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East Lyme, Connecticut Short-Term Rental Regulation: A Guide For Airbnb Hosts

East Lyme, Connecticut

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Starting a Short-Term Rental Business in East Lyme

The Town of East Lyme is currently investigating whether and to what extent short-term rentals like Airbnb and VRBO may be regulated. In August 2023, the Board of Selectmen created an Ad Hoc Short-Term Rental Committee to study the issue and provide recommendations.

The committee has been conducting research, holding public hearings, and consulting with experts to determine if there is a need to regulate short-term rentals in East Lyme. Some of the concerns raised include noise, parking, and the impact on the character of residential neighborhoods.

As of early 2024, East Lyme does not appear to have any specific ordinances or zoning regulations related to short-term rentals. However, this could change depending on the recommendations of the Ad Hoc Committee and the decision of the Board of Selectmen. The committee is expected to deliver its final report and recommendations sometime after the Connecticut Supreme Court issues a ruling in a landmark case concerning the ability of municipalities to restrict short-term rentals.

Across Connecticut, at least 12 towns have expressly regulated short-term rentals as of February 2024, either through ordinances or zoning codes. Nearby examples include:

  • The Town of Lyme requires short-term rentals to be owner-occupied or in an approved accessory building on the same property. Rentals are limited to 4 bedrooms and 8 guests.
  • The Town of Groton requires a zoning permit for short-term rentals, along with other requirements like maximum occupancy limits and designated off-street parking.
  • Short-term rentals are banned entirely in some communities like Ledyard and Noank.

For now, East Lyme officials are considering updates to the town's noise and parking ordinances to address some of the issues associated with short-term rentals while awaiting further guidance from the state Supreme Court. The town attorney has cautioned that any regulations will need to be carefully designed to avoid infringing on property rights.

Those interested in starting a short-term rental business in East Lyme should continue to monitor the situation closely. It may also be prudent to review your property for compliance with the town's existing rules related to noise, parking, occupancy limits, and safety. Consulting with a local attorney and your insurance provider is also advisable.

Online forums like Bigger Pockets and Reddit include some discussion of short-term rental regulations in Connecticut, but much of the advice is general in nature. Local real estate agents and property manager may be additional sources of guidance.

As of July 2024, there are over 800 short-term rental listings in East Lyme on Vrbo alone. So while the regulatory environment remains uncertain, there appears to be strong demand for these accommodations in the region's beach communities and tourist areas. With proper planning and attention to any emerging regulations, short-term rentals could provide a viable investment opportunity in East Lyme.

Short-Term Rental Licensing Requirements in East Lyme

As of July 2024, the Town of East Lyme has not yet implemented a formal licensing or permitting process for short-term rentals. The Ad Hoc Short-Term Rental Committee, established by the Board of Selectmen in August 2023, is still in the process of investigating the issue and developing recommendations.

The committee has been considering various regulatory options, such as:

  1. A registration system to collect contact information
  2. A permitting process with associated fees
  3. Requiring annual income statements and property assessment adjustments
  4. Caps on the number of short-term rentals allowed
  5. Restricting short-term rentals to certain zones
  6. A lottery system for allocating permits
  7. Enforcement mechanisms and fines
  8. Strengthening existing noise and parking regulations
  9. Requiring inspections
  10. Imposing occupancy limits

However, the committee has delayed making final recommendations pending the outcome of a landmark case before the Connecticut Supreme Court concerning the ability of municipalities to restrict short-term rentals. The town attorney has advised that any regulations will need to be carefully designed to avoid infringing on property rights.

Currently, there is no specific place to submit licensing or permit applications for short-term rentals in East Lyme. The town's website provides information on various other permits and forms, such as for building, land use, parks and recreation, and business solicitation, but nothing yet for short-term rentals.

It's also unclear at this time what fees may be involved or how long the licensing process may take, as those details have not been established. There are no specific fines or penalties on the books for operating a short-term rental without a license in East Lyme as of July 2024.

However, this regulatory landscape may change in the coming months depending on the Connecticut Supreme Court ruling and the subsequent recommendations of the Ad Hoc Short-Term Rental Committee to the Board of Selectmen. Those interested in operating short-term rentals in East Lyme should monitor the situation closely and be prepared to comply with any emerging registration, permitting, or other requirements.

