Boots & Sabers

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Owen

Everything but tech support.
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1553, 21 Dec 15

Short-Term Rentals Debated

This is a fascinating issue that can be debated from a few different angles.

But it would involve a move by Republicans at the state Capitol to block some municipal ordinances such as one in Madison, which limits some short-term rentals to up to 30 days each year. The city of Bayfield, said Mayor Larry MacDonald, passed limits on short-term rentals about 15 years ago after citizens said they were tired of “not knowing who was in the house next to them.”

“It’s another attempt to take away local control, and in our case, it’s taking away local control directly from the residents who asked for this ordinance,” MacDonald said.

The bill’s supporters, meanwhile, say local governments will still be able to regulate those properties and require inspections if they wish. But they can’t have an ordinance that prohibits or “unreasonably restricts” rental of residential properties for more than seven days.

Government also shouldn’t limit people’s right to rent out their homes or cabins, an activity that provides an economic boost to the state, supporters say.

“Here’s the fundamental question,” said the bill’s author, state Rep. Scott Allen, R-Waukesha. “Do we err on the side of local government and their rights or do we err on the rights of the individual property owner? If I’m getting that question, nine times out of 10, I’m coming down on the side of the property owner.”

The bill, AB 583, got public hearings last week in the Assembly and yesterday in the Senate.

People have been renting out their private property forever. What makes this an issue is that technology has enabled it to take on a scale that was previously unobtainable.

On the issue itself, what business is it of the government if I want to rent out my home to someone for a few days or a few weeks? It is my property and I should be able to do with it as I please. But at some point, if I am renting out my property on a regular basis, it becomes a business. At that point, we have determined as a society that it is in the people’s interest for the government to regulate that business to ensure some basic levels of standards and safety. What is the point at which renting out my house becomes a business? Well, that’s the million-dollar question, isn’t it?

Aggravating this issue are the industries involved and their interests. On the one side are the new companies that are making money by facilitating peer-to-peer rentals. They are the new entrants to the market. On the other side are the traditional lodging companies that are threatened by these new entrants who are eroding their profits. The traditional lodging industry wants the government to regulate these transactions to protect their entrenched businesses. The new companies want no restrictions to allow the free economy to evolve. Both interest groups have their lobbyists plying their trade in Madison.

Then we get into which level of government should hold sway here. Generally speaking, government works best when it is closest to the people. In this case, local governments want to have the power to set their own threshold for when these rentals become a business and when to apply business regulations. But if we are to promote a freer market, this particular industry does not lend itself well to dealing with a patchwork of local regulations. Since these are peer-to-peer transactions, it is difficult for each participant to know which regulations apply. A statewide standard would make it easier for everyone to comply with the law and easier for the government to enforce the regulations.

Where do I come down on this issue? I support free markets. And if I want to rent out my house for a day for people attending EAA or for 5 months while I spend the winter in Florida, I don’t see any compelling interest for the government to intervene in how I dispose of my property. The point at which such a relationship becomes a business is when I am no longer the primary user of the property.¬†As for which level of government should hold sway, I agree with the balance that this bill’s authors set. State government should set the overall rule for protecting the behavior, but local governments still control their own inspection regime and building codes. And state government should be as liberal as possible in allowing property owners to rent their properties as they see fit.

 

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1553, 21 December 2015

3 Comments

  1. Steve Austin

    I will take a dissenting view here. I am not for the State blocking these ordinances.

    At the end of the day your home is your castle but at the same time part of what makes up the attractiveness of that castle is the stability of your neighbors and local block. While you can’t pick your neighbors, you do have some level of choice as to the type of community you move into, People need that continuity for safety and stability.

    These ordinances aren’t blocking long term rentals. They are merely stopping your neighbor from running a motel in an area not zoned for one.

  2. Owen

    I can appreciate that, but the local ordinances are appropriate for regulating behavior irrespective of who is occupying the house. I don’t know most of my neighbors nor do I care to know them. What I care about is that they keep their properties¬†in good repair and junk out of the street. Those ordinances can be enforced on the owner even if they have rented out their house to someone else. So if the local government is effective in enforcement of ordinances that preserve my property value, do I care who is actually occupying the house?

  3. Steve Austin

    Owen, The thought isn’t necessarily who is occupying the house but the idea that many different people are occupying the house week in and week out. People who are long term have a far greater incentive to keep up the property, follow noise ordinances, not engage in illegal activities and just overall be better neighbors.

    These are a big part of the reason why people buy a house versus rent an apartment. For many of us we want that stability and consistency that being a neighborhood resident brings,

    The bigger issue is this is why we have zoning laws. If you want to be a hotel operator then buy a hotel or apartment building. And if people insist on this, then zone a section of the town as “transient single family residential”. See how many homeowners want to actually buy a house in a subdivision zoned for that. My guess is the number is very low.

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