Legislation introduced in the Michigan state legislature that if enacted would regulate short-term rentals and generate revenue that would benefit host cities, towns, and villages that experience steep population increases each summer by levying a 6% excise tax on short term rentals has been met with a whirlwind of opposition from both the real estate industry and from individual property owners who believe the legislation violates their basic property rights.
If passed by the Michigan state legislature and signed by Michigan’s governor, House Bills 5437 to 5446 would regulate and levy assessments on short-term rental facilities in Michigan. House Bills 5437 and 5439 to 5446 serve to supplement MI House Bill 5438 also referred to as the “Short Term Rental Regulation Act”, that, in addition to levying a 6% excise tax on short term rentals, also require short term rental property owners to acquire $1M in liability insurance, and implement safety measures such as the installation of fire extinguishers and smoke alarms, and making sure first responder contact information is made readily available to short-term renters. The suite of bills comprising the Short-Term Rental Regulation Act would also require often utilized international vacation rental property service providers such as Vrbo and Airbnb to pay a $100.00 annual registration fee on each of their short-term rental property listings. Moreover, the legislation would allow local units of government to regulate short-term rentals such as by limiting the number of short-term rental properties within their jurisdiction and by enforcing existing zoning laws.
Defined by the Michigan state legislature as the rental of a single-family residence, a dwelling unit in a one-to-four family house, or the rental of a unit or group of units within a condominium for up to thirty consecutive days, short-term rentals serve to enhance the real estate values of lakefront homes, and homes located within popular tourist destinations. The ready availability of short-term rentals within popular tourist destinations and steep increases in population that occur each summer have dramatically increased the cost of providing basic government services such as providing water and sewer services for host local units of governments – the Short-Term Rental Regulation Act was introduced in part to help affected local governments to raise revenue that will be used to off set the increased cost of governing and providing essential services that occurs each summer.
It is important to note that the Michigan Supreme Court rendered a decision in October of 2018 that upheld the right of local units of government to enact ordinances to allow or to restrict short-term rentals.