Short-term rentals: Towns take up regulation, for a variety of reasons

GILFORD — Gilford residents will weigh short-term rental rules proposed by the town’s planning board next month. The proposed regulations, which succeeded to the town warrant at the town deliberative session Tuesday without amendment, create detailed requirements for property owners around capacity, guest curfew, septic management, trash disposal, parking and property manager eligibility. 

With climbing demand for listings near Lake Winnipesaukee and in the Gunstock Acres, Gilford has 234 active online short-term rental listings, according to the tracking platform AirDNA, second in the county and other surrounding towns only to Laconia’s 250. Across the Lakes Region, about 99% of such rentals are full houses rather than spare rooms, apartments or in-law suites. 

The popularity of short-term rentals has reached a nationwide zenith the past two years — alongside ballooning prices and dwindling supply of housing to buy or rent. But as the Airbnb-defined short-term rental industry settles into its dominance of the lodging market, an increasing number of communities such as Gilford are grappling with what restrictions, if any, are right for them. 

Critique of STRs falls into two primary genres. 

In the first, neighbors complain about the behavior of short-term guests: they park too many cars in the wrong places, overburden utility systems, leave trash and food scraps out attracting pests and are loud late into the evening. 

In the second, rentals gobble up available homes and apartments. People who might otherwise sell or rent their residence instead list it on Airbnb, and homes that do come up for sale are quickly bought — often for well above market price — by out-of-staters looking for lucrative real estate investments. The slow metamorphosis of family homes into weekend-centric rentals means once tight-knit neighborhoods become ghost towns midweek. 

Which rules local towns choose to adopt, and how they are enforced, indicate which of these trends officials find most pressing, and whether they even see short-term rentals as a concern. 

Gilford’s proposed ordinance change aims at absentee owners and properties with behavior and maintenance issues.

“We don’t have a problem with every short-term rental, mostly with absentee landlords,” Planning Director John Ayer said. “We’re trying to put in regulations so we can know who owns what and make sure they have rules in place.”

Gilford’s proposed rules prevent overly large parties of guests and emphasize the responsibility of property owners. 

The rules limit capacity by specifying what can be defined as a sleeping area and how many people are allowed to stay per sleeping area in a house. The number of people on the property between the hours of midnight and 8 a.m. can’t be larger than the sleeping capacity, imposing a curfew on large guest gatherings. To measure compliance, permit applicants would have to submit both site and floor plans.

Parking is limited to one space per sleeping area, and owners have to prove the capability of their home’s septic system. 

Importantly, owners must supply the town with contact information for themselves and, upon request, guests. 

Gilford does not limit short-term rentals to owner-occupied properties, but its amendment indicates that owner-occupied listings don’t pose an issue. These requirements only apply to rentals where the owner is not a resident of the home.

Town officials have considered, but decided against, owner-occupant requirements, Ayer said.

“We tried to strike a balance between regulating and allowing people to continue doing what they’ve been doing.” Ayer said. “We determined that allowing some leeway for people is something that would work.”

There have been many homes purchased exclusively for short-term rental and consequently some concerns about housing stock, according to Ayer, but none that outweigh beliefs of the benefit an ample rental supply brings to the local tourism industry.

Given Gilford’s local economy, “the planning board felt inclined to allow people to rent their homes,” Ayer said. “It’s a concern, but we’re continuing to allow the market to function, largely.”

Rules in other communities

After forming a short-term rental committee in 2019, Meredith added a zoning ordinance that restricts rentals to family homes and caps bookings to 120 days per year.

Meredith’s Community Development Director John Edgar reported to the committee that, as of 2020, 36% of Meredith’s housing is “used in a recreational way.” Edgar also had concerns about implementing rules that could not be enforced. In a public survey about short-term rentals, more than half of responses viewed them positively, and most negative comments focused on behaviors such as parking and safety concerns. Edgar was unavailable for comment.

In 2019, the Laconia City Council approved a new ordinance requiring short-term rental owners to be owner-occupants of the property they list. This means that, per the rule, it is their primary legal residence and that they stay there at least 150 nights per year. While some exceptions were added six months later, the ordinance’s language declares outright its focus not just on disruptive rentals, but on the encroachment of the market on housing supply in residential neighborhoods. 

Short-term rentals, the ordinance states, are restricted by Laconia “to preserve the traditional character of residential neighborhoods that can be negatively impacted by this type of use and to help preserve the quality and quantity of the housing stock for year-round residential use.” 

At the moment however, the way this ordinance is enforced leans toward a focus on rentals with rowdy or disruptive guests. Because the city’s resources for enforcement are limited, the city only engages with rentals without permits when they’re brought up in neighbor complaints, according to Planning Director Dean Trefethen. Listings that fly under the radar, or don’t have friction with neighbors, are able to evade the owner-operator requirement.

The city is considering upping its enforcement resources, looking to take on a third-party software platform that helps municipalities identify, and even bring into compliance, short-term rentals without permits. Enforcing the requirement for all rentals, not just problem properties, would better align the city’s enforcement on the ground with the intentions laid out in the ordinance. 

Regardless of their aims and strictness, requirements for short-term rental owners to hold a permit can help municipalities manage any friction that arises between residents and landlords. 

The permitting process has facilitated the city’s ability to educate owners about their responsibilities as hosts and how to vet guests well, Trefethen said. This has markedly decreased the behavior concerns at permitted properties, he noted. If owners receive numerous complaints and don’t take action, permit revocation can hold them accountable.

Debates about how and whether to restrict short-term rentals have bubbled into a statewide conversation.

A bill that would have allowed municipal regulations, but prohibited any that ban short-term rentals by certain owners or in certain zones, died in the Legislature last year. Proponents argued that bans infringe on property owners’ rights, and critics felt that the bill steamrolled local officials’ authority to write their own zoning laws. 

A dispute between the town of Conway and a local property owner went before the New Hampshire Supreme Court last year. The case, which awaits a ruling, won’t decide whether it is legal to restrict or ban short-term rentals — the city of Portsmouth won a NH Supreme Court case in 2019 affirming the legality of its ban — rather, it will determine whether the language in Conway’s zoning actually does so.

According to information gathered by the state Division of Economic Development Business and Economic Affairs, 36 municipalities have adopted some kind of short-term rental rules and definitions. Of these, nine have outright bans in certain zones or districts, or allow them only by special exemption. Sixteen have rules that, at the strictest, create safety, documentation and behavior requirements for rental owners and their guests. Some of these create distinctions based on whether or not a rental is owner-occupied or has the owner on site during the rental, but allow the listing either way. Seven, including Laconia, allow them only in owner-occupied properties or with an on-site manager, among other rules. 

Once a regulation is confirmed, how it will be enforced also poses a tall task for planning departments. There is now an entire industry of companies that assist municipalities in identifying short-term rentals and enforcing ordinances. Laconia is considering taking on this service to enforce its permit requirements.

As short-term rentals cement their foothold in New Hampshire and continue to play a role in local housing markets, municipalities will increasingly confront questions about whether and how to regulate them in a way that best serves their communities. Gilford voters will weigh one answer to those questions when the proposed rules appear on the municipal ballot in March.