March 29, 2022

Short-Term Rental Regulations Goes into Effect! What You Should Know

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By

Karl Scarlett

short-term rental regulations in D.C

What Do We Consider a Short-Term Rental in the District of Columbia (DC)?

A short-term rental lets a host rent out their primary house while staying on the property. There are no limitations on the number of stays during a year if the host is present. But, each rental visit can only last for thirty (or fewer) continuous nights.

Why do I Need to Apply for a DC Short-Term Rental (or Vacation Rental) License?

D.C. implemented a three-year-old law in January this year. The law restricts short-term rentals bookings on platforms like Vrbo and Airbnb. The law requires all hosts in D.C. to apply for a license. Hosts will also have to limit the renting period. 

The law passed in 2018 to implement new restrictions on short-term rentals. Naturally, it faced much opposition. Home-sharing services and homeowners opposed the bill. They considered it unnecessarily restrictive. The bill imposed a 90-day cap on the renting period. It also prohibited homeowners from using their second homes for their short-term rental business. 

But, the D.C. Department of Consumer and Regulatory Affairs reported in 2021 that it was ready to enforce the law. The agency began accepting license applications in April last year.

What are the Legal and Regulatory Considerations for Short-Term Rentals (STRs)?

The law applies to short-term rentals that last less than 30 days. All D.C. homeowners must obtain a license from DCRA for renting out their residence. It doesn't matter if they want to rent out a single room or an entire home on platforms like Airbnb. The cost of a two-year permit is $104.50. The rental license is not applicable for second homes.

What are the Benefits of this Law?

AirDNA is a trusted resource for vacation rental research. The company collects and analyzes valuable data. Findings from their study show that 79% of the district’s active short-term rentals comprise entire homes.

Hosts will have the opportunity to rent out spare rooms to make extra money. For example, they could use basements or bedrooms. But the law will also stop companies and property owners from using their property for short-term rentals only. While many argued that the law increased housing prices and affected the D.C. market for short-term rentals, the law is now applicable. 

Since there were concerns over some hosts renting out the property to tourists only, the council passed this law to put an end to the unrest in residential neighborhoods.

Which US Cities or States have Restrictions on Short-Term Rentals (STRs)?

Boston adopted its law in 2019. Officials in New York City are also considering their regulations on short-term rentals. But, the situation was more serious in Airbnb’s home, San Francisco. According to a 2015 ballot, homeowners in San Francisco strongly opposed the restrictions on short-term rentals.

Airbnb and its users argued that short-term rentals helped homeowners with their mortgage payments. Such rentals also offer neighborhood-based and distinct lodging options. Airbnb hosts also help raise money for the city. That's because they collect the same occupancy and sales taxes as hotels.

Similar rules regulating and restricting short-term rentals are also implemented throughout the Washington region. These include:

  • Arlington County
  • Alexandria
  • Fairfax County
  • Montgomery County

What Do I Need to Apply for the License?

DCRA systems obligate customers to have a single account to use the systems. That also includes the D.C. Short-Term Rental Licensure platform. Users who already have an Access DC account can skip this step. But, you can quickly sign-up if you don't have an account.

Here is what you need to do.

  • Visit the District of Columbia Short-Term Rental Licensing website. Begin the licensing application process. Now add basic contact information and register for the licensing platform.
  • Once you register, link the address you will use with your license platform. This email address will help you conduct short-term rentals.
  • Once your address gets verified, you will need to submit the complete application. You will also need to pay the licensing fees.

Remember to keep the following information ready. 

  • Proof of liability insurance (at least $250,000 in coverage)
  • Clean Hands Certificate, issued in the property owner's name. The certificate must be issued within the last 30 days. You can request the D.C. Office of Tax and Revenue for the certificate.
  • Vacation or Short-Term Rental Attestation Form if the property is in an association. Examples include Co-OP, condo, HOA.
  • Debit/credit card to pay for the license fees

Additional Requirements

  • The rental property must have an open exit. There should be smoke and carbon monoxide detectors. A fire extinguisher should also be present.
  • All hosts must have an easily accessible phone number. That will help the guests reach the owners or their representatives. Make sure this number is accessible 24/7 to report emergencies.
  • The host must post the Vacation Rental or Short-Term Rental License on their property.
  • Hosts must pay all transient lodging taxes, collected by booking services, on their behalf.
  • Hosts will record all bookings for two years.
  • Properties by corporate entities and investment properties are not eligible.

Fee and Cost

The cost for the Vacation Rental or Short-Term Rental License is $104.50. This license is valid for two years. The cost includes a $70.00 processing fee. There is also a 10% platform fee along with a $25 endorsement fee.

Property owners must have a Certificate of Clean Hands in the property owner's name. As per the Clean Hands mandate of the District of Columbia, individuals will not receive any permits or contracts if they owe a debt of more than $100 to the District of Columbia. This amount could be due to any taxes, fees, or penalties. Visit the D.C. Tax Office website to apply for a Certificate of Clean Hands.

Bottom Line

Washington, DC, is a thriving real estate market in the country. Yet, cities are now imposing new regulations for reducing the impact of short-term rentals. That's because short-term rentals can affect many factors of the housing market. Such as parking, traffic, and  traffic, and parking.

Is There Anyone to Answer My Questions About STR Licensing?

Great Dwellings can help you run a successful short-term/vacation rental business. We are a Washington DC-based property management company for helping homeowners. Our experts can help you scale your short-term vacation business. Contact us today to find out more about STR licensing.

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