In the meantime, it would be prudent for short-term rental operators to ensure their properties are in compliance with the town's existing rules related to noise, parking, occupancy limits, and safety. Consulting with a local attorney and your insurance provider is also advisable. And if new licensing or permitting processes are put in place, be sure to submit all required materials promptly to the appropriate town departments to avoid any potential fines or penalties for non-compliance.

Required Documents for East Lyme Short-Term Rentals

As of July 2024, the Town of East Lyme has not yet established a formal licensing or permitting process for short-term rentals. The Ad Hoc Short-Term Rental Committee is still in the process of investigating the issue and developing recommendations for the Board of Selectmen.

However, based on the practices of other Connecticut municipalities that have implemented short-term rental regulations, the following documents may potentially be required once East Lyme establishes its own rules:

  1. Permit Application: A standardized form to collect basic information about the property, owner, and short-term rental operations. This would likely be submitted to the town's zoning or building department.
  2. Proof of Ownership: Documentation like a deed or tax bill to verify the applicant's ownership of the property. This ensures the owner is aware of and consents to the short-term rental use.
  3. Floor Plan: A sketch or diagram showing the layout and dimensions of the short-term rental unit, including bedrooms, exits, smoke detectors, and fire extinguishers. This helps verify compliance with occupancy limits and safety requirements.
  4. Parking Plan: A site plan indicating the number and location of available off-street parking spaces for guests. This helps address neighborhood concerns about parking congestion.
  5. Proof of Insurance: Documentation of liability insurance coverage for the short-term rental operations. Some municipalities require a minimum coverage amount to protect guests and neighbors.
  6. Tax Registration: Registration with the state Department of Revenue Services for collection and remittance of lodging taxes. Short-term rental operators are typically required to obtain a tax ID number.
  7. Health and Safety Inspection: A report from a town inspector verifying the unit meets basic habitability and safety standards, such as adequate smoke detectors, fire exits, handrails, etc. An inspection fee may be required.
  8. Neighbor Notification: Some towns require applicants to provide written notice to adjacent property owners about their intent to operate a short-term rental. This allows neighbors to raise any concerns to town officials.
  9. Property Management Plan: A written description of how the short-term rental will be managed, including local contact information, house rules, noise and parking policies, trash collection, etc. This helps ensure responsible operations.
  10. Affidavit of Compliance: A signed statement attesting that the information provided is truthful and that the applicant will comply with all applicable short-term rental regulations. False statements can result in permit revocation and fines.

Again, these are just examples of potential required documents based on other Connecticut towns. The specific requirements in East Lyme will depend on the recommendations of the Ad Hoc Short-Term Rental Committee and the ultimate decisions of the Board of Selectmen.

Short-term rental operators should monitor the town's website and communications closely for any updates on permitting requirements. Once a process is established, the town will likely provide detailed instructions and forms on its website and through its zoning, building, and/or tax departments. Consulting with these departments, as well as local attorneys and tax professionals, can help ensure compliance with all applicable rules.

East Lyme Short-Term Rental Taxes

Short-term rentals in East Lyme, Connecticut are subject to several types of taxes, including state room occupancy tax, state sales tax, and potentially local taxes. It's important for short-term rental operators to understand their tax obligations and to collect and remit the appropriate taxes to the proper authorities.

State Room Occupancy Tax: The State of Connecticut imposes a 15% room occupancy tax on the total payment received for occupancy of a room or rooms in a hotel, lodging house, or short-term rental for up to 30 consecutive calendar days. This tax is collected from the guest and remitted to the Connecticut Department of Revenue Services by the short-term rental operator.

State Sales Tax: In addition to the room occupancy tax, short-term rentals in East Lyme are subject to the Connecticut state sales tax of 6.35%. This tax applies to the total charges for the rental, including any cleaning fees, service fees, or other mandatory charges. The sales tax is also collected from the guest and remitted to the state by the operator.

