Over the summer of 2015, the attention of town officials and the courts regarding rentals on the East End of Long Island has gained momentum. On August 7th, the Suffolk County Supreme Court recognized a tenant's right to recoup rent paid to a landlord who failed to procure a rental permit, as required by the Town of Southampton Code. On September 4, 2014, the Suffolk County Supreme Court recognized a tenant's right to terminate a lease where the landlord had not procured a rental permit required by the Southampton Code because the lease was illegal. Landlords who have filed suits to collect unpaid rent found the claim unenforceable absent the required permit.
Another area of focus by the municipalities is the subject of the short-term rentals, made notorious, in part, by the website Airbnb. The towns of Southampton and East Hampton already have laws restricting short-term rentals of fourteen and fifteen days respectively. This past August, the Board of Trustees of the Town of Southold passed a law prohibiting rentals of fewer than fourteen days. The law is expected to go into effect in October of 2015. I recently had the opportunity to meet with Town Supervisor Scott Russell
to discuss the new law.
Supervisor, why did the Board decide that the town needed a minimum stay rental law?
The practice of short-term rentals has been flying under the radar for a few years. Over the past couple of years it has exploded. So many homes have been added to the inventory by Airbnb, resulting in community complaints that we felt we had to address the problem. We looked very long and hard at the issues. There were some benefits to Airbnb, presumptively, a boon to the local economy. It filled a niche for accommodation in Southold which doesn't have very many apartments, but when it's all said and done, we had to look at the impacts that it was having on the community, including the commercialization of our residential community. The groups that were against any limit focused on bad behavior that could be fixed with a rental permit which aren't as enforceable as they would lead you to believe. The complaints I got couldn't be classified as bad behavior. Eight or ten people sharing a barbecue in the backyard until one or two in the morning every weekend isn't bad behavior. Also, new people coming to the community every weekend, people weren't comfortable, particularly in Southold where we have so many private beaches run by homeowners associations. Landlords aren't just renting out their house; they're renting out their community. People in those areas felt that they were maintaining the community beaches for commercial operation.
Do we know how many homes are being rented through Airbnb?
The number we hear is about six hundred units, which is about 5 percent of our housing stock. A few years ago, we had none. Unless we take action now, how many will there be in the future? 10 percent, 15 percent, 20 percent? Given the lucrative nature of the industry, you're going to see rapid growth which will have a profound effect on properties available for rent. We need affordable rental units. We don't have enough rental units, affordable or unaffordable. It's reasonable to assume that overtime the available of inventory will be eaten up and exacerbate the housing problem we have, and lead to a gentrification of the community which, good in some ways, has an awful lot of drawbacks. That weighed very heavily on my decision to implement the law.
You referred to issues of overcrowding, which implies code violations related to health and safety. Would you please speak to that?
Yes. Some argued that could be addressed with a rental permit, but that's not very enforceable. How can we say how many people are living in a house? There is a Constitutional issue. We can't just walk into people's houses to see how many people are living there. We would have to rely on the veracity of the leases.
Wouldn't that also mean that you would be acting after the fact, rather than being able to prevent an undesirable situation?
That's right. It could also be the case that the landlord rented the house based on the terms of the rental permit, but the tenant violated it, which is unfair to the landlord.
Motels, hotels, and bed and breakfasts have been the proper means for accommodating short-term rentals. Please explain how these short-term landlord rentals affect those commercial establishments.
One of the goals of zoning is the expectation that you are going to operate in competition with similar businesses regulated by law. It is very costly to operate a B & B. Since they operate in a residential area, there are lots of regulations that mitigate the negative impacts on the community. There are regulations for parking, the owner has to live there, and can deal with problems, and they are subject to Federal taxes and State taxes. Their insurance carrier is going to know that they are operating a B & B. People talk about the new sharing economy, but for some people it's just an end run around zoning, planning, regulations, and taxes.
Is it different for an inn?
Yes. Inns have to be located in a commercial zone, as do hotels and motels. They are subject to County Health Department regulations, annual inspections, and other heavy regulations. Our Comprehensive Plan is intended to meet all of the needs of the community. We can't attract these investors if they have to compete with illegal rentals.
Why did the board shift its intention from seven to fourteen days?
We realized that the problem with short-term rentals was turnover, and seven days would have a negligible effect on the problem.
What are the penalties that may be imposed upon a landlord who violates the law?
The minimum fine is $1,500 and may escalate to $8,000 for repeat violations.
The New York State Attorney General considers rentals through Airbnb to be in violation of the New York Multiple Dwelling Law. Are you familiar with that?
Yes. Something we added to the law is what is known as presumptive enforcement, and rentals through Airbnb come under that presumption.
Who would prosecute violators?
The Southold Town Attorney. We are hoping that we will achieve compliance rather than prosecution. That's our goal.
John is a St. John's University graduate, licensed Real Estate Broker, DOS Certified Instructor, and real estate consultant. He previously taught at NYU, LIU, and The Cook Maran Real Estate School, which he helped found.