Vermont Short Term Rentals
Coventry, RI · Member since 2018 · 73 posts · 39 votes
Hello All,
I'm wondering if there are any VT investors around specifically for short term rentals.
This has me concerned and wondering. Specifically the very last section about no one being able to offer a short term rental unless they live at the property over 270 days a year.
https://fastdemocracy.com/bill-search/vt/2021-2022/bills/VTB00007442/
I vacation to ski in VT all the time (not so much this year) and have been considering buying a vacation home there. I love the community feel and supporting the small shops and businesses where I go. Unfortunately part of being able to afford a vacation home would involve renting it out in the summer to offset the cost. If that's not a possibility I may have to rethink entirely. Thoughts?
@Nicholas Bolcon Very true about passing these type of laws at the local vs state level. However it is interesting that this bill is being introduced by members from very different areas of the state (Burlington, Brattleboro and Londonderry) which may be in an effort to build, "state wide" support.
I am also now turned around by that last line. I initially read it as it only applying to first year, then afterward you could start STR. However now I read that 70% as the ENTIRE length of ownership, not per year. I may reach out to my rep for clarification as well.
This is what @Nicholas Bolcon is referring to, from Vermont House Bill H 200. It got an "Oh My GOD" out of me.
12 § 4469. RESIDENCY REQUIREMENT
13 A person may not offer all or part of a dwelling unit as a short-term rental
14 unless the person has occupied the dwelling unit as his or her primary
15 residence for:
16 (1) 270 days of the preceding year; or
17 (2) if the person has owned or leased the dwelling unit for less than a
18 year, more than 70 percent of the days that the person has owned or leased the
19 dwelling unit.
20 Sec. 3. EFFECTIVE DATE
21 This act shall take effect on July 1, 2021.
Are existing rentals going to be grandfathered in? Nicholas, has this bill passed? I am looking in to buying a one family or a multi-family in Massachusetts, Vermont or Maine as an investment property. I actually prefer long term tenants, as short term rentals have such high overhead and cause such constant management headaches, but I am considering short term rentals. The market is so inflated right now, many properties have weak numbers for long term rental and great numbers for short term rental. If this bill has passed, it all but crosses Vermont off of my list.
Nicholas, the work around is to get a two family, use one side for yourself, and rent the other side out for the entire ski season, which does not qualify as a short term rental. Then rent both sides out for the whole summer. Some areas have summer long events that people who participate in them need housing for, for instance Middlebury College's summer writing program, Bread Loaf. (By the way, Bread Loaf is not happening in Summer 2021 because of COVID-19.) You would have to see if there are summer events in Stowe. Or rent both sides out May-October to snowbirds. Again, this is a longer rental and does not fall under short term rental rules. Fully booked that would yield you at least five-six months of rentals a year, depending on whether you get someone for the entire ski season and the length of the summer event. Stowe has a 57% occupancy rate for short term rentals according to Airdna, so the total days occupied would be similar.
Not sure how this effects investment properties owned by an LLC and financed on the commercial side...doesn't sound like new ones will be permitted.
People get married for green cards. Maybe people will start getting married to have a spouse to stick in one of the units of their Vermont property for 270 days a year. Doubles the capital gains tax exclusion too.
I spoke with my state representative on this and she said that this bill has just been released and they will negotiate the bill before it ever comes to a vote.
As it is now, per my rep, buy before the bill is passed, and you're grandfathered in.
A short term rental property that is rented 255 days a year, or 36 weeks, which is the 70% dictated in the last line of that proposed bill will likely still bring you a nice profit and is actually pretty reasonable (few come up for six weeks in April to may and from the end of foliage through the first snow. That's about 12 weeks, so you'd likely only be unable to rent for an additional 4 weeks. (52 weeks a year - shoulder season=40 weeks). Hope that helps quell the panic!
it may not be possible to buy ahead of time and I still think those types of restrictions are unreasonable.
For now I am going to hope the bill will not pass with the residency provision in it. The rest of it is fairly reasonable.
I would have to imagine that since they are not banning STRs outright that it would be hard to prevent an entity (LLC for example) from offering a house for STR. How can you have a residency requirement on a company? I think the aim of the bill is to keep these rentals registered and safe and make sure the correct taxes are being collected. Which is reasonable. But the residency requirement would have numerous unintended consequences especially in mountain towns.
