The city of Lexington, Virginia recently updated their zoning ordinance to include restrictions on short-term rentals (STRs), including Airbnbs. Colloquially called Airbnb laws, these regulations are common in large cities, but smaller cities take a larger risk of harming their economy by restricting one of the many cottage industries providing income to residents. By capping total rental nights to 104 per year and threatening business license revocation on the basis of neighbor complaints, Lexington fails to recognize the potential negative impact this action will have on the city’s small economy.

Homes Are a Resource for Generating Income

Increased regulation directly harms residents who use STRs as a source of income.

At the time of the 2010 census, the population of Lexington measured at over 7,000 people. The largest employer in Lexington is Washington and Lee University, serving about 1,800 undergraduates, just ahead of the other higher education institution in town, Virginia Military Institute. Most jobs, however, fall into the small business category, with 60 percent of businesses employing between zero and four people. STRs would be included in this count as they require a business license to operate, even before this most recent zoning ordinance update.

In an economy that relies heavily on small businesses to provide jobs, increased regulation directly harms residents who use STRs as a source – or the only source – of income. In some cases, residents don’t have many other attractive options. A retired person might be unable to handle the physical demands of retail or restaurant work, or a stay at home mother or father might need to supplement their family’s income while also caring for their children. Regardless of why residents choose to operate STRs, the zoning ordinance capping total rental nights to 104 per year is harmful.

In addition to contending with the new zoning ordinance rules, under the “three strikes” provision in the ordinance changes, resident who operate STRs will now be answering to their own neighbors. The change endangers the operation of an STR if three or more complaints are filed in a one-year period for nuisances such as noise, trash, or parking.