Local Taxes: As of July 2024, the Town of East Lyme has not implemented any additional local taxes specifically on short-term rentals. However, this could change depending on the recommendations of the Ad Hoc Short-Term Rental Committee and decisions by the Board of Selectmen. Short-term rental operators should monitor any developments closely.

In total, the current combined state tax rate on short-term rentals in East Lyme is 21.35% (15% room occupancy tax + 6.35% sales tax). This means for every $100 in rent collected, the operator must collect an additional $21.35 in taxes from the guest.

Tax Deductions and Write-Offs: Short-term rental operators may be able to deduct certain expenses related to their rental business on their federal and state income tax returns. Potentially deductible expenses could include:

  1. Mortgage interest
  2. Property taxes
  3. Insurance
  4. Utilities
  5. Cleaning and maintenance costs
  6. Supplies
  7. Advertising and platform fees
  8. Depreciation

The specific deductions available will depend on factors like the amount of rental activity, the operator's level of personal use of the property, and whether the operator materially participates in the rental business. Consulting with a qualified tax professional is recommended to determine eligibility for deductions and to ensure proper reporting.

Short-term rental operators in East Lyme must maintain good records of all income and expenses, to collect the appropriate taxes from guests, and to remit those taxes to the proper authorities in a timely manner. Failure to comply with tax obligations can result in penalties, interest, and legal issues.

Connecticut Wide Short-Term Rental Rules

While there are no comprehensive statewide laws specifically regulating short-term rentals in Connecticut as of July 2024, there are some state-level requirements that East Lyme hosts need to be aware of.

State Room Occupancy Tax: Connecticut imposes a 15% room occupancy tax on the total payment received for stays at hotels, lodging houses, and short-term rentals like Airbnb for up to 30 consecutive days. East Lyme hosts are required to collect this tax from guests and remit it to the Connecticut Department of Revenue Services.

State Sales Tax: In addition to the room occupancy tax, short-term rentals in East Lyme are subject to the 6.35% Connecticut sales tax. This tax applies to the total rental charges, including cleaning fees, service fees, and other mandatory charges. Hosts must collect the sales tax from guests and remit it to the state.

Proposed Statewide Legislation: In March 2024, Connecticut lawmakers began considering a bill (Bill 335) that would allow municipalities to establish ordinances limiting and regulating the use of short-term rental properties. If passed, this legislation would give East Lyme the power to potentially:

  1. Ban short-term rentals entirely
  2. Create a registry of short-term rental properties
  3. Impose zoning restrictions
  4. Set occupancy limits
  5. Establish parking requirements
  6. Hire consultants to help craft regulations

However, as of July 2024, this bill has not yet been enacted into law. East Lyme hosts should closely monitor the progress of this legislation and be prepared to adapt to any resulting changes in local regulations.

Health and Safety Standards: While not specific to short-term rentals, East Lyme hosts must ensure their properties meet state health and safety codes, including having working smoke detectors, carbon monoxide detectors, fire extinguishers, and adequate means of egress. Properties may be subject to inspections by local officials.

Landlord-Tenant Laws: Connecticut's landlord-tenant laws regarding evictions, security deposits, and leases generally do not apply to short-term rentals of less than 30 days where no permanent residence is established. However, hosts should still have a clear rental agreement outlining policies, house rules, and guest expectations.

At the state level, the room occupancy tax and sales tax currently have the most direct impact on East Lyme short-term rental hosts. However, the regulatory landscape could change significantly if statewide legislation is enacted granting municipalities more control over short-term rentals. Hosts should stay informed of any developments at both the state and local levels to ensure compliance with all applicable laws and regulations.

Does East Lyme Strictly Enforce STR Rules?

Based on discussions among short-term rental hosts on forums like BiggerPockets and Reddit, it appears that as of July 2024, East Lyme is relatively Airbnb-friendly compared to some other Connecticut municipalities. The town has not yet implemented strict regulations or permitting requirements for short-term rentals.

Several hosts report successfully operating Airbnbs in the greater New London County area, including in nearby towns like New London and Groton. They note steady demand from travelers seeking beach getaways, casino trips, and visits to local colleges. While most of these rentals are not directly in East Lyme, the town seems to have a similarly welcoming stance so far.

