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.