State Policymakers' Role in Protecting Short-Term Rental Rights in Ohio

Chair Wiggam, Vice Chair John, Ranking Member Kelly, and members of the House State and Local Government Committee, thank you for allowing me to offer testimony on House Bill 563. I am Emily Hamilton, a senior research fellow at the Mercatus Center at George Mason University, where I am codirector of the Urbanity Project. The Mercatus Center is dedicated to advancing knowledge relevant to current policy debates. Toward this end, its scholars conduct independent, nonpartisan analyses of legislation, rules, and proposals.

As in other areas of land use regulation, local policymakers get their authority to regulate the length of rental terms from the state. Short-term rentals provide important benefits for both homeowners and renters, and state policymakers determine the extent to which local regulations may limit their use. Here I cover some of the opportunities at stake in the short-term rental market and the policies that shape it. I have attached to this testimony a policy brief I authored with my former colleagues Chris Koopman and Nick Zaiac that discusses these ideas in more detail.

Homeownership and Rental Income

About two-thirds of American households own their own homes, more than the share of Americans who have retirement accounts or own stocks of any kind. Before the widespread adoption of local zoning restrictions, homeowners commonly shared their homes with tenants. For many people, this made homeownership possible while providing a key source of market-rate housing that was affordable even to low-income renters, often on a short-term basis.

Housing shared between owners and their short-term tenants was once so commonplace that it is depicted in movies and TV shows including Field of Dreams, The Blues Brothers, and Mary Tyler Moore. But as home-sharing platforms make it easier than ever to match homeowners with renters, local zoning rules are increasingly standing in the way.

Evaluating the Costs and Benefits of Zoning Restrictions

The people who oppose short-term rentals are most likely to be residents who live on the same block as the house in question. These neighbors may be concerned about on-street parking, traffic, or seeing new people around. The benefits of short-term rentals are widespread. They go to homeowners, visitors who have increased options for accommodations, the businesses that benefit from tourism, and native Ohioans who may need short-term housing as they go through a transition in their life.

When local policymakers determine land use restrictions, they tend to put more weight on the costs of land uses than the benefits because the benefits spill over across the state and country as a whole. When local policymakers fail to fairly consider the costs of their policies for Ohio residents across the state, state legislators have a role to play in limiting local restrictions.

State Protections of Property Rights

Although state policymakers have delegated many aspects of land use regulation to localities, state policymakers maintain the responsibility for protecting property rights for all Ohioans. Protecting the right of homeowners to monetize their largest asset provides a broad swath of Ohioans the opportunity to earn additional income from their houses. Local policymakers have the responsibility for regulating real nuisances from short-term rentals, such as noise or safety concerns, and they have the tools for addressing these problems directly by, for example, enforcing noise ordinances without resorting to complete bans on short-term rentals that take away an important right from Buckeye homeowners.

Conclusion

Short-term rentals provide important benefits to Ohio homeowners, tourists, and other renters who need housing but aren’t ready for a long-term lease. State policymakers have a duty to protect property rights for all the state’s residents and to evaluate the costs and benefits of land use restrictions for the whole state.

Attachment

“Land Use and Homesharing Regulation: A Call for State Preemption” (Mercatus on Policy)