Role of Short-Term Rentals Called into Question

During the Kentucky Chamber’s testimony before the Interim Joint Committee on Appropriations & Revenue, the conversation turned to the need for increased housing to meet a massive shortfall in housing supply in the state.

Co-Chair Senator Chris McDaniel (R-Ryland Heights) questioned whether short-term rentals were damaging the state’s housing supply.

“When you have existing supply pulled out in order to become, in essence, an investment property, it is not, you know, a full-time rental for someone, but instead is only rented out for the occasional visitor,” he said. “That removes from the housing stock as well. So, it’s not just that it’s not being built, it’s that the existing stock is being depleted by an entirely new type of business activity as well.”

Kentucky Chamber of Commerce Vice President Charles Aull responded that, from the Chamber’s perspective, there is a balancing act of interests because short-term rentals are helpful for the tourism industry, and that, in an ideal setting, Kentucky would have a housing market that could accommodate those types of activities.

Sen. McDaniel replied that he did not dispute the interest in utilizing short-term rentals for tourism purposes but insisted that the impact on housing could not be overlooked.

“From a public policy point of view, you can’t neglect the fact that you have a tremendous amount of housing stock pulled offline in order to accommodate that side of things as well,” McDaniel said

In response to an inquiry by Co-Chair Representative Jason Petrie (R-Elkton) as to whether the Chamber has come across any data on housing being repurposed as short-term rental as opposed to traditional residential rental, Aull noted that this data is obtainable and acknowledged that Sen. McDaniel has cited related statistics in the past.

Indeed, this is not the first time Sen. McDaniel has voiced this concern. The issue came up previously during a July meeting of the Interim Joint Committee on Local Government, where it was noted that two companies alone have pulled about 17,700 units out of the housing stock in Kentucky in the last decade or so.

In the face of legislative advocacy efforts pushing for harmful policies that would allow short-term rental companies to eat away at Kentucky’s crucial housing supply in the midst of a housing crisis, Kentucky League of Cities Board of Directors has voted to oppose any state-level mandates or preemption efforts that override local regulation of short-term rentals, including local density regulations that prevent these rentals from overtaking Kentucky communities.