ST. THOMAS – Several V.I. government departments are trying to address the issue of private vacation rentals, develop standards for the rentals and increase the collection of taxes due when homes or rooms are rented out.
“There is no comprehensive law on the books that covers vacation rentals,” said Department of Licensing and Consumer Affairs Commissioner Devin Carrington.
He and Internal Revenue Bureau Director Marvin Pickering and Tourism Commissioner Beverly Nicholson-Doty met last week to discuss regulating the fast-growing vacation room rental business in the territory.
The focus begins with companies that connect property owners to visitors seeking short-term rental of anything from a bed up to a villa.
Vacationers find available rentals on popular websites like Airbnb.com and vrbo.com, or smaller sites like VIVAvillas.com.
What is available in the territory ranges from large seaside villas to a bed in a shared house.
The problems, some say, are that the rentals are not regulated; tenants might disturb residential areas; the visitor might have a bad experience; and unregulated rentals don’t contribute to the government coffers if the territory can’t collect hotel taxes or Gross Receipts taxes.
“At the end of the day, there needs to be legislation and tighter regulation of the industry to make sure the product is of the highest standard,” Carrington said.
That last part is key, because one bad experience can keep a family of vacationers from ever coming back, he said.
“Regulation is key to this,” Carrington said. “In the absence of any legislation, rule or regulation, there’s no standards by which these people are expected to adhere. We can hold people to certain standards.”
Pickering said the territory could be losing a lot of money if vacation rentals aren’t paying the 10 percent hotel tax when they provide a room, condo or house.
That, and people engaging in the business of renting out property need to be licensed, he said.
Licensing is about $130 a year for a boarding house, bed and breakfast or facility with four units or fewer, provided that “zoning and everything else is accounted for,” Pickering said.
Other U.S. cities also have been trying to address the issue of private rentership in residential areas.
Asheville, N.C., is rated one of the top tourist destinations in the country, but the city council said in May that it wants tougher enforcement of short-term rentals because such businesses disturb neighborhoods, increase traffic and take empty houses or apartments out of the rental mix in a tight and increasingly expensive market.
In Key West, Fla., the local government is cracking down on unlicensed vacation rentals. The tax collector’s office has seized accounts and put liens on properties that have been rented illegally. The tax office has collected more than $600,000 in revenue that would have been lost if the government hadn’t begun targeting illegal vacation rental properties.
Airbnb has begun cooperating with cities, states and countries that feel the small-time private rentals can add up to big-time losses in taxes.
On its website, the company has announced its willingness to collect hotel taxes and other fees for governments.
“In some locations, Airbnb has made agreements with government officials to collect and remit local taxes on behalf of hosts,” the company noted. “Additionally, Airbnb is required to collect VAT on its service fees in countries that tax electronically supplied services. Currently, that includes all countries in the EU, Switzerland, Norway, Iceland and South Africa.”
The company said it also collects tourism taxes for private rental facilities throughout India and has agreements to collect taxes in the states of Rhode Island and North Carolina.
Carrington said his department compiled a list of all of the properties in the territory regularly advertised online, and they came up with a list of about 608 units.
“We’re now doing our due diligence, checking our database to find out if these people are actually licensed,” he said. “Ninety percent were not licensed.”
He said the growing use of private rentals impacts the islands in a number of ways, whether it be uncollected taxes, zoning violations or the problem of visitors not getting what they expected.
“We’re going to try to get some legislation developed,” he said. “We’re going to do that with all of the stakeholders involved in the issue.”
– Contact Jonathan Austin at 714-9104 or email jaustin@dailynews.vi.
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