Fine for unregistered short-term rental owners in R.I. not being enforced

RHODE ISLAND BUSINESS REGULATORS are not imposing fines against short-term rental property owners who have not signed up for the new, state registry because they have not received official complaints about missing properties. Pictured is a screenshot of some of the Airbnb rentals available in Newport, where an estimated two-thirds of rental property owners have not registered with the state. / COURTESY AIRBNB

PROVIDENCE – Short-term rental property owners who advertise their homes through websites such as Airbnb Inc. and VRBO were supposed to be fined $250 starting Monday if they failed to sign up for a public, online registry, according to state law. 

But state business regulators aren’t charging anyone, despite the fact that an estimated 1,500 properties haven’t signed up, according to data from third-party analytics website AirDNA. That’s because the R.I. Department of Business Regulation, which is charged with overseeing the registry and imposing fines, isn’t going after the missing property owners unless they receive a specific complaint about an unregistered property, and so far, no one has complained, according to Lindsay Russell, a spokesperson for R.I. Commerce Corp.

The registry we’re building is the only database we have of short-term rental properties in our state,” Russell said in an email to PBN Tuesday. “We do not have a list of non-compliant properties to issue fines to. Specific complaints are how we learn of unregistered properties.”

This was a surprise to Rep. Lauren Carson, D-Newport, who sponsored the 2021 bill to create the state registry. Carson in an interview Wednesday acknowledged that waiting for complaints to issue fines was not how she originally intended the program to work. The law, which passed in early 2022 over Gov. Daniel J. McKee’s veto, states that any short-term rental property owner who does not sign up with DBR by the Dec. 31 deadline (and pay the accompanying $50 fee)  “shall be subject to a civil fine,” starting at $250 for the first 30 days, and escaping to $1,000 if they continue to flout the registration 60 days after the deadline.

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Carson was one of a trio of Newport area lawmakers who recently singled out property owners in the city of Newport, where an estimated two-thirds of rental property owners still haven’t registered with the state, according to comparisons of the state registry and AirDNA data.

But Carson isn’t worried that the state has not levied fines against those violators.

“The third-party rental industry is an evolving industry so we need to continue to work at it,” she said, adding that the registry was always intended as a “first step” in addressing the problem.

Publishing a list of owners’ names and property addresses aims to help neighbors, and law enforcement, get in touch with the right people when problems arise. The exploding short-term rental market, which has swelled to 20% of Newport’s housing market, has led to mounting complaints about noise and safety which came to a head during a fatal shooting at a party hosted at a Newport Airbnb in 2021.

Some municipalities, including Newport, have created their own regulations apart from the state, such as public registries and limits on where these rentals can be located based on zoning and owner occupancy. In Newport, short-term rental properties are required to register with the city and to get a special permit to operate in certain business zones, with fines of up $1,000 a day for violators. Last year, the City Council also banned new rentals within residential zones. 

Unlike the state, Newport has not waited for complaints to issue fines, according to Thomas Shevlin, a city spokesperson. The city’s designated short-term rental compliance officer proactively investigates and “flags” properties that are listed on Airbnb or other rental websites but have not signed up for the city registry or gotten the right permits, Shevlin said. Sometimes, though not always, those investigations lead to fines; nine city short-term rental properties were cited for failing to register in 2020 (the most recent data available), though eight of the cases were dismissed in municipal court. The ninth was fined nearly $2,700, according to Shevlin.

These are separate from the citations and fines for rental properties that don’t obtain the proper permits or are operating outside of approved zones.

Shevlin declined to comment on the state’s decision not to impose fines for its own registry, but said that for the city, enforcement was a crucial part of the program’s effectiveness.

“Without the enforcement aspect, I think the rules are weakened to a point where the problem could start to get away from us again,” Shevlin said.

The state program does not come with any funding or designated personnel for DBR to manage the program, instead relying on registration fees and fines to cover the costs. It also does not give DBR any enforcement beyond levying fines for those who don’t sign up.

Carson pledged to continue working with state regulators and lawmakers to improve oversight of the short-term rental industry.

“We’re still looking into the enforcement angle,” she said. “We are not giving up on this.”

The Rhode Island League of Cities and Towns, which supported the legislation to create the registry, declined to comment on the state’s enforcement, saying it was too early to “weigh in on its success and general use,” according to an emailed statement from a spokesperson.

Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.

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