According to AirDNA, which provides data and analytics about the short-term rental industry, demand for short-term rentals — such as those offered by Airbnb, VRBO and the like — is exceeding all expectations in 2021.
The first three months of 2021 were all records for new bookings as demand surged in small-town and destination markets throughout the United States. While recovery has been more incremental in the rest of the hospitality industry, the short-term rental sector is thriving and well past its pre-pandemic size. But Rhode Island, along with most other states, remains in the dark about where these rentals are or whether they comply with health and safety standards that are vital for keeping visitors and our communities safe.
For those reasons, we are calling on the General Assembly to override Gov. Dan McKee’s veto of our legislation to create a statewide registry of short-term rentals when we return to session in January.
The legislation (2021-H 5505, 2021-S 0501) creates a simple, statewide registry of only the most basic information about each property, including owners’ contact information in case of an emergency. This registry would be operated by the Department of Business Regulation, because these are businesses, and businesses should be registered with the state.
This industry rapidly transformed from mom and pop renting out a spare bedroom to investors redeveloping residential properties solely for use as short-term rentals in areas like our districts in Newport. These are basically hotels operating in residential properties and neighborhoods, generally without on-site staff, and without the safety standards that are required of more traditional hospitality properties. (It should be noted that they are also contributing to our housing crisis, since they are removing much-needed multi-unit residential properties from our residential stock.)
States, including our own, have been slow to respond. The results have been lost tax revenue – although in 2016, Rhode Island did start requiring the hosting platforms to collect and remit the hospitality tax – and essentially a Wild West situation in terms of safety.
The anonymity fostered by the third-party platforms and the lack of on-site management reduces the sense of responsibility between renters and property owners, and sometimes results in renters using properties for out-of-control gatherings, such as one at a short-term rental on Thames Street in Newport on Memorial Day weekend where a URI student was murdered. (His alleged assailant was recently indicted.)
Leaving registration up to municipalities, as the governor suggested in his veto message, makes little sense in a state as small as ours. Without state action, the municipalities on Aquidneck Island are currently paying a vendor to operate their own registry to help address some of these issues. A statewide registry would save money and help municipalities across the state deal uniformly with short-term rentals.
The governor is correct that the rental operators are required to register with the Division of Taxation, but Taxation’s registration system is woefully insufficient, concerns only tax collection and is not a business registration. Currently the hosting platforms are collecting and remitting the taxes, and our state is simply taking them at their word that they’re doing it honestly. Rhode Island has no system to verify that taxes the platforms remit is accurate or complete.
Massachusetts enacted a bill in 2018 to create a statewide short-term rental registry. Rhode Island’s General Assembly needs to do the same by overriding the veto.
Rep. Lauren H. Carson (D-Dist. 15, Newport ) and Sen. Dawn Euer (D-Dist. 13, Newport, Jamestown) are the sponsors of the bill creating a statewide registry for short-term rentals.