Creating a level playing field for short-term rentals and hotels

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by Toni-Anne Barry

These days, it seems like politicians cannot agree about anything. That’s because it’s convenient for the media to use a gridlock narrative as shorthand for the contrarian and obstinate behavior that defines how our elected representatives address a few big issues. However, a different, more nuanced picture emerges when one takes a closer look at the actual lawmaking process – the pursuit of positive change. Common Ground profiles two members of opposing parties who are working together to advance issues important to hoteliers.

The Issue

Creating a level playing field for short-term rentals and hotels.

The rise of short-term rentals brings welcome competition to hoteliers. Home-sharing platforms have given homeowners the ability to open their homes to travelers to generate extra income. But data shows that a large portion of hosts are actually commercial operators who rent out multiple units on a full-time basis. These operators are functioning as hotels but have different tax rates and can operate without having to adhere to the same regulatory standards, giving them a significant and unfair advantage over hotels. As short-term rental listings continue to grow, more commercial operators are trying to take advantage of the system, and state legislatures across the country are looking for ways to increase transparency of who is functioning as a host and promote fairness in the lodging industry.

Common Ground

Massachusetts lawmakers have taken this issue head on and found a bipartisan solution to encourage fair competition between short-term rentals and hotels. Democrats and Republicans in the state legislature came together and passed H.4841, An Act Regulating and Insuring Short-Term Rentals, legislation that requires short-term rental hosts to register with the state, carry proper insurance, and pay the same 5.7-percent state tax that hotels are required to pay. The bill also gives more authority to towns and cities to add additional regulations to fit the specific needs of their communities. Political opposites, Gov. Charlie Baker (R-MA) and Speaker of the House Robert DeLeo (D-MA) both advocated on behalf of the bill, citing the need for comprehensive regulatory reform and the importance of fostering an environment that allows hotels and short-term rentals to compete on the same level. Gov. Baker signed the legislation into law in January, and the new regulations will take effect on July 1, 2019.

Gov. Charlie Baker (R-MA)

First Elected: 2015

“Our administration has long supported leveling the playing field for short-term rental operators who use their properties as de facto hotels, and I appreciate the Legislature’s work to reach a compromise on this bill that adopts our proposal to avoid placing undue burdens on occasional renters.”

 

Speaker Robert A. DeLeo (D-Winthrop-MA)

First Elected: 1991

“The House took a thoughtful and holistic approach to regulating short-term rentals. For the first time in Massachusetts, we go beyond taxation and implement a necessary regulatory framework to ensure public safety and accountability.”

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