Short-term rentals (STRs) have been a contentious issue in many Pennsylvania municipalities in recent years, particularly in popular tourist destinations like the Poconos Mountains. Many property owners are looking to capitalize on the growing popularity of home-sharing platforms like Airbnb and Vrbo to supplement their income or to offset their mortgage payments. However, these STRs are often seen as a nuisance by neighbors and local officials, who argue that they can lead to noise complaints, parking issues, and other problems.
To address these concerns, many municipalities in Southeastern Pennsylvania have begun regulating and permitting STRs. For example, Philadelphia requires all STRs to be licensed and imposes a hotel tax on them. Other municipalities, like Chester County, have imposed zoning restrictions on STRs, limiting them to certain areas and requiring that they meet certain safety and building codes. Various property owners in the Poconos will find that they need to acquire a permit for their county and then also their HOA. The Poconos have also found rental properties being scooped up by investment opportunists, who intend to use the property for rental purposes. This can cause unease with full-time residents and vacation property owners alike.
For renters, it's important to consider any homeowner association (HOA) rules or covenants that may apply to your property. Some HOAs may prohibit STRs altogether, while others may allow them with certain restrictions or requirements. If you own a rental property, it is important to review the terms of your lease agreement to ensure that you are not violating any terms related to STRs.
While Pennsylvania state law generally allows property owners to rent out their homes, there may be local regulations that restrict or prohibit STRs in certain areas or under certain circumstances. One of the most important regulations to consider is zoning. Municipalities may have different zoning classifications for different areas, such as residential, commercial, or industrial. Depending on the zoning classification, STRs may be permitted, prohibited, or subject to certain restrictions or requirements. For example, a municipality may allow STRs in residential areas, but only if the property owner obtains a permit and meets certain safety and building code requirements
Townships have found that STRs aren't all bad news. Many municipalities have benefitted from the increase in revenue from taxes and fees related to STRs. The revenue derived from STRs in the Pocono Mountains increased by over 275 percent between June 2020 and June 2021, rising from $10,881,000 to $40,833,000. This was the largest percent change in all of PA's 11 regions. With increased renters come increased need to entertain and feed vacationers. Brick and Mortar resorts, restaurants, and stores have all benefited from the increased traffic.
Here are a few examples of municipalities in Eastern Pennsylvania using the fu nds generated by STRs to benefit their communities:
Pocono Township: In Pocono Township, STRs have become a significant source of revenue for the local government. According to the Pocono Record, the township generated over $1.1 million in revenue from STRs in 2019 alone, which was used to fund road improvements, police services, and other community projects.
Bethlehem: In Bethlehem, STRs have been credited with helping to revitalize the city's downtown area. According to the Morning Call, the city has seen a significant increase in tourism and economic growth since it began promoting STRs, with many visitors opting to stay in local homes and apartments rather than traditional hotels.
Bucks County: In Bucks County, STRs have become an important part of the local tourism industry. According to Visit Bucks County, many visitors choose to stay in local homes and apartments when visiting the area, which has helped to drive tourism spending and promote local businesses.
Lancaster: In Lancaster, STRs have been used to address the city's affordable housing crisis. According to Lancaster Online, the city has implemented a program that allows property owners to convert their homes into STRs for up to three years, after which they must either convert the property back to a permanent residence or sell it. The program has been credited with helping to increase the supply of affordable housing in the city. Momentum is building that 2023 will be a strong year for tourism there.
What can PA municipalities do to mitigate tensions between STR owners and residents?
To keep STR owners and renters happy while also maximizing revenue coming into the municipality, there are a few strategies that municipalities can employ.
Streamline the permitting process
This essentially would make it easier for property owners to comply with regulations and obtain the necessary permits. This can reduce the administrative burden on both the property owner and the municipality, while also ensuring that STRs are safe and meet local building codes.
Promote STRs as a viable and attractive option
This can include partnering with local tourism organizations to promote the area's unique attractions and amenities, and highlighting the benefits of staying in a local STR over a hotel or other traditional accommodation.
Enforce the Rules
Certain municipalities have worked to strike a balance between the needs of STR owners and the concerns of local residents. This can include enforcing noise ordinances and other regulations, while also ensuring that STR owners are aware of their responsibilities and obligations as property owners in the community.
In summary, short-term rentals can bring a variety of benefits to Eastern Pennsylvania municipalities, including increased tax revenue, economic growth, and tourism promotion. By embracing STRs and working to promote them as a viable and attractive option for visitors, townships can continue to benefit from the growing popularity of home-sharing platforms like Airbnb and Vrbo.
If you have questions regarding short term rentals in your township, contact the municipal law group at High Swartz LLP for more information at (610) 275-0700.