Keith Richard, Principal
Maine is renowned as a summer tourism destination. In Portland, even the “budget” hotels can run upwards of $400/night during the peak season. Given the shortage of rooms, and high prices, it’s no surprise that vacationers have looked to other options.
Enter rental websites and apps like Airbnb and VRBO. Many Mainers have rented rooms, apartments, and home on a short term basis using those platforms, with rapid success. One estimate found that in 2017, short-term rentals surged more than 62% statewide in Maine and have continued to keep pace through the pandemic.
Renting your property raises a host of legal issues, touching upon taxation, liability and insurance law, and local municipal regulation. The focus of this article is local municipal regulation.
While short term renting has benefits for property owners and guests alike, the practice has come under criticism. Where housing is in short supply, converting a home to a full-time short-term rental essentially removes a home from an already stressed housing market. Opening a home up for rentals could also constitute business or commercial activity in what would otherwise be a predominantly residential neighborhood. Aside from introducing an occupancy tax, the Maine legislature has not passed legislation regulating short-term rentals. Bills proposed in 2015 to require statewide licensing and in 2021 to prohibit municipalities from banning short term rentals failed to become law.
By default, the issue has become a matter of local concern; cities and towns have filled the void, taking varying approaches.
In Portland, the City Council passed an ordinance that was effective January 1, 2018. Among other requirements, the ordinance requires registration, payment of a fee, and caps the number of rentals.
South Portland submitted a short-term rental ordinance to a referendum and vote, which upheld the ordinance. Current rules still allow owner-occupied residences to rent rooms and units, but with restrictions and detailed rules.
Long before Portland and South Portland passed legislation, however, the popular coastal community of Bar Harbor attempted to regulate short-term rentals in 2006. Property owners filed a lawsuit challenging the ordinance as unlawfully curtailing their rights and prevailed. Bar Harbor has since passed a revised ordinance requiring registration. The ordinance limits the number of registrations per property owner, distinguishes between primary residence rentals and second home rentals, and caps the percentage of dwellings that may be registered at 9%.
In sum, if you’re thinking about renting a room or apartment unit on Airbnb or a similar site, be sure to seek advice regarding your specific local regulation (if any), and other potential legal issues that could arise.
This article is for informational and educational purposes, and is not intended to be legal advice. You should consult legal counsel to assess the legal issues specific to your case. Archipelago Law has extensive experience in land-use matters, including short term rental ordinances and regulations.