Commercial short-term rental facts and solutions.

If you’ve been part of the island for a decade or more, the same issues likely continue to pop up on your radar screen. Nantucket has been growing at an unsustainable rate: construction is everywhere, traffic congestion, poor water quality, stress on the failing infrastructure, and perhaps Nantucket’s biggest problem, the lack of attainable year-round housing.

The answer is simple: it’s a problem to which there are solutions. With the State now requiring owners to register and collect the lodging tax, we now have information about Nantucket’s landscape. The island has over 2,000 short-term rentals registered with the State – about 20% of the housing stock. That’s an estimated 8,500 “hotel rooms” sprinkled around the island. The real concern is a growing number of investors, including corporations and vacation clubs, buying properties to operate short-term rentals. A few other key findings:

• Roughly 80% of registered rentals are owned by off-island individuals and businesses. This means most of the economic benefits of these businesses are not staying on-island.
• There are over 330 rentals in multi-property portfolios. These are businesses akin to mini-hotels in residential areas. They are disrupting and changing the character of neighborhoods (if you have a story let us know by sending an email to in**@ac****.org).
• Commercial short-term rental owners pay residential property taxes while other businesses on-island pay commercial property taxes, which is 1.7x higher. Essentially, we are all subsidizing these businesses; the playing field is not level.
• Investors are purchasing properties in year-round neighborhoods, directly competing with year-round residents.

It’s having dramatic impacts on housing, development, traffic, infrastructure, and the environment. If we don’t address this, investors will dominate the housing supply on Nantucket very soon. There is currently a great deal of detailed information in our white paper: The long and short-term of it – The impact of short-term rentals on Nantucket. And in our one-sheet digests of this data. You can download those pieces and more below.

The research shows a strong link between local housing shortages and the growing number of investors running short-term rentals in communities across the country. Cities like Boston, New Orleans, Charleston, New York City, Santa Fe, and San Francisco have instituted regulations to get housing back into resident hands. Resort destinations in Hawaii, New York (i.e, The Hamptons), and across California, Florida, and Arizona have found ways to regulate short-term rentals to minimize their communities’ impacts.

Nantucket has had trouble maintaining housing for year-round residents for decades. But this has progressed into a crisis. Year-round residents can’t compete with investors who can always outbid them, and investors are lining up to buy entry-level properties. Development is everywhere, but the US Census estimates the island lost 600 year-round rentals between 2010 and 2018. Year-round rentals are now an endangered species.

The Commonwealth of Massachusetts passed legislation in 2019, giving municipalities the ability to regulate short-term rentals in a customized local solution. Most communities quickly adopted the short-term rental tax — an extension of the lodging tax. Boston instituted a ban on investor-owned short-term rentals and reduced the number of short-term rentals by two thirds. The suburbs banned short-term rentals entirely. Nantucket is different from these examples, but has access to the toolbox and can look to many other resort destinations (i.e., Kauai, the Hamptons) to help solve this problem.

Potential remedies:

Before implementing a solution, we need to discuss this as a community. There will be strong voices on all sides of this issue, and in order for the island to come together and fix this problem, there needs to be a dialog to land on a good solution for the island as a whole, not just a few. 

That said, let’s review three broad approaches.

1. Taxes and fees: Level the playing field by removing artificial subsidies and taxing short-term rental businesses as businesses. We could also require the inspections and permits that other commercial entities on the island must adhere to like yearly fire inspections, health codes, and other licenses to ensure all businesses’ safety and code adherence. 
2. General bylaw: Many communities have more liberal rules to allow residents to short-term rent their primary residence while having stricter rules for other short-term rentals. Municipalities can address capacity limitations, turnover frequency, number of days rented, and much more.
3. Zoning enforcement: Other communities have opted to address the issue by enforcing zoning laws or creating new ones that dictate where short-term rentals can operate.

ACK•Now’s next task is to put forward a short-term rental licensing program designed to help protect year-round housing and island neighborhoods, while helping to foster the traditional vacation rental market on Nantucket. The organization is dedicated to bringing to light all of the available information while getting input from as many as possible. If you’d like to be a part of that, please join our mailing list to receive timely updates, ideas, and insights. And please send us your thoughts at in**@ac****.org.