Short-Term Rentals in Baltimore City: What You Need to Know
Ready to get into the short-term rental business in Baltimore?
The laws associated with short term rentals in Baltimore City are biased against investors.
Whether it’s Airbnb, VRBO, Flip Key or one of the many other hosting platforms, there are several rules and restrictions that should be taken into consideration.
In this article, we’ll explain some of the laws you’ll have to know if you’re interested in investing in Airbnbs in Baltimore City.
Airbnb vs. Short-Term Rental: What’s the Difference?
For the purposes of this article, we are going to use the terms “Airbnb” and “short-term rental” interchangeably.
In Baltimore City, a residential property that is rented, whether a portion of the home or the entire home, for less than 90 nights is considered a short-term rental.
Licensing Your Airbnb
Both owner-occupied “hosted” and non-owner-occupied “un-hosted” short term rental properties must be registered and licensed under the supervision of the housing commissioner.
Unless you purchased the property before 2019, the property must be a principal residence, deeded in your name, and free of any code violations.
Specifically, you need to reside in the property for an aggregate of at least 180 days annually and you need at least one of the following: a driver’s license registered at the address, a voter registration, or an “official designation of the dwelling unit as the owner’s principal residence in accordance with the criteria governing the State Homestead Tax Credit."
Another way to say that is this: if someone looks the property up on the SDAT website, it should state that the property is the owner’s principal residence.
Regulations for Renting Multiple Airbnbs
If you wish to rent a second unit, the unit will need to be part of the owner-occupied residence; for example, a two-unit property where the owner resides in one of the units.
Like any other business, the owner must be registered with the State Comptroller for the collection of the State’s sales and use tax as well as the 9.5% Baltimore hotel room tax.
How to Turn Your Investment Property Into a Rental Property
How can you turn an investment property into a short-term rental property? It needs to be “grandfathered” in.
Currently, the law stipulates you must have purchased the dwelling unit before December 31, 2018.
Further, you need to have at least one booked transaction between August 1, 2017, and December 31, 2018.
Even if you meet those requirements, you need to have applied no later than the 90th day after the date on which the ordinance took effect.
Does this seem like a lot of hurdles to clear?
The laws associated with short term rentals in Baltimore City favor homeowners and hotels.
Selling Your Airbnb
Looking to sell your “grandfathered” Baltimore City Airbnb investment property?
Unfortunately, short term residential leases do not transfer on the sale or ownership, as short-term rental licenses are not property rights.
This means you may have a profitable “grandfathered’ Airbnb business, but you are stuck marketing it like any other property at the time of sale.
A possible workaround may be a transfer of membership sale, and this is something you should discuss with a qualified title company or attorney.
Other Baltimore City Airbnb Laws & Regulations
Each short-term residential rental license expires biennially on the anniversary of its issuance. Before a license expires, the host may apply to renew it for an additional 2-year term.
The renewal application must be submitted to the Housing Commissioner, with the applicable annual fee, at least 30 days before the current license expires. The biennial license fee for a short-term residential rental license is $200 per dwelling unit, subject to adjustment in accordance with the City Fee Policy.
Think you can forgo a license?
Hosting platforms are monitored by Baltimore Housing.
If a hosting platform receives written notice from the Housing Commissioner that a dwelling unit advertised or listed for short-term residential rental on the hosting platform cannot lawfully be used for a short-term residential rental, the hosting platform must remove the advertisement or listing within 3 days.
Are Short-Term Rental Laws in Baltimore City Too Restrictive?
Initially that was our conclusion, but then we went on the Airbnb website and noticed there were over 900+ short term rental options in the Baltimore area on any given weekend.
Most significantly, there were over 100 shared rooms for rent by the night at modest prices in private residences. These homeowners were clearly supplementing their incomes by renting out rooms.
Many of these homeowners had lovely feedback and great reviews.
If investors were allowed to hold multiple Airbnb properties, these homeowners might get pushed out of the market.
Investors are still free to build a portfolio of rental properties in Baltimore City, they just need bonafide lease agreements and tenants instead of guests.
Are there less restrictions in Baltimore County on short term rentals? Yes.
This is because technically, Baltimore City is in the hotel business. The city owns the Hilton Hotel next to the convention center.
Last, sometimes Baltimore is like a small town.
On the Airbnb website we knew many of the “hosts," frankly we had no idea so many of our guerilla clients were renting out rooms or basement apartments within their residences.
When we searched for Airbnbs in Baltimore City, the search results gave us property deja vu. It makes sense, since our creative clients are well-qualified to design great spaces. One of our favorite clients in Baltimore County makes a serious second-income annually with her Airbnb business. The laws associated with short term rentals in Baltimore City are biased against investors but favor homeowners.
For this reason, we’ve concluded that for now, Baltimore City may have gotten this legislation right.