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Short Term Rental Law Update, Sept. 2018


Springtime in Cape Cod


Massachusetts Short Term Rental Law: An Update (Sept. 2018)

It seems the state of Massachusetts is finally gearing up to regulate and tax the short term rental Market. For years, people in the housing industry have opposed this sort of interference and until recently, they were left alone. But when sharing sites started gaining popularity, it changed the game entirely.

After a noticeable shift in economy has taken place due to short term rentals, the Massachusetts legislature is trying to provide solutions. Topics regarding taxes and rental home registration are highly debated. Either way, property management companies in Massachusetts and sites like VBRO, HomeAway and Airbnb will have to brush up on their knowledge pretty soon.

However, according to the Cape Cod and Islands Association of Realtors and multiple other sources, the short term rental law bill has not officially passed yet. This is due to Governor Charlie Baker, who has sent it back with suggested revisions. (read other’s Reaction) Until he signs the bill, the new laws will not be active. Until then, homeowners, realtors and property managers will have to wait in suspense.  Still, the probable outcome seems rather clear, considering how we came to this decision in the first place.

The Reasoning Behind The Motion

The nature of the short-term rental industry changed when internet sharing sites started booming. For this reason, many people find the bill to be a relief, as the lack of regulation allowed questionable behaviors from tenants and operators alike. Families neighboring short term rental properties are subject to damage, trespassing, noise and traffic.

If all that wasn’t chaotic enough, hotels were losing money and year-round rentals were becoming less affordable. It was pretty clear that something had to be done sooner or later. And here’s what sweetens the deal: this untapped industry is worth millions of dollars to the state.

The New Short-Term Rental Management Laws

It is believed that Massachusetts seizing control of the rental market could work to eliminate many concerns. Meanwhile appropriate taxing can help the state fund important projects. On the other hand, homeowners and rental companies have mixed feelings regarding the topic.

Naturally, renters are none too thrilled about the raised prices. Still, the laws themselves may help restore some order to the industry. If approved, the bill will be effective as of January 2019 and apply to stays booked as early as November 1st. This effective date may change to January 2020 since the legislators will not act on this until January 2020. The laws and taxes may vary slightly between cities and towns but there are a few main points:

  • All properties must be registered online with the state. Address is the only information required.
  • Short-Term rental laws apply to a stay of 31 days or less.
  • State Tax: 5.7%
  • Local Tax: up to 6%
  • Community Impact Fee: up to 3% (for owning multiple properties in the same)
  • Cape & Islands Water Tax: 2.75%
  • The property owner or appointed intermediary must collect and pay out the taxes.
  • Short term rental operators must be covered by at least $1 million of liability coverage.

This bill would also allow individual cities and towns to regulate in their own ways. As a Cape Cod Property Management Service, navigating the vacation season may be a bit tricky at first. Here is what cities and towns may do:

  • Place limits on rental locations
  • Limit the number of establishments permitted in the town or city
  • Regulate the duration of stays and the time of year they are permitted
  • Require licenses or permits
  • Require inspections of the premises

Property managers, landlords, and realtors alike will need to get familiar with these new conditions.

Why The Wait?

The latest any one has heard of this bill, is that it is still pending. As mentioned earlier, The Massachusetts Governor has proposed a few changes to the original bill. He asked for protection for owners who rent for less than 14 days a year and declined the online registry. While some find this move to be unnecessary, others are grateful that the Governor seems to be seeking a compromise for operators. We shall see what the outcome is in the near future.

All we know is that this new crackdown is going to shift the state of the market once again. In other states where these changes have occurred, there was a large dip in short term rentals. Traditional lodging groups, on the other hand, were glad to have fair competition.

This information has caused quite the commotion for operators and tenants alike. Fears of unknowingly breaking a law or losing money are rippling through the short-term rental community. To avoid such issues, get in touch with our knowledgeable professionals over at Real Property Management Associates. We stay up to date on all the current laws and regulations for your rental, residential, and commercial properties.

Call 508-509-4485


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