Vacation Rentals in the Line of Fire for NH Legislators
VACATION RENTALS IN THE LINE OF FIRE FOR NH LEGISLATORS
**To See the Most Current Information Including Final Bill Scroll Down**
Current Information as of March 9th, 2016
By Jim Lyons, REALTOR®
Select Real Estate
As professionals, beyond simply providing brokerage and transactional services we believe that REALTORS® have a duty to engage in Public Policy issues that impact our clients’ rights to use and enjoy real property. Consistent with that belief, I serve on the NH Association of REALTORS® Public Policy Committee where every bill that is filed as proposed legislation is evaluated, monitored and either supported or opposed in view of its’ impact on our right to own and enjoy real property. Among the many bills this legislative session, we have been engaged in opposing three bills in particular that we believe would be burdensome and negatively impact vacation rentals – essentially, legislation in search of a problem. Here is a quick summary of each of the three bills followed by the status of each at this particular time in the legislative session:
As originally filed this bill would require short term rental businesses to register as businesses with the Secretary of State and meet certain posting and reporting requirements – this would make any individual renting short term subject to new regulations. The bill also expands the meals and rooms tax to apply to short term rental businesses. It appears that the initial filing of this bill was intended to throw down a spike strip, so to speak on the recent explosion of short term rentals of residential properties being promoted through website platforms which some view as competition to traditional hotel, motel and B&B operations. Some of the platforms that help owners rent their properties are AirBNB, HomeAway, Flipkey, Pillow, VRBO, Beyond Stays, and Guesty, among others. Though these operators offer overnight accommodations and other services similar to traditional lodging businesses (which pay the state Rooms and Meals tax and comply with public health and safety regulations) many, if not most do not apply for a Rooms and Meals tax license. While many do not register, current law mandates that any short-term rental is subject to the Rooms and Meals tax (RSA78-A). Our Association opposed the original bill and brought forward an amendment which we believed would satisfy the allegation of non- tax reporting by requiring that all residential short-term rental operators include their Rooms and Meals tax license number in all advertisements which will of course, include online listings. This will give the Department of Revenue Administration another mechanism to determine if those using these website platforms are paying the required taxes. It may also serve to encourage neighbors who do pay this tax to question neighbors who also provide short-term rentals who are not. The status of the bill is moved out of Committee with OUGHT TO PASS WITH AMENDMENT. The bill has moved to the Ways and Means Committee from which it seems likely that it will move forward to the House Floor for a vote.
SB 482 -FN-LOCAL
This bill is enabling legislation and permits municipalities to regulate short-term rental businesses. It would permit, but not require local municipalities to adopt regulations. Such regulations may include but would not be limited to requiring licensing and permitting for a fee as well as requiring property inspections for building, health, fire and life safety. REALTORS® oppose this bill and view it as onerous and unnecessary. I testified in opposition to this bill before a Senate Committee in February. On March 2nd , the bill was referred for interim study and will now move to the Senate Floor. If no action is taken on the floor the bill will remain in interim study- possibly to allow HB1590 to work. In the event that HB1590 does not pass, the amendment requiring display of the operators Rooms & Meals tax license number from HB1590 could then be attached to SB482.
This bill would require real estate offices and rental agencies to provide a schedule of all addresses of short term rentals when filing the monthly Rooms and Meals tax report. Currently reporting by these businesses is in a consolidated format which does not provide the DRA with specificity of the individual property addresses. Ways and Means has passed HB1689 with input from the Department of Revenue Administration. This bill will now move to the floor for a vote. REALTORS® oppose this bill as being onerous and burdensome, and believe that legislators should pass and allow the Amended HB 1590 to take effect before adding any additional regulations on the industry
If you would like to view the complete bills, their docket, and status click the link below for the NH General Court.
On the right side go to the box called "State Legislation Dash Board" and the last bullet called "Find a 2016 Bill" will allow you to input the bill number to see the detail and status of the bill. Make sure to only enter the HB1590, SB482, or HB 1689 to see the details for each bill.
UPDATE - March 28th, 2016
By Jim Lyons, REALTOR®
Select Real Estate
The Legislative session is now in the period of cross over, where bills move from House to Senate and Senate to House.
HB1590 Amended Passed unanimously out of the House and will now be assigned to a Senate Committee. It is unclear at this time which Senate Committee will receive the bill.
SB482 Was amended so that the language was replaced to where the bill would now serve to establish a Legislative Committee to study the issues referred to in the original bill. The Legislative Committee would likely consist of two Senators and three members of the House. There would be opportunity for public input. The bill is coming out of the Public and Municipal Committee and will likely move to the Public and Municipal Committee in the House. As with HB1590, the committee assignment has not been confirmed.
