers may be inclined to produce more stringent regulations in upcoming legislative sessions.
“The only concern is that it opens the door to bad fees for everyone in the future,” Piper said.
“What’s important is that there is a real benefit to the state to encourage this industry rather to discourage it.”
