Raleigh City Council Votes to Allow Renting Guest Rooms, but Bans Whole House Rentals | Eastern North Carolina Now

    Publisher's note: This post appears here courtesy of the Carolina Journal, and written by Lindsay Marchello, Associate Editor.


    The Raleigh City Council has voted to allow people to rent one or two guest rooms, but homeowners won't be allowed to rent entire houses. Unless bills pending in the General Assembly block Raleigh and other cities from micromanaging similar short-term rental properties.

    In a 5-2 vote, the City Council on Tuesday, May 21, passed new rules governing homestays, otherwise known as short-term rentals. A homeowner who wants to rent a guest room will have to buy a short-term rental permit, for $172, and pay $86 for annual renewals. Homeowners seeking a permit must notify neighbors within 100 feet of the property that they're looking to obtain a permit.

    The homeowner must live on the property while a guest is staying as part of the short-term rental. Backyard cottages can't serve as short-term rentals, and violators can be hit with a $500 civil penalty.

    Council members Kay Crowder, David Cox, Stef Mendell, Russ Stephenson, and Dickie Thompson voted in favor of the new rules. Council members Corey Branch and Nicole Stewart voted against them. Raleigh Mayor Nancy McFarlane, who recently underwent back surgery, didn't attend the meeting.

    Two bills moving through the General Assembly would put a stop to the City Council's rules. House Bill 922 and Senate Bill 483 would limit local governments' ability to regulate residential property as covered by the Vacation Rental Act.

    The short-term rental debate has languished for years without an end. A citizens' task force was formed to develop with regulations for homestays, but the City Council ended up rejecting the recommendations.

    While discussions were ongoing, the city didn't enforce its ban on the practice. Mendell made a motion to begin enforcing the city's ban on whole house short-term rentals starting Jan. 1, 2020. The motion was approved in a 5-2 vote.

    "By taking some of those properties off the market for short-term rentals, it hurts the ability of people who want to live in Raleigh and make Raleigh their home," Mendell said, per the News & Observer. "That is a big factor to me. And the other issue is introducing commerce into a residential neighborhood."

    Others weren't so welcoming.

    John Burns, former Wake County commissioner, said the new rules are overly restrictive and will hurt homeowners and investors who rely on the income generated from short-term rentals.

    "A citizen task force proposed a comprehensive set of rules and regulations that would have addressed many issues and could have been adjusted to meet new concerns," Burns said. "But instead, after years of delay, the city has decided to impose a ban on whole house rentals."

    The Vacation Rental Act, which became law in 1999, protects consumers who rent a vacation property for fewer than 90 days. Under the law, cities and counties are allowed to periodically perform inspections for hazardous or unsafe living conditions, but they aren't allowed to adopt or enforce an ordinance requiring a property owner to obtain a permit to rent their property. The law prohibits local governments from imposing a special fee or tax on residential rental property unless it's also levied against other commercial and residential properties.

    H.B. 922 passed the House and is now in the Senate Rules Committee; S.B. 483 passed the Senate and is in the House Rules Committee.