I'll keep you both updated on here on the progression of this bill and will speak to some of my colleagues (one of whom is the president of the Vermont Association of Realtors) to see what VAR and realtors in general have been hearing.
@Kathleen James thank you for all of the helpful info, I appreciate your help.
Thanks for bringing this to light and your further research @Kathleen James.
There have been rumblings about this at the state and local level over the past few years, and I do not think this is too draconian given how progressive some legislatures/areas are of Vermont. My thought would be that most reps who represent the larger ski areas will be hearing from people within those communities about this once it becomes better known. If the past year has taught us anything here in VT, its that our economy is driven by out of state visitors and a law that is too strict on this could really hamper that moving forward. My hope is that with recovery from COVID still underway, ski area reps will not support this as it would damage economic recovery.
@Patrick Giblin well put!!
@Patrick Giblin I have been discussing this with some people both in an out of VT. I agree it would hurt the ski/mountain areas the most. The other thing that I have been discussing with some is that the reason this type of restriction is not usually passed at the state level is that the zoning laws are all controlled by individual towns and counties. So it becomes a nightmare to enforce. Because what is zoned for residential vs business vs mixed-use is not standard across the entire state. Now I would have to agree that it doesn't necessarily mean it wouldn't pass anyway, but I think it reduces its chances. Hopefully it is just low hanging fruit to be negotiated out because the rest of the bill is decently reasonable.
@Kathleen James I am reading that line of the bill differently than you. I think that text about the 270 days/less than a year is only to encompass anyone who has owned a house for less than a year. So as soon as the second year of your ownership starts you can't offer a STR unless you are a resident living there the majority of the year. If the bill were to pass that is.
@Nicholas Bolcon Very true about passing these type of laws at the local vs state level. However it is interesting that this bill is being introduced by members from very different areas of the state (Burlington, Brattleboro and Londonderry) which may be in an effort to build, "state wide" support.
I am also now turned around by that last line. I initially read it as it only applying to first year, then afterward you could start STR. However now I read that 70% as the ENTIRE length of ownership, not per year. I may reach out to my rep for clarification as well.
@Patrick Giblin That is how I am reading it. You must have been a full-time resident the year prior to offer as an STR. Which means in any given year you had to be a resident the preceding year otherwise you go back to not being able to offer it as a short term rental. The second line is only to capture those who buy a house in the middle of the year.
@Patrick Giblin Also I can see what you are saying about "statewide support" and it may be a reality. But that won't change the reality of how complicated it would be to enforce if it were to pass given the different zoning standards in pretty much every town.
Not saying it would happen this way but I can see a town particularly hurt by this decided to issue zoning variances left right and center to allow a "business" to operate a STR. Which is why these types of restrictions usually happen at the local level, because they can decide if it is helpful or hurtful for their area and they control the zoning.
Does anyone have an idea of a time frame? How long the bill will be in committee or when it will come up for a vote? The language as written has it taking effect in July. That seems very quick.
Also, is there any organizing against this bill i.e. petitions, phone banking, etc. My family and I love being part of the short term rental community in West Dover. We're proud of our community and the business we bring in both in tourism dollars and in tax revenue, but if this bill passes as written it will likely be impossible for us to keep our house.
I apologize everyone, I promised an update! The Realtor Political Action Committee, Vermont Association of Realtors, Realtor boards across the state and Representatives from all of the ski towns are very aware of this and discussions have been taking place in so many different forums. There are multiple petitions circulating against this.
Many of us recognize that tourism is a huge part of our economy and we can't survive without it. We also recognize that we need the out of state owner's taxes to survive. Another factor that is brought up quite frequently is our need for more internet access, and with more people purchasing property in rural areas, we may have the money to create a better internet infrastructure.
My representative has let me know that this is only a first draft of a bill. The language that we all find so troubling will likely be negotiated out. As of now, they have not set any time for this to come to a vote. I will keep you all updated when anything changes!
@Kathleen James
Thanks for the update. I wish I had something valuable to add on the legal front.
