Do your neighbors have a lot of visitors with out-of-state plates on their cars? It could be a sign of another vacation rental business.
Homestead city ordinances allow Bed & Breakfast rentals only if the property is designated historic. Absent that, City Code is silent on short term rentals other than hotels or motels.
The best known short term rental operation is AirBnB. Founded by two roommates in San Francisco in October 2007, it was named for the air mattresses they threw on their floor and rented by the night to help meet an expensive rent.
Today, AirBnB has annual revenue of $2.6 billion with a valuation of over $31 billion. Its three millennial executives are all multiple billionaires.
There are already competitors. Websites advertise rentals through hometogo and FlipKey. HomeAway was already a worldwide operation when it acquired VRBO (Vacation Rentals By Owner) in 2006 that was since acquired by Expedia. Similar sites like Trivago.com direct inquiries to rentals as well as hotel rooms.
VRBO started in Colorado in 1995 with a different business model. Prior to widespread internet use, rental ads were considered costly classified advertising. Under VRBO, property owners pay an annual fee to list rentals that the owners manage.
AirBnB services are clearly universal claiming operations in 190 of the world’s 195 countries as do most companies.
There are objections to short term rentals however. Local residents often complain about increased traffic, parking problems and especially noise. Authorities may object to rentals for lack of oversight or use of inappropriate structures on safety grounds (think rickety boats).
Towns object to short term rentals because hotel occupancy taxes become largely unenforceable. Insurance companies are reluctant to cover “business pursuits” like this under homeowners’ policies. There are also questions about application of Fair Housing acts to avoid discrimination and the Americans with Disabilities Act to ensure compliance with rules for the disabled.
Courts have been asked to decide what short term rental means. An Indiana court compared residential use to business use regulation under zoning ordinances (Siwinski v. Town of Ogden Dunes, 2010). The case concerned a VRBO listing with rentals by the homeowners.
Weighing various nuisances of sub-rentals against permissible home office or telecommuting use, the court said local zoning must expressly restrict short term rentals if that’s what the town intended. The VRBO clients won.
A Maryland court decided a rental host did not need to be a property owner. The court said if there is nothing in the lease about short term rentals, a tenant could sublease without the landlord’s consent or knowledge.
There are different approaches to regulating the short term rental market. A municipality could institute a total prohibition. It could put a cap on the number of renters allowed. A town can regulate the parking or limit number of guests per lot size.
The biggest impact might come from a minimal rent period (such as three days often seen in Bed & Breakfast rentals) or limiting the maximum consecutive rentals or the number of rentals within a time frame.
For oversight, government could require that the home is the owner’s primary residence. A common approach is to require owner occupancy for short term rentals.
Homestead’s 1999 B&B ordinance requires a resident property owner or manager and restricts rentals to a maximum of ten days in any sixty day period. An annual review for compliance is also required.
Miami-Dade County modified its ordinance in September 2018 permitting “home occupation” as an ancillary use of a residence. Ordinance 33-25.1 provides modest rules for AirBnB-style businesses but requires an annual certificate of use. The County’s certificate subjects the property to a compliance inspection on all code requirements.
The Certificate of Use application states any ordinance violation can result in a $500 ticket, a lien on the property for unpaid tickets, and the filing of a civil law suit.
Miami-Dade County passed Ordinance 33-28 in 2017 dealing with vacation rentals in unincorporated areas of the county. It requires a responsible party be available 24/7 for any issues arising from a rental. That party doesn’t have to be the property owner.
This Ordinance is more thorough than the home occupation law and includes a review of the property’s violation history. It too requires a Certificate of Use. Any “platform entity” third party (like AirBnB) having a role in rental transactions must do weekly reports to the county, agree to provide only payment processing services, must insist clients obey all Ordinance requirements, and has to provide business records for inspection.
AirBnB’s terms of service with its members in 2014 was said to be 69 pages to cover all contingencies of local regulation.
Neighborhood homeowners’ associations add an additional level of oversight for short term rentals. Their rules can be more restrictive than a county’s and take precedence in the absence of municipal regulation. Some
neighborhoods permit an AirBnB business by grant of a special license that is revocable, requiring a house decal visible to authorities. Older associations prohibit business use of a residence that would cover short term rentals.
California courts generally have said local restrictions on vacation rentals by homeowners’ associations are per se reasonable. The usual standard applied by associations is compliance or compatibility of the premises with adjoining properties.
It is difficult to locate rentals precisely on the public AirBnB site, presumably by design to avoid site visits or private rental deals.
A search restricted to Homestead’s zip codes returns about 80 properties available within city limits, two of which are the Redland Hotel. An additional search confined to the Homestead vicinity and Redland found about 240 offered properties.
Prices for one-bed, one-bath spaces range from $26 to $61 per night; local houses rent between $100 and $200 per night on average but allow more guests. This seems to offer stiff competition to area hotels and motels.
Florida has always been notorious for vacation rentals. Now, a simple new business idea that generates recurring revenue with limited risk from something you already own is very popular. And the idea has been successful beyond anyone’s wildest dreams.