HB1689 This bill is now in the Senate Ways and Means Committee. Last week, I provided testimony to that Committee ( See below) on behalf of the NH Association of REALTORS in opposition to the bill. A law firm representing AirBnB testified but indicated they had no position on the bill as they are not responsible for collection of the Rooms and Meals Tax. The NH Department of Revenue testified in support of the bill indicating that it would assist them in better identifying properties that may not be processing the tax. Representative Gene Chandler testified in favor of the bill, but recommended that the Committee wait until they act on HB1590.
Testimony of Jim Lyons
On behalf of the NH Association of REALTORS
In opposition to HB 1689
Good morning, my name is Jim Lyons, broker owner of Select Real Estate in Conway and a member of the New Hampshire Association of Realtors Public Policy Committee. I am here on behalf of the Association to urge you to ITL HB 1689.
I think it is important to understand that HB 1689 was the result of a House study committee, formed as a result of HB 531 in 2015, to look at short-term rentals. More specifically, that study committee was created to look at issues which have arisen over the past several years due to the increased use by homeowners of web-based marketing companies such as AirBnb, Homeaway, Flipkey and VRBO.
These sites connect homeowners with travelers and enable those travelers to rent a room or single family home directly from the owner. The concern voiced by many, and shared by Realtors, the DRA and the lodging association, is that some property owners utilizing these sites may not be collecting their rooms and meals tax.
Operators not collecting the tax are, in essence, getting a 9 percent discount on that rental unit, and therefore have a competitive advantage.
Unfortunately, HB 1689 does not target those who are not paying their taxes but instead targets those who are paying their taxes. And that simply does not make sense to us.
Further, Airbnb and other similar companies that advertise on behalf of their clients do not file taxes on behalf of their clients. So this bill will not impact those companies at all. It will impact many New Hampshire real estate companies that serve as operators for short-term rentals and collect the rooms and meals tax on behalf of their clients – and in some cases owners might also be reporting themselves.
There is a better way. And that better way is another bill, HB 1590, which has passed unanimously out of the House Commerce Committee and is on the House Consent Calendar in tomorrow’s session.
HB 1590 makes HB 1689 unnecessary. The bill in front of you, HB 1689, requires a licensed operator of short-term rental units to provide a schedule, following the collection of taxes, of the addresses of the residences where the short-term rental occurred. Just to be clear, under current law that information is currently required to be retained by the operator, and is subject to an audit.
However, HB 1689 will only let the DRA know what happened last month. It does not help them know if that same unit will have the same rooms and meals operator this month or next month. There are owners of short-term rentals that might use a real estate firm on one transaction – in which case we pay their tax as the operator – but on the next transaction, which might be to a friend or family member or made through Airbnb, they might not use that real estate firm as their operator.
So at best, the information the DRA would receive will be out-of-date, and at worst it would be misleading. Misleading because it may lead the DRA to believe that a real estate firm is the operator when it really is not.
Additional statutory filing requirements mean additional liability. Some real estate firms might serve as the operator for hundreds of condo and single-family short-term rentals – especially in vacation areas like the White Mountain, lakes and seacoast regions.
However, other Realtors might simply handle a few such short-term rentals – not because they necessarily make much money on rentals, but because it is a service they want to provide to long-term clients to preserve relationships. A greater regulatory burden and additional liability might make them less likely to take on the operator responsibility of short-term rentals.
Realtors know that the rooms and meals tax must be paid. Take them out of the equation, and we think the likelihood of paying the rooms and meals tax drops.
The other bill, HB 1590, requires that anyone who advertises a short-term rental must include in that advertisement the rooms and meals operator license number. That will give the DRA a reliable and powerful tool to review a local newspaper or a website like Airbnb and immediately identify rentals that do not have a rooms and meals tax license.
That is a clean, simple and easy way to comply, and in our view, it makes HB 1689 unnecessary.
UPDATE - May 18th, 2016
By Jim Lyons, REALTOR®
Select Real Estate
HB 1590 has been voted on and approved by the Senate. The bill has been moved back to the house for approval. If the house concurs the bill will move to the governor's desk for signature. If approved, the bill will require all short-term rental advertising to display your New Hampshire room and meals tax id number. Check back here to see the bill in it's final form after approval.
UPDATE - July 6th, 2016
By Jim Lyons, REALTOR®
Select Real Estate
House Bill 1590, was approved by all necessary parties, and will go into effect on August 23. The bill requires anyone advertising a short-term rental to display their meals and rooms license number within that advertisement. The New Hampshire Association of REALTORS® (NHAR) supported the bill. It was clear that some property owners offering short-term rentals through sites like Airbnb were not paying the required 9 percent meals and rooms tax, providing an advantage over real estate firms which were paying the tax on behalf of their clients.
NHAR also successfully suggested adopting language which makes it clear that paying the tax does not make a short-term rental a business and therefore cannot be used by a municipality to determine compliance with a local zoning ordinance prohibiting a business use.
A separate bill, Senate Bill 482, has also passed and will set up a study committee to look at short-term rentals.
Below is a copy of the bill entirety, or you can view the bill by clicking this link: House Bill 1590