Ocean City Today

Short-term rentals comply with regulations, survey says

Data shows 84 percent of units have permits, unclear if owners paying room tax
By Katie Tabeling | Jul 13, 2017

(July 14, 2017) Online short-term rentals in Ocean City are complying with the resort’s housing regulations for the most part, but government officials will start checking next month to see if the property owners are paying Worcester County its share of room tax.

Mayor Rick Meehan reported during Monday’s Tourism Commission meeting that a survey sample of 120 listings from Airbnb and VRBO showed that 101 units were licensed. That shows an 84 percent compliance rate.

Extrapolating that statistic to the approximate 600 listings on both sites combined, Finance Administrator Martha Bennett estimated that 505 units were licensed.

“They have sent notices to get a rental license to those that don’t have it,” Meehan said. “The next step is to double check those that are licensed to see if they’re paying the room tax, which I’m sure they’re not.”

Worcester County collects the 4.5 percent room tax on behalf of the resort and other municipalities, but there is no way to differentiate revenue from hotels and online short-term rentals. However, county officials could check to see if the property is on the rolls with the Treasurer’s Office.

Room tax unpaid or delinquent for one month from the due date will have a penalty of 10 percent of the bill, according to the Worcester County government website. Interest at the rate of one half a percent of the bill will be added each month beginning of the month. Ocean City is projected to see $15.4 million in room tax for fiscal year 2018.

Airbnb, meanwhile, has been rapidly growing throughout the nation, and expected to see $12.6 billion in total billing last year as compared to $7.2 billion in bookings in 2015.

Meehan said the city is using clues on the unit’s listing to help determine where the unlicensed rentals are, but Airbnb properties are significantly harder to identify.

Complicating matters is that several local rental agencies, like Vantage Rentals and Coastal Realtor use the websites to capture more of the market share or to expand social media presence.

Airbnb also lists more than 300 units in Ocean City, but some include duplicates. Bennett also estimated that 10 percent of the remaining amount included rentals in the surrounding area like West Ocean City, Ocean Pines and in northern Delaware.

But Meehan said that resort officials will persevere, despite the positive show in the statistics.

“Even though the percentages are very good, the number of total listings aren’t that large. It doesn’t take them that long to check them,” he said.

Meehan added that this was the only move Ocean City had left, barring waiting for a new bill on short-term rentals next fall.

“We’ve been circling this issue for a long time, and this is a way to end it,” he said. “We’re going to get information from this and possibly answer some questions. It’s not the best scenario, but it’s the best way to level the playing field, and that’s what everyone is looking for.”

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