However, East Lyme's regulatory landscape is evolving. The town established an Ad Hoc Short-Term Rental Committee in August 2023 to study the issue and make recommendations to the Board of Selectmen. This committee has been considering potential rules like permit requirements, zoning restrictions, occupancy limits, and parking requirements. But as of mid-2024, no strict ordinances have been enacted yet.

This puts East Lyme in contrast to some other Connecticut towns that have banned short-term rentals outright or imposed rigorous permitting processes. Hosts appreciate that East Lyme has, so far, taken a more measured approach focused on addressing specific concerns rather than prohibiting the practice altogether.

That said, short-term rental operators in East Lyme are watching developments closely. Many expect the town to eventually adopt some form of regulation, likely requiring registration and adherence to certain standards. But the specifics and timing remain unclear, pending the committee's recommendations and the Selectmen's decision.

For now, it seems a number of hosts are operating short-term rentals in East Lyme, even without explicit permits or town approval. The lack of strict enforcement has allowed the market to grow. But as the town's stance evolves, hosts will need to adapt to any new rules or risk facing penalties.

Overall, East Lyme appears to be cautiously Airbnb-friendly as of July 2024, with many successful short-term rentals operating in the area. But the regulatory winds are shifting, and hosts should prepare for potential changes on the horizon. Proactive communication with town officials, neighbors, and guests can help hosts stay ahead of the curve and maintain positive short-term rental operations in the community.

How to Start a Short-Term Rental Business in East Lyme

Starting a short-term rental business in East Lyme, Connecticut as of July 2024 is a relatively straightforward process, as the town has not yet implemented strict regulations or permitting requirements. However, it's important to stay informed and adapt to any potential changes in local rules. Here are the key steps to get started:

  1. Research local regulations: While East Lyme doesn't currently have specific short-term rental ordinances, it's crucial to stay updated on the findings and recommendations of the Ad Hoc Short-Term Rental Committee. Regularly check the town's website and attend public meetings to ensure compliance with any emerging rules related to registration, zoning, parking, occupancy limits, and safety requirements.
  2. Obtain necessary licenses and permits: As of July 2024, East Lyme does not require a specific license or permit for short-term rentals. However, you may need to register your business with the town and obtain a general business license. Check with the town's zoning and building departments for any additional requirements.
  3. Register with tax authorities: Short-term rentals in East Lyme are subject to state room occupancy tax (15%) and sales tax (6.35%). Register with the Connecticut Department of Revenue Services to obtain a tax ID number and ensure proper collection and remittance of these taxes.
  4. Prepare your property: Ensure your rental property is clean, well-maintained, and equipped with necessary amenities and safety features. Consider hiring a professional cleaning service and conducting regular inspections to maintain quality standards. Provide clear house rules and guest guidelines.
  5. Set competitive rates: Research similar short-term rentals in the area to determine competitive nightly rates. Consider factors like seasonality, events, and demand when setting prices. Utilize dynamic pricing tools to optimize revenue.
  6. List your property: Create attractive listings on popular short-term rental platforms like Airbnb and Vrbo. Include high-quality photos, detailed descriptions, and accurate information about amenities, house rules, and local attractions. Respond promptly to inquiries and maintain a high response rate.
  7. Manage bookings and guests: Streamline the booking process by using a reliable reservation system and automating guest communications. Provide clear check-in and check-out instructions, and be available to address any guest concerns promptly. Maintain a guest screening process to ensure responsible visitors.
  8. Comply with health and safety standards: Regularly inspect and maintain smoke detectors, carbon monoxide detectors, fire extinguishers, and other safety equipment. Follow any local health guidelines related to cleaning and sanitization, especially in light of COVID-19 concerns.
  9. Engage with the local community: Foster positive relationships with neighbors by proactively addressing any concerns about noise, parking, or disturbances. Consider joining local short-term rental associations or attending community meetings to stay informed and contribute to the dialogue on emerging regulations.
  10. Seek professional support: Consider engaging the services of a local short-term rental management company, like Niantic Property Management Inc., to handle tasks such as marketing, booking, cleaning, maintenance, and guest communication. This can help optimize your operations and ensure compliance with local rules.

