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Best practices for VT communities considering regulation of short-term rental homes

Collaborate with neighboring towns (Act regionally)

  • Vermont towns do not operate in a vacuum.  For example, if a town in a ski area prohibits many types of short-term rentals (STR) and a neighboring town does not, the number of STRs is likely to grow in the neighboring town.
  • Forming agreement among towns in a region before setting municipal STR policy will increase the likelihood of reaching intended outcomes.

Understand the scope and trends of your area’s STR market

  • Does the number and percentage of homes in your area that are used as an STR warrant the time and enforcement that will be required of additional regulation?
  • Is the percentage of homes in your area used as STRs over time increasing or decreasing?
  • ResourcesEntire homes listed as short-term rentals by town and county (Vermont Housing Data website) and Airdna.co

Set explicit policy objectives first

  • What larger municipal strategic objectives are related to STRs?  
    • Increase homes available for incoming new year-round residents
    • Increase earnings and income for residents
    • Reduce likelihood of “party houses”
    • Reduce likelihood of investors from out of the area from purchasing homes for STRs that would otherwise be critical elements of the local housing supply
    • Other objectives
  • Resources:  A practical guide to effectively regulating short term rentals on the local government level (Granicus)

Identify existing town and state regulations that apply to STRs

  • Does your town have local rental registry and/or building codes?  
    • What types of STRs are currently covered by theses? Are they considered “rental housing”?
  • Are STRs covered by regulation as B and Bs in your town? 
    • If so, are B and Bs limited to certain neighborhoods?
    • What type of permits are required? Conditional use? 
  • What fees are currently in place? (Local options tax, others?)
  • Resources: Overview of Short-Term Rentals (Vermont Department of Taxes)

Identify gaps between policy objectives and existing regulations to determine where additional municipal regulation is warranted.  Sample municipal STR regulations:

  • Limit STR use to year-round town residents only.  
  • Limit the number of units on a property that may be used as STRs.
  • Limit the number of units on a property that may be used as STRs to the number of units on the property that constitute year-round affordable housing.
  • Allow existing STRs to continue operating, but prohibit additional ones. 
  • Increase local option tax to register STRs.
  • Set numerical limit on the number of homes that may be used as STRs.
  • Require STR owners to obtain a permit and pay an application fee. 
  • Require STR owners to sign an affidavit

Additional information