I can say that we received notification that StarLink satellite internet is available at our house in Essex. It is $500 start up costs for the dish and $100/mo after that. I would think a lot of other areas in VT would also qualify. Hope that helps some of the really rural folks.
-Adrian
@Adrian Tanguay that's HUGE! Hopefully soon that will break up some of the monopoly that Consolidated holds in the NEK and Stowe Cable olds in my neck of the woods and help the super rural folks who still have dial up!
The biggest take away that was explained to me from those in the state regarding this bill is that new buyers of STR would have some regulation of standards and need to own for 70% of a physicals year prior to a STR. Ultimately an investor would need to calculate numbers for leasing or residing in the property for a majority of a year prior to the STR. A little bit of a headache, and a barrier to entrée, but should not be a deal breaker.
@Michael Dumont II the way the bill reads is absolutely a deal breaker. It currently reads, as far as I can tell, that you have to be a resident of the property (live there 70% of the year essentially) for the year prior if you wish to offer all or part of the property as a STR. This means you can't possibly own more than one unit. And you can't rent it out unless you lived there the year prior. As soon as you go a year without making it your full-time residence you go back to square one and can't rent it out next year. This is similar to what individual cities and towns have passed elsewhere. Newport, RI is one.
However there is some good news as @Kathleen James has pointed out. There are a number of petitions against this bill and the control of zoning regulations at the local level would also mean that it would be a nightmare to enforce as written. Also I believe that Representative Stevens has reintroduced H. 256 which does much of the same things as this bill but without the ridiculous residency requirement. Given that both bills are in front of the committee he chairs it is far more likely that they would advance H. 256 given it's lower level of opposition while still achieving many of the same goals.
That being said @Kathleen James I have found that at this point I am pretty much priced out of the market. Houses are going within days of being listed and they are being listed at much higher than I think they are worth, or could justify paying for them even given generous STR numbers and potential appreciation. I think I'm going to have to wait this hot market out but I still hope this version of the bill doesn't pass.
Hi Everyone! I wanted to update you on this legislation. H200 did not and will not pass. Instead, our legislature passed bill S79, which can be read here: https://legislature.vermont.go... This bill will just create a registry for short term rentals and will require rental properties to be inspected and approved by the Vermont Department of Fire Safety only if a complaint has been filed. There is no active legislation that will mandate that short term rental owners are Vermont residents.
Unfortunately, this doesn't correct the market, and many are still priced out, but I'm hopeful that with the warm weather approaching we will get more inventory!
Please reach out with any questions!
Thanks @Kathleen James I am now definitely moving to Vermont. Of course, the real estate market has ot cooperate and cough up a house. Do you know if renting to travel nurses falls under STR rules?
in vermont STR was recently defined as anything less then 15 days. This may vary from city to city.
Hi Everyone! I wanted to update you on this legislation. H200 did not and will not pass. Instead, our legislature passed bill S79, which can be read here: https://legislature.vermont.go... This bill will just create a registry for short term rentals and will require rental properties to be inspected and approved by the Vermont Department of Fire Safety only if a complaint has been filed. There is no active legislation that will mandate that short term rental owners are Vermont residents.
Unfortunately, this doesn't correct the market, and many are still priced out, but I'm hopeful that with the warm weather approaching we will get more inventory!
Please reach out with any questions!
Thank you for this update. Does this functionally mean that STRs remain legal in all of Vermont, but subject to local restrictions where they exist? I am interested in looking into Stowe/Smugglers Notch, Mt Snow area, Killington/Pico, and perhaps others.
That is correct! Governor Phil Scott vetoed S79 (commonly referred to as the rental registry). Some towns may have restrictions on short term rentals, but for the most part, specifically in the ski towns that you mentioned, Vermont depends on tourist revenue to survive and I have not heard further news restricting rentals.
I just looked at a property in Woodstock VT a few weeks ago and they have very strict regulations about STR. I called someone from town hall zoning and told me that if the limit for properties in Woodstock is you can only rent it out 10 times a year. Not sure if any other towns have rules like this.
Woodstock has some of the most restrictive regulations on STRs in VT. The ski towns are far more accommodating, but be aware of restrictions adopted by some home owner's associations - there are many condo complexes that only allow STRs through HOA-approved rental agencies.