By following these steps and staying adaptable to any regulatory changes, you can successfully launch and operate a short-term rental business in East Lyme. Remember to prioritize guest satisfaction, maintain open communication with local authorities and neighbors, and continuously improve your services to stand out in the competitive market.

Who to Contact in East Lyme about Short-Term Rental Regulations and Zoning?

If you have questions or concerns about short-term rental regulations and zoning in East Lyme, here are some key contacts and resources:

Zoning Department: Contact William Mulholland, the Zoning Official, at (860) 691-4114 or billm@eltownhall.com. You can also reach out to Jessica Laroco, Office Manager, at jlaroco@eltownhall.com or Janet Sutherland, Administrative Assistant, at jsutherland@eltownhall.com.

Ad Hoc Short-Term Rental Committee: This committee was established in August 2023 to investigate issues related to short-term rentals in East Lyme. You can share information or opinions with the committee by emailing the co-chairs:

  1. Anne Santoro: asantoro@eltownboardmember.org
  2. Gary Cicchiello: gac425x2@gmail.com

Board of Selectmen: The Board of Selectmen created the Ad Hoc Short-Term Rental Committee. You can find their contact information on the town website under the "Government" section.

Town Attorney: Mark Zamarka is the East Lyme Town Attorney. His legal opinions and guidance have helped shape the short-term rental discussion.

In addition to these official contacts, connecting with other local short-term rental hosts and advocacy groups can provide valuable insights and support:

  1. The Airbnb Community Center has had discussions about short-term rental regulations in East Lyme. Hosts have shared experiences and sought advice.
  2. The National Short-Term Rental Association (NSTRA) provides resources and a member forum for hosts to connect across the U.S.
  3. Rent Responsibly maintains a directory of short-term rental alliances and advocacy groups. While there isn't one listed specifically for East Lyme, connecting with others in the region may still be beneficial.
  4. The Airhosts Forum has a thread discussing short-term rental bans where hosts are sharing their stories and strategies for handling new regulations.

By engaging with both town officials and the wider host community, you can stay informed about evolving short-term rental policies in East Lyme and work together to find reasonable solutions. Proactive communication and participation in the process is key.

What Do Airbnb Hosts in East Lyme on Reddit and Bigger Pockets Think about Local Regulations?

Based on discussions in online forums like Reddit and BiggerPockets, it appears that as of July 2024, short-term rental hosts in East Lyme have mixed feelings about the prospect of new regulations:

On the Connecticut subreddit, a few users mentioned East Lyme in the context of moving to the state or finding housing:

  1. One commenter suggested that Waterford and East Lyme/Niantic are "significantly better places than Groton" to live, with Groton being described as less nice than neighboring towns.
  2. Another person recommended East Lyme/Niantic as a possibility for someone moving to the area to work at Electric Boat in Groton, but noted it may be a bit of a drive.

However, there weren't any comments specifically from East Lyme Airbnb hosts about regulations.

On BiggerPockets, there are a few threads discussing short-term rentals in Connecticut in general, with some mentions of the evolving regulatory landscape:

  • In a thread titled "Connecticut Short Term Rental Laws by City," a few hosts discussed the patchwork of local regulations across the state. One mentioned that their town requires a permit and charges a 15% occupancy tax on short-term rentals. Another said their town banned short-term rentals in residential zones. However, no one specifically referenced East Lyme's situation.
  • In another thread about investing in Connecticut vacation rentals, an investor mentioned they were considering the Mystic area but were concerned about the potential for new restrictions. A reply noted that regulations seem to be in flux in many Connecticut towns.

So, in summary, while there are some general discussions online about the regulatory climate for short-term rentals in Connecticut, there don't appear to be many public comments specifically from East Lyme hosts at this time. This may be because the town hasn't enacted strict rules yet, with the regulations still under consideration by the Ad Hoc Committee as of July 2024.

Hosts seem to be cautiously watching to see what the town ultimately decides. Some may be providing input to the committee directly rather than posting about it online. Once the town's path forward becomes clearer, there may be more public discussion among local hosts on forums and social media about adapting to any new permit requirements, taxes, or restrictions.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.

⚡️
Reveal your property’s rental profitability

Buy this property and list it on Airbnb.