The Rental Market

On 6/21/16 The Shelter Island Town Board discussed short term rentals, those generally less than two weeks in duration, following complaints from residents whose quality of life has been affected by noise from nearby rental properties.

A bill passed by the New York State legislature this week makes it illegal to advertise an entire home on direct owner rental websites for 30 days or less. New York already prohibits rentals of fewer than 30 days if residents are not present, but posting listings for such rentals was not explicitly barred. Under the new legislation, people who post such listings could be fined up to $7,500.

Councilman Jim Colligan said that he is sympathetic to owners who rent a room or two short term and who without the rental income, “cannot get by,” but is less empathetic to others who purchased a residential property as an investment but “cannot continue to afford the house” without renting short term, adding “maybe you shouldn’t have bought here.”

The Board described “nightmare” situations with certain blocks “inundated with vulgar, loud noise” and “16 people spending the night in a three bedroom” house. Shelter Island already has group rental laws prohibiting “any number of persons in excess of five persons, unrelated by blood, marriage or adoption occupying a one or two family dwelling unless the owner thereof actually occupies same and uses same as his principal place of abode” with “not more than two persons per conventional bedroom”. Violations can result in $250 per day or imprisonment for not more than 15 days or both for each and every violation” for the homeowner and real estate agent, if one assisted or participated.

Councilman Paul Shepherd said it should be “fairly straightforward to set up” regulations “so that people with a two week window or less will have to act as a bed and breakfast or can’t operate without being owner occupied,” adding that there are also safety issues such as adequate number of smoke detectors.

In East Hampton, Colligan noted, a rental registry was created this year with a fee of $100 for two years with proof of a full certificate of occupancy which “does not interfere with rights, balances the safety and protection of tenants and first responders and drinking water.” Councilwoman Chris Lewis added that for “East Hampton, that ship has long since sailed.”

With enforceability being a concern, the Town Board will be drafting a proposal that for rentals of two weeks or less, the rental is owner occupied and operated by the same rules as a B&B and that advertising a property short term and not owner occupied would be a violation.

Many one month or longer rentals remain available with some Landlords considering reverting to short term despite more wear and tear.

One real estate agent last week told me that they had “spent two hours and a lot of gasoline” driving potential customers to rental properties, only to discover that they had leased one of the properties that they had been shown directly through the Landlord. Another agent described a conversation with a customer who said that they had compared a list of rental properties the agent had sent to them with the map on AirBnb and rented directly, adding that Landlords “give in” to more demands.

Southold Town last year passed a law prohibiting rentals of fewer than 14 days. Town Supervisor Scott Russell, in an interview with Hamptons.com said “The practice of short-term rentals has been flying under the radar for a few years. Over the past couple of years it has exploded. So many homes have been added to the inventory by Airbnb, resulting in community complaints that we felt we had to address the problem. We looked very long and hard at the issues. There were some benefits to Airbnb, presumptively, a boon to the local economy. It filled a niche for accommodation in Southold which doesn’t have very many apartments, but when it’s all said and done, we had to look at the impacts that it was having on the community, including the commercialization of our residential community.”