Homeowners who violate Southold Town’s short-term rental regulations could soon be paying big bucks.
The town is poised to raise the penalty for renting a home for fewer than 14 nights to $5,000 from $500, and repeat offenders could lose their ability to rent their homes, said Scott Russell, the town supervisor. Southold will also require short-term rentals to display their rental permit number in advertisements.
At a recent meeting of Southold trustees, Russell also pushed an increase in the minimum stay to 30 days, but that failed.
“The public files complaints on short-term rentals more than anything else,” he said.
Still, the town has issued only nine violations in the past few months. Proponents hope stricter enforcement could lead to more housing stock becoming available for sale or long-term tenancy by forcing churn-and-burn owners to change course.
While Southold makes a more serious effort to keep Airbnb and VRBO owners in line and ensure their homes are up to code, it won’t employ AI — at least not yet.
“They’ve had mixed results in other towns,” Russell said of artificial intelligence. “Some speak highly of it. Many haven’t had the type of outcome they’ve been looking for.”
For now, the town is pursuing a shoe-leather strategy, or as Russell put it, a “knock-on-doors and take-affidavits approach.”
“We’re not just waiting for complaints,” he said.
The ubiquity of short-term rentals has spurred action from several municipalities out East.
Greenport Village announced in July that it would start using artificial intelligence to monitor short-term rental listings, following a similar decision from Suffolk County in June. The county’s crackdown began last year after a fire at a Southampton rental killed two young women on vacation. An investigation found that the home had not undergone safety or rental inspections.
Data on Airbnb and Vrbo listings collected by StayMarquis, a company that manages vacation rentals in the North Fork and greater tri-state area, show that short-term rentals are growing in the area: The number of listings this summer is up to roughly 1,000, compared to 800 last year. The increase in supply is so great that the average nightly rate has fallen by 5 percent.
“What we can see in the data is the average length of stay for peak season in 2023 is coming in at about five nights,” said Max Schuster, StayMarquis’ chief revenue officer.
“Anonymous LLCs have come in and bought up houses and are running them as illegal weekend rentals.”
Suffolk County began using AI in June to identify short-term rental owners, who are supposed to pay a 5.5 percent tax. Officials also say it will ensure that homeowners who rent their properties are in compliance with local regulations, and will increase tax revenue by $9 million to $12 million annually. The software costs $270,000 per year.
Greenport Mayor Kevin Stuessi said roughly 320 short-term rentals are available within a single square mile that includes his village’s historic district. By contrast, the village has 10 hotels with only 155 rooms, and about 2,000 permanent residents, according to the Suffolk Times.
“What has happened is some anonymous LLCs have come in and bought up houses and are running them as illegal weekend rentals,” said Stuessi.
“It’s been very challenging for neighbors when party buses are showing up and loads of people are pouring out into a house next to them.”
Stuessi said the Greenport AI program, called GovOS, should be operational sometime this fall, at a cost of just under $20,000, which will be offset by rental permit fees from increased compliance. He also said he plans to propose raising those fees, which are now $250 for two years, and fines. In the meantime, Greenport has adopted a similar strategy to Southold, in which the village is situated.
“We’ve already stepped up enforcement significantly, “ said Stuessi, adding that his administration is currently doing things “the old-fashioned way,” which involves matching rental listings to photos on Google Maps and checking them against rental permits.
“It’s hard to do,” he said.
Stuessi believes that stricter enforcement of the 14-day minimum could lead to an increase in homes on the market. While some residential brokers are skeptical of that, Airbnb and Vrbo listing data collected by StayMarquis suggests it might just happen: Less than 10 percent of bookings across the North Fork meet the minimum stay.
An owner’s carrying costs figure to play a role.
“Owners who purchased homes in 2020 in a lower-interest-rate environment are much less likely to be impacted than those who made purchases in 2022 and 2023 in a higher-rate environment and price point,” said Schuster.
But agents at Corcoran and Compass don’t think many homeowners will be forced to list their properties as a result of the changes. The North Fork has become a co-primary community since the pandemic spurred more New Yorkers to escape lockdowns in cramped apartments, according to analyst Jonathan Miller.
“The people that are buying second homes aren’t just buying them to rent them out,” said Corcoran’s Sheri Winter Parker. “I’m not seeing that it’s going to necessarily affect the for-sale market.”
Bridget Elkin, who heads the Elkin Team at Compass with her husband Eric Elkin, said many people rent their homes out for a month during the summer while they vacation elsewhere.
“I think the residents and maybe the town think there’s a lot more investors in the market owning these Airbnbs,” said Elkin.