Editor’s note: This commentary is by Nancy Owens, who is president of Housing Vermont & Vermont Rural Ventures.
[S]hort-term rental investment properties are an emerging pressure point on the tight housing market in Vermont. Single family homes and smaller apartment buildings located in city neighborhoods, downtowns and villages which once housed residents who worked, voted, attended school and volunteered in our communities, are now housing vacationers and visitors.
Because we have such a severe housing shortage in much of Vermont the loss of these homes from the general housing stock has a serious negative impact on the housing market. The cost to build new homes to replace those lost to short-term rental business is extraordinary and even if the cost could be overcome, the will to develop land and infrastructure for new housing is weak.
On my own street in Burlington a three-bedroom single family home sold for over $450,000 last fall and was immediately listed on Airbnb as a rental property for $165 a night. Short-term rentals yield double the revenue of an ordinary rental. Of course that’s true only if the home is rented every night, but even a 70% occupancy results in 30% more income from this short-term rental as compared to rent from a permanent resident.
This “super host” owns or manages 11 homes in Vermont, most in Burlington renting homes to visitors for a nightly fee. Some would say this business is unfairly competing with B&Bs and hotels which operate under health and safety rules, are registered and appropriately taxed. In 2018 Airbnb reported to the state of Vermont that 490 active hosts operated in Burlington. In 2018 the state of Vermont tax department reported that only 26 short-term rental operators in Burlington are registered with the tax department.
Our family has a short-term rental studio apartment above the garage which we have rented for nearly 10 years. Short-term rentals, when in an owner-occupied home, whether a small apartment or a room in a large house, provide modest additional income to existing residents and have relatively little impact on the rental market.
The short term rental business, operating outside of owner-occupied homes, is disrupting the market by removing existing housing stock from the local housing market. This occurs both with single family homes and with apartment buildings. The impact on home buyers and renters is real and for low-income renters in compressed markets, the loss of any apartments simply makes finding housing even more difficult. While market rents for apartments in Burlington are high, they are nowhere close to the short-term nightly rate.
The short-term rental business is both exacerbating the housing crisis and competing unfairly with other hospitality businesses. The cost of the sharing economy must be managed and regulated with due consideration for the health and prosperity of Vermont’s people and communities. What policies will the city and state put in place to prevent and mitigate the serious negative economic and community impacts of the short-term rental business?
