The new short-term rental regulations recently approved in the city of Wilmington are welcomed by those who want to preserve residential areas; however, some property owners and Realtors believe the rules will have a negative impact on the city.

David Billitto, co-owner of hospitality company NachoMammas NC, said the regulations, adopted June 19 by the Wilmington City Council, will affect the city's economy because people who rent homes spend money here.

“The entire food chain is going to be impacted, from the owners of the properties to residents,” he said.

Landlords are now legally able to profit from renting their homes for fewer than seven days. However, those who have been profiting from short-term “whole-house” rentals in residential districts might be facing a loss when the regulations go into effect March 1, if the Wilmington City Council approves them in a final vote June 16.

The new regulations allow homestay short-term rentals in all residential and some commercial and mixed-use districts. The city defines "homestay" as the rental of a room or two with the owner of the house present.

New regulations also address “whole-house” rentals by allowing them in some commercial and mixed-use districts only.

According to a staff report from the meeting in June, the council did not address whole-house rentals in residential zones, meaning they will continue to be prohibited after March 1 unless new regulations are adopted by then. Council members said they will consider whole-house short-term rentals in residential districts during their October meeting. 

Previously, Wilmington had few existing regulations on short-term rentals, outside of the seven-day minimum stay, meaning rentals for fewer than seven days were not allowed. Occupants had to fit the definition of a family, meaning no more than three unrelated people in a home.

There were also no zoning district regulations on either type of short-term rentals. These regulations were largely not enforced unless complaints were made to the city.

Other cities that have also recently enacted regulations on short-term rentals include Charleston, South Carolina, and Portland, Oregon.

Harry Smith, chairman of the Wilmington Host Short-Term Rental Advocacy group, said Wilmington's new regulations can be beneficial for homestay rentals because the regulations did not restrict how many homestays can be registered within a set distance, but it is not beneficial for people who rely on renting their entire homes in residential areas.

“I know people in the downtown area who are renting for income and to supplement their mortgage payments and who want to save to retire and its shooting all these people in the foot,” Smith said.

A Realtor at Nest Realty, Erick Knight, said if the residential whole-house restrictions take place, landlords could have a hard time paying their mortgage.

“I don’t think from the perspective of many of the council members that they fully realize the effect it’s going to have for people who don’t have the savings to pay for the houses until they can reposition themselves,” he said.

Wilmington City Councilman Kevin O’Grady, however, said these new regulations will be beneficial for the tourism economy and for landlords because it legally permits homestays in most residential, commercial and mixed-use districts.

“We will now allow them,” O’Grady said. “Whoever wants to create them, they can do it. It will be out in the open.”

O’Grady said these new regulations are important because they will maintain the nature of residential districts.

“It affects the character of residential neighborhoods,” O’Grady said. “People make their housing decisions based on that, that they are going to have neighbors. The whole-house rental concept completely turns that on its head. By definition, you have an absentee owner, and it's transient every weekend; that is contrary to the concept of a residential neighborhood.”

Sylvia Kochler, former president of Residents of Old Wilmington, said in an email that the new regulations are a good compromise.

“Allowing all types of STRS [short-term rentals] in business districts is good for tourism and STR businesses,” Kochler said. “Allowing only hosted homestays in residential districts, allows Wilmington residents to rent rooms on a short-term basis to help with mortgage payments.”

Kochler said she doesn’t think these regulations are perfect because they do not address neighborhood parking, but that the city should do nothing more to the regulations and to see how they work out for a year.

Others think regulations should go further and limit homestays even more. Margi and Doug Erickson, who own C.W. Worth House Bed and Breakfast, said in a letter to the council that bed-and-breakfasts are limited to three guestrooms.

“In order to give some support to bed-and-breakfasts and differentiate them from a homestay, I would like to request a homestay be allowed to rent only two bedrooms,” they said in the letter.

They also recommend the hiring of a part-time code enforcement officer.

While these new regulations don’t affect Wrightsville Beach, which has no regulations on short-term rentals, they might offset some short-term rental business to the coast, said Wrightsville Beach Town Manager Tim Owens.

“Typically, beach communities are more tolerant of short-term rentals. We profit on them from occupancy tax,” Owens said.

There are no future plans to implement any short-term rental regulations at Wrightsville. Owens said the town handles complaints on a case-by-case basis, and it should not incite the need for regulations.

The short-term rental market at Wrightsville Beach is important because of the tourism activity it generates, Owens said.

According to AirDNA.co data, which gathers data on Airbnb listings, there were 564 active rentals in Wilmington as of May. Out of that total, 370 are whole-house rentals.

The median monthly revenue for whole-house rentals in Wilmington was $2,108 in May. In 2017, Airbnb hosts in Wilmington made $3.8 million.

An Airbnb study from June shows there are 85 Airbnb hosts in Wilmington that are 60 years old or more, making up 18 percent of total Wilmington hosts. According to the study, 41 percent of seniors reported that hosting helped them afford their homes.

Clarification: This version has been changed to include the City Council's final vote date on the regulations.