Renting Out on Airbnb? More Regulations Coming

Loudoun’s multi-year effort to track, regulate and tax short-term rentals, such as those offered through Airbnb and VRBO, has begun to yield results.

Companies like Airbnb have resisted increased regulation, and the taxation that comes with it. But last year, the General Assembly passed a law that requires hosting platforms like Airbnb to register with the state Department of Taxation to collect and remit taxes on behalf of the property owners. This year, the General Assembly passed another law authorizing localities to require people offering short-term rentals to register with the government.

Visit Loudoun President and CEO Beth Erickson helped lead Loudoun’s effort to wield more control over short-term rentals. She said recently Visit Loudoun checked Airbnb listings in Loudoun and found 439 residential units offering 932 sleeping rooms.

“When you put that into context, we have 131 sleeping rooms in traditional bed-and-breakfasts,” Erickson said. “That clearly greatly eclipses that number. That 932 sleeping rooms represents about 16 percent of the inventory that we have in our hotels.”

For a person traveling on a budget, renting a spare bedroom on internet platforms like Airbnb can also be cheaper than a B&B or a hotel.

In pushing for greater regulation of short-term rentals, Erickson has cited concerns about safety, including fire code, and Loudoun’s foregone tax revenue. The county collects a transient occupancy tax on hotel and B&B stays, but is not collecting a tax on all of those short-term residential rentals, simply because there is no way to keep track of them. Last year, Visit Loudoun estimated the county had missed out on $923,000 in revenue.

County supervisors voted Oct. 19 to establish a registry and annual registration process for rental operators without discussion. Only Supervisor Ron A. Meyer Jr. (R-Broad Run) voted against.

A working group comprised of staff members from the Departments of Planning and Zoning, Building and Development, County Administration, Loudoun County Fire and Rescue, and the Commissioner of the Revenue will decide help set the registration fee for homeowners renting rooms through sites like Airbnb and VRBO—and penalties for noncompliance.

“Short-term residential rentals are a key player in our industry, and they’re going to continue to be a key player in our industry,” Erickson said. “And I think that making sure the county has that infrastructure in place for short-term residential rentals to be able to flourish in our economy is important.”

After the registry is set up, the county will have to decide how these home businesses—which by definition are in residential areas—fit into its zoning ordinances. The rooms and houses for rent could also face additional health department, building code, and fire code regulations.

But some of the operators on Airbnb are renting properties where they don’t live. That, according to county zoning officials, is where the trouble can begin.

“If people don’t live in a house, but they’re renting it out in the middle of a neighborhood, obviously, they don’t have the same skin in the game as the people that are living there full time,” said Deputy Zoning Administrator Chris Mohn.

Some of the rentals are run by full-time, multi-unit operators. Visit Loudoun reported last year that 17 percent of Airbnb hosts rent out two or more residential properties, and account for nearly 40 percent of revenues at the site.

“That starts changing the dynamics,” Mohn said. “Those are no longer a person participating in the sharing economy by renting out a room or sharing a house to people in that respect, but instead it does take on a different, business aspect. And if it’s a multi-family building, it starts to behave a lot like a hotel or something.”

Greg Miller is the cofounder of a company that owns 40 hotels—including four in Loudoun, an Embassy Suites and Homewood Suites on Waxpool Road, a Hilton Garden Inn and Aloft at Moorefield Station. He said the market of people renting out rooms in their homes “isn’t really a problem for us.”

“It’s that approach when it becomes illegal hotels, or it becomes disruptive in a way,” Miller said. “We’re regulated, so we have all kinds of things that we have to do to make sure safety is a priority.”

He estimates the hotel business in Loudoun loses 350 rooms to short-term residential rentals on weekends, plus another 250 on major holidays. As a conservative estimate, he said that accounts for $8.5 million in revenue annually for Loudoun’s 34 hotels, or 5 percent of their annual revenue. Two years ago, it was less than 2 percent of their revenue.

And the safety regulations, he said, aren’t just in case of fire.

“If it’s a hotel, in this age of terrorism, we have to have positive identification, and it has to be presented,” Miller said. “But this is going to be the way, I think, for people that don’t want to be positively ID’d to be staying wherever they want.”

But most Airbnb hosts, like Angie Miles, are simply using their extra space to create a little extra income. When she and her boyfriend bought a house in Leesburg, part of the reason they chose the home was because of a small street-side cottage on the property.

County supervisors voted to begin registering short-term rentals like this Airbnb property on South King Street in Leesburg. It’s the first step toward taxing and regulating Airbnb-type properties in Loudoun County. [Douglas Graham/Loudoun Now]
“It’s been great, actually,” Miles said. “We really didn’t expect the amount of people who would be interested in a little cottage in Leesburg.”

She said since they’ve started offering the cottage a few months ago, there have only been a handful of nights that haven’t been booked.

“It was just overwhelming in the beginning, something I didn’t expect,” she said. “And now it’s just kind of a routine.”

Miles and her boyfriend both have full-time jobs. The narrow two-story brick cottage starts at $70 a night, and she said working in Leesburg, it’s relatively easy for her to get away for 45 minutes to clean it up and get ready for the next guest.

That also makes the price of a night in the two-story cottage competitive with a single room in a hotel.

County staff members say the registry will be good for more than just taxes—as a central, public source of information, it can also be a resource for others, such as for HOAs looking to see if there are rental operators in their neighborhoods. And Visit Loudoun has argued unregulated short-term rentals can be a nuisance to the neighborhood, relating horror stories of loud parties and multiple calls to law enforcement.

But Miles said most of her guests are in town for weddings, to visit wineries, to escape the city, or to bike the W&OD or C&O Canal trails.

“They all seem pretty normal to us, we haven’t had any crazy stories,” Miles said. “I know other people have talked about it, but I think because it’s so small you can’t really throw a party in it and you can’t really get too wild and crazy for the most part.”

Well, almost no crazy stories.

“We did find a tooth in a tic tac box, which was strange,” Miles said.

This article was updated Oct. 27 at 3:07.

rgreene@loudounnow.com
@RenssGreene

2 thoughts on “Renting Out on Airbnb? More Regulations Coming

  • 2017-10-26 at 5:12 pm
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    This is outrageous. To call renting out your house illegal and to say the government has lost revenue when they are seeking to take money out of the pockets of home owners? Why do they think they are entitled to a taxpayer’s hard earned money? Are they a better judge of what to do with my money than I am? Are they going to put my children through college or are just looking to assure their position, power and money by asserting they have a better use for it? Last time I checked there are plenty of laws on the books that prevent crimes. Even so they haven’t got rid of gangs that prey on our citizens. Renting out your home is not a crime; it is a right of free citizens. So if I loan my riding mower to my neighbor and he pays me with a case of beer did Loudoun just lose money if I don’t pay taxes on this income or did I just keep my liberty?

  • 2017-10-27 at 10:39 am
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    Amen Pat..

    County government is using their regulatory power to expand said power, and further the interest of corporations, all at the expense of individual Loudoun citizens. This is poor public policy.

    The county doesn’t actually care about health, building codes, or fire regulations, or the ridiculous terrorism angle. They just want the money. That’s what this is about. Money.

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