City leaders are split over whether residents should be allowed to rent out their entire house for short periods of time, and the divide is keeping Raleigh from legitimizing residential rentals through online services such as Airbnb and VRBO.
Raleigh currently has no regulations governing those who rent out their properties for less than 30 days, meaning such activity is technically banned. However, city leaders in late 2014 opted to pause enforcement until they adopt short-term rental rules.
A proposal to allow residents to put up to two rooms for rent, but not an entire house, died Tuesday night after a rare 4-4 vote by the City Council. Raleigh will continue to have no rules as it goes back to the drawing board.
The drama revealed tension between city leaders who fear that legitimizing whole-house rentals will bring unwanted traffic and noise and those who say banning them will be a fruitless effort that will harm Raleigh’s image as an innovative city that embraces the sharing economy.
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A ban whole-house rentals would make Raleigh’s rental market less accommodating than comparable cities such as Austin, Texas; Nashville, Tenn.; and Durham. A ban would also strike a big blow to the online service VRBO, short for Vacation Rentals By Owner, whose hosts only rent out their entire homes. VRBO, says it has about 45 hosts in Raleigh.
At Tuesday’s meeting, more than 30 people advocating for whole-house rentals cheered the vote as a small victory. Prior to the meeting, a council majority that included Mayor Nancy McFarlane appeared ready to ban whole-house rentals.
But McFarlane pointed to the small number of complaints over the last 18 months about the city’s 13,000 short-term rentals – seven – and pivoted, saying she wants to continue to study the issue.
“I think we need the regulation. But I think (the whole-house rental ban) is a mistake and we need to keep talking about it,” McFarlane said to applause from the crowd.
McFarlane joined council members Mary-Ann Baldwin, Corey Branch and Bonner Gaylord in opposing the proposed whole-house ban. Council members David Cox, Kay Crowder, Russ Stephenson and Dickie Thompson supported it.
City regulations wouldn’t affect neighborhood covenants and homeowners associations, which can prohibit short-term rentals. But Cox and Thompson said people in their districts, which are mostly outside the Beltline, are uncomfortable with the possibility of living next to houses that have new tenants every month.
Stephenson challenged the notion that short-term rental services such as Airbnb and VRBO are part of the “shared economy,” saying they don’t necessarily benefit everyone.
“This is something better described as internet-enabled, crowd-sourced capitalism because that’s really what it’s about. It’s creating an opportunity by using the internet to monetize some assets that would be difficult for us as individuals to monetize,” said Stephenson, referring to residents who don’t own property. He acknowledged being a landlord to long-term rental tenants.
The stalemate means Raleigh will have to draft a new set of regulations if it wants to govern short-term rentals. McFarlane sent the job to the Economic Development and Innovation Committee, which she leads. Crowder, Gaylord and Thompson are also on the committee.
Baldwin suggested rules that would allow residents to rent out their entire house so long as they acquire a special use permit by gaining approval from city’s Board of Adjustment.
Justin Miller, a downtown Raleigh resident and entrepreneur, said he’s encouraged by McFarlane’s comments and hopes the delay leads to more thoughtful rental rules.
“We need to focus on continuing to attract visitors to this place we call home, and not be a place that boxes out change simply because it’s misunderstood,” Miller said. “Once again, Raleigh is in a position to take the lead and set the precedence for other cities to follow.”
Specht: 919-829-4870; @AndySpecht