Regulatory Framework for Short-Term Rentals

Policy Reform Goal

The goal of this reform is to create a regulatory framework for short-term rentals that includes tiers for different types of rentals, and disincentivizes the most impactful uses in order to protect the city’s housing supply. This reform seeks to limit the number of housing units that can be converted to short-term rental uses, and ensure that those conversions contribute to the City’s efforts to preserve and expand permanently affordable housing, while also preserving some flexibility for hosts to use their homes and earn income, as well as recognizing that some supply of short-term rentals benefits the Burlington economy.

Proposed Reform

In order to achieve this goal, the following zoning and housing code reforms are proposed:

Create clear standards for short-term rentals that differentiate between a ‘bedroom(s) within a unit’ and a ‘whole unit’ short-term rental for zoning, rental registration, and minimum housing code requirements.
Require all hosts of short-term rentals to apply for a zoning permit and register as a rental unit with the Department of Permitting & Inspections, meet minimum maintenance and fire safety standards consistent with those required by the State of Vermont, and remit state and local Rooms & Meals taxes.
Expand the existing zoning standards for Bed & Breakfast to explicitly recognize ‘bedroom(s) within a unit’ short-term rentals, and continue existing standards as outlined:
- Property must be the host’s primary residence. In residential zones, up to two rented rooms are permitted, while three or more rented rooms are reviewed under conditional use requirements. In mixed-use zones, up to five rented rooms are permitted.
- Required to provide one parking space per rented bedroom in residential districts.
While rental registration is proposed for all short-term rentals, continue the existing exemption from minimum housing inspections for the rental of one or two bedrooms within an owner-occupied home even when those rooms are rented as short-term rentals.

Create a new ‘Whole Unit Short-Term Rental’ use within the zoning ordinance, that is considered a non-residential use, with applicable standards as outlined:
- Host (owner or tenant) is required to be a resident of the property/building in which the rental is located. Whole unit rentals are proposed to be a permitted use in mixed-use zones, but a conditional use in residential and institutional zones.
- Limit the total number of whole-unit rentals within a building, based on the number of units within the building:
  - 1 short-term rental within buildings containing 1-3 units (including ADUs)
  - 2 short-term rentals for buildings with 4-5 units
  - 3 short-term rentals in buildings with 6 or more units
  - Any building with 4+ short term rentals is considered to be a hotel
  - Have an overall limit on the number of short-term rentals on a lot, regardless of the number of buildings.
- Require a parking space for each short-term rental unit in all zoning districts.
Continue to apply the Housing Replacement requirements to any housing units converted to a non-residential use (i.e. whole-unit short-term rental). Housing replacement is not required when a new unit is constructed and initially permitted as a short-term rental.

Continue the existing “temporary” standards in the zoning ordinance, which would exempt short-term rentals from zoning requirements for those rentals leased less than 10 consecutive and 30 total days within any 12-month period.

Review More Info & Share your Thoughts

Use these quick links to review the proposed reform, find an upcoming meeting, and to share your input on this proposal. Make sure to review the additional information about this proposal below.

Review Proposed Reforms See upcoming meetings & review proposed reforms

June 2019 Housing Summit Report Review input on this issue from the Housing Summit

Share Your Input on this Proposal Join an upcoming meeting, or leave your input online.

Framing the Burlington Context

Based on data from the City of Burlington, Host Compliance (HC), AirDNA, and AirBnB the following is intended to provide a snapshot of the short-term rental landscape in Burlington in 2019:

410 unique short-term rental listings across many platforms (HC). This represents approximately 2% of all housing units in the city. There was a 25% increase in short-term rentals between 2018-2019 (HC), and the total number doubled from 2016-2019 (AirDNA).
AirDNA reports 66% of rentals are for the whole housing unit, and that 76% of listings were efficiency, one bedroom, or two-bedroom units.
Presently, short-term rentals have been handled under the City’s zoning standards as a Bed & Breakfast or a hotel. However, it is estimated that 95% of these units are operating with no zoning permit. Additionally, it is unclear how many of these units have been subject to life safety inspections through the rental registration process.
In a 2019 press release, AirBnb reported that Burlington was the #1 destination for their guests visiting Vermont in the summer 2019. Per Host Compliance, the average monthly revenue for a short-term rental in Burlington was $2,700, at an average nightly rate of $161 per unit; for a short-term rental to earn this amount of revenue, it is estimated to be rented for around 200 nights per year.
The City collects a 2% Rooms & Meals tax on income from short-term rentals. In 2019, the City’s Housing Replacement fee for a 1-bedroom rental unit was $7,930.
AirBnB reported that 63% of Burlington hosts self-identify as women, and 31% self-identify as being 60 and older.

FAQs about this Policy

Why not consider an outright ban on short-term rentals?

Many have expressed their support for short-term rentals as a flexible, low-barrier way for hosts to earn income to offset their cost of living, stay in their home, enable them to more efficiently use space within their home, or to find ‘mid-term’ tenants (i.e. to market an available bedroom to a traveling faculty, researcher, etc). This proposal intends to enable these benefits, while limiting the proliferation of entire units as short-term rentals.
Others have noted the city-wide economic benefit of short-term rentals in bringing visitors to the city, and the ability for short-term rentals to serve as a more affordable alternative to traditional lodging. This proposal intends to enable some short-term rentals to balance this benefit, while limiting wide-spread impact on long-term housing options.

What impact does this policy have on renters? What benefits?

The most significant benefit to renters is reduced competition for rental units by requiring the host to live on the same property as the short-term rental, and by limiting the total number of rentals in each building. This limits the potential for individuals/management companies to operate multiple properties and/or a large number of units within a building for short-term rental purposes which removes those units as long-term housing.
For short-term rentals that replace a long-term housing unit, a host is required to either create an equivalent unit elsewhere, or pay a Housing Replacement fee. The fee is intended to represent the cost to the Housing Trust Fund to create or preserve a permanently affordable housing unit of equal size. Thus, this fee will generate revenues to expand the capacity of the Housing Trust Fund to offset the loss of the housing unit.

Does this policy benefit only those individuals with the financial means to own a multi-unit property or comply with housing replacement fees?

Under this proposal, there are two low-barrier options for hosts to realize the economic benefits of short-term rentals within their existing homes without major physical improvements and/or impact fees: by renting as a ‘temporary use’ for fewer than 30 nights per year, or by renting up to two bedrooms within their home. In the former scenario, the City’s zoning requirements would not apply, and in the latter, minimum housing code inspections would not apply. In both scenarios, Housing Replacement fees would not apply.

How will the City enforce the proposed regulations, particularly regarding the occupancy of the host?

The City anticipates working with a third-party provider to regularly monitor short-term rental listings across platforms, to be compared to the City’s rental registration list. Rental registration is renewed annually, which requires a number of details to be submitted, including the address of the owner. This proposal will further require questions to be answered about any short-term rental use of the property.

How does this proposal compare to other communities’ regulations for short-term rentals?

Approaches that cities have used to regulate short-term rentals vary widely. Bar Harbor, ME created a permissive framework, simply requiring a registration process that includes standards for the health and safety of guests. Based on the concern about the impact on local housing supply, Portland, ME created a limit on the number of short-term rentals within a building based on the total number of units in a building, and whether the building was owner or renter-occupied. Facing a notorious housing crisis, San Francisco, CA has created a robust set of zoning and building code standards, and established an entire office to enforce these regulations. The State of Vermont requires minimum life safety standards and payment of Rooms and Meals taxes. This proposed approach builds on the State’s requirements, and falls between the Portland, ME and San Francisco, CA models.