A New Debate… The Impact Of Short Term Rentals In Seven Lakes

Recently, there has been a heated debate throughout the Seven Lakes North community regarding the future of “STR“, (Short Term Rentals) with restrictions which are currently in place on the South side.

While living in California until 2016, we were not aware of any restrictions and rented our house on the South side consistently for weekend and weekly rentals and the rentals produced a substantial amount of income for our family. 

When we owned a home in Palmetto Dunes on Hilton Head Island we chose to leave the oppressive humidity in the summer and rent our home for 13 weeks.  The income generated by the rental completely covered our mortgage payment, taxes, maid service and HOA fees for the entire year, thereby owning a house for free except for income taxes.

I wanted to research the positive and negative impact STR‘s have upon on our community.

At first blush, short-term rentals seem like a win-win situation.  You can find a nice place to stay for a few nights, and it is frequently cheaper than booking a hotel.  Just as importantly, vacation houses and condos rented out through Airbnb or VRBO are often more interesting places to stay, with the individual character and idiosyncrasies you do not get from a cookie-cutter hotel room. It can be a great deal for property owners, too.

Yet, there has been a growing trend to prohibit them in HOA communities. Is it just a case of power-tripping HOA boards lording their authority over members by banning a potentially lucrative source of secondary income? Actually, no. As is so often the case, there is more to it than that.

Some owners gain where profits are privatized, and and some  may possibly suffer as the risks are socialized.  In this case, the advantages of short-term rentals (i.e., increased income) are reaped by individual property owners, while the potential downsides (when they are present, which is not always the case) are borne by the community as a whole.

With short-term rental restrictions, the purpose is generally to protect other members and preserve the character of the community.  A quiet, sleepy neighborhood that all-the-sudden has vacationers coming and going on a regular basis stands a good chance of losing its quiet, sleepy nature.

In our community with common areas and facilities, vacationers can overtax the amenities, preventing full-time residents from enjoying the benefits for which their assessments pay.  Vacationers do not pay HOA fees and are less vested in the long-term condition of the community.

The main problems HOAs have with short term rentals are issues that may arise from renters.

These short term rental problems can be anything from excessive noise, more traffic coming through the neighborhood, vandalism, and even small things such as leaving trash out on the street.

Although these problems may not seem big, an HOA’s primary job is to keep their residents happy. And if someone is constantly renting out their home, these issues can build over time.

Living next door to a short-term vacation rental can range from mildly concerning to completely life altering.  Some rentals may become party houses with nightmarish results for neighbors.

In neighborhoods that are close to tourist destinations such as Pinehurst, residents who do not own their homes often face inflated rental prices that force them to move because landlords are choosing to convert their long-term rentals into STR’s. This can also make it more difficult for people to rent or buy a home in Seven Lakes.

Short-term vacation rentals are considered disruptive for the traditional lodging industry. The hotel industry claims that the business models of short-term vacation rental platforms offer unfair economic advantages.

On the positive side short-term vacation rental guests can benefit the community as a whole in terms of economic benefit because guests will spend their money in other visitor related amenities such as our wine shop, restaurants, and local businesses.

Because short term rentals are so popular now, community associations may have more trouble securing a majority vote in instituting new restrictions.

However, if residents understand that some limitations can protect the entire community from extra service burdens or potential noise or damage, they may agree to restrict vacation rentals to a certain number per homeowner per year.

They may also agree to prohibit the use of community amenities like the pool and clubhouse for renters.

Another reasonable restriction is to require residents to notify the board of each rental, complete with the renter’s information. You can also require the renter to identify themselves upon entering the property.

It may also be a good idea to make sure that homeowners understand that they are responsible for any violations of the governing documents and any fines that may come with these violations.

Furthermore, an HOA may discourage short term vacation rentals by collecting additional money that can mitigate some of the negative effects of short term rentals.

Short term guests can be charged with extra fees that can cover community services such as parking and trash removal. Maximum occupancy limits can be enforced and violations can carry fines. Fees that pay for extra property or liability coverage can also be charged.

When it comes down to it, whether or not you should allow HOA short term rentals in your community is a decision your board must make. All things considered, more problems will certainly arise from allowing them.

However, you must also take into account how community members feel about the issue.

You can’t make everyone happy, so settle on a decision that would both satisfy most members without sacrificing the community’s well-being.

After all, the HOA board’s decisions must always be in the community’s best interest.

In the end, as usual…it’s a balancing act.

By:  Victoria Levinger, Publisher