New Georgia Bill Would Bar Localities From Restricting Existing Short-Term Rentals

New legislation proposed in the Georgia House of Representatives is looking to protect owners of short-term rental units from potential local restrictions or bans.

Republican Reps. Dale Washburn of Macon, Bethany Ballard of Warner Robins, Alan Powell of Hartwell, Kimberly New of Villa Rica and Steven Sainz of St. Marys introduced a bill this month that would prevent city and county governments from banning landlords from using their dwelling units as short-term rentals, such as those commonly found on platforms like Airbnb and Vrbo.

In essence, the bill, if passed in the House and Senate and signed by Georgia Gov. Brian Kemp, would act as a grandfather clause, allowing landlords who already list their units in single-family homes and apartment communities for rent for 30 days or fewer to continue to do so, even if a local government passes an ordinance that would prohibit or outlaw them.

“It’s necessary to protect the legal rights of property owners in the state of Georgia, many of whom rely on the income of short-term rentals,” said Kathie McClure, vice president of the Atlanta Metro Short Term Rental Alliance, a volunteer organization of people who rent out units on a short-term basis.

“It makes it fair to property owners in the state of Georgia who are, in fact, entitled to protection,” McClure said. “This is extremely reasonable.”

But for local officials who spoke to Bisnow, the bill represents a turf war with the state, which they say should have no jurisdiction to dictate what local governments can and can’t do when it comes to land use.

“I can understand why this of importance to the state,” Cobb County Commission Chairwoman Lisa Cupid told Bisnow via email. “This also has direct impact on the livability of communities which is an area that local governments tend to have priority interest and discretion given nuances of the areas we govern.”

None of the bill’s co-sponsors responded to messages seeking comment, nor did a spokesperson for Kemp.

While always an element in the overall rental market, short-term or vacation rentals gobbled up market share during the depths of the pandemic. Between 2021 and 2023, demand for short-term rentals increased an average of 13.6% per year across the country, according to data compiled by the research firm AirDNA.

Demand is expected to exceed 10% this year from overall economic growth and a recovery in domestic travel, with landlords seeing more than a 2% increase in average daily rates, AirDNA projects.

Many municipal governments in Georgia have been able to increase their tax base because of a 2021 law that mandated that Airbnb and other short-term rental platforms collect a $5 tax per unit.

For many governments in Georgia, short-term rentals are a way to increase their typically scant hotel-motel taxes or even collect those taxes where they weren’t available before.

“We had a number of counties that have passed hotel-motel tax ordinances because of short-term rentals,” said Clint Mueller, the governmental affairs director of the ACCG, formerly the Association of County Commissioners of Georgia. “And they’re getting a decent amount of revenue.”

Short-term rental ordinances are a patchwork in Georgia. Most localities don’t prohibit or limit them, but some have attempted to.

Atlanta passed a short-term rental ordinance in 2022 but has yet to enforce or enact the ordinance due to growing legal questions, including a threat by AMSTRA to file a lawsuit against the city. In the fourth quarter, more than 7,300 housing units were listed as short-term rentals each month, according to the Atlanta Convention & Visitors Bureau.

Savannah limits short-term rentals to the Downtown and Victorian districts mainly, and Cobb County and the cities of Brookhaven, Macon and South Fulton require landlords to register units with the local governments and pay annual application fees.

House Bill 1121 looks to create a halo of protection for short-term rental landlords against what local governments may decide to do in the future. 

McClure said HB 1121 would only solidify a precedent set by an appellate court ruling from 2022, in which the court overturned penalties placed on the owner of a short-term rental unit near Lake Oconee despite an ordinance that banned the business. The court ruled that Morgan County’s ordinance was unconstitutionally vague and that the owner, Christine May, had a right to continue operating her unit as a short-term rental despite the local law.

Still, some maintain the state has no constitutional authority to dictate local land use policies. Georgia is a home rule state, which means all land use decisions are determined by local elected officials, according to the Georgia Municipal Association. HB 1121 would supersede that law, Mueller said.

“We’ve always maintained that it's like zoning. It’s a land use decision,” he said. “Those are discussions that need to be had at the local level.”

The sentiment was echoed by Dan Immergluck, a professor at Georgia State University's Urban Studies Institute.

“In general, the state should allow local governments to regulate short-term rentals as they see fit,” Immergluck told Bisnow by email. “And in general, short-term rentals that are owned by investors have been shown to increase local rents by extracting long-term rental units from the market.” 

HB 1121 is the latest example of a nationwide trend at state and local levels to define some control over the booming short-term rental markets nationwide.

Limits and prohibitions on short-term rentals can have massive impacts on the industry, especially as many local governments in the U.S. have enacted ordinances and rules that limit or prohibit the use of properties as short-term rentals.

Among those are New Orleans, which limits owners to one short-term rental unit per block; Honolulu, which bans rentals for fewer than 90 days; Burlington, Vermont, which mandates that landlords live in the same dwelling as the short-term rental unit; and Chattanooga, Tennessee, where absentee landlords are prohibited from renting out units on a short-term basis in residential zones.

Perhaps the most restrictive Airbnb law is in New York City and provides an example of the extent to which a local ordinance can impact the short-term rental industry. Local Law 18, which went into effect in September, all but bans short-term rentals unless they abide by strict rules: The host must live in the unit, guests are limited to two people, and the guests must have access to the entire living space. 

The impact was rapid.

Airbnb listings for rentals of fewer than 30 days plummeted 77% in the week after the law took effect, Skift reported. The diminished competition helped push average hotel rates up 8% year-over-year in December in New York City and 20% from November, the New York Post reported, citing data from Trivago’s Hotel Price Index. 

New Jersey has benefited from the new law. While New York saw demand growth drop by 46% in December, its neighbor saw demand spike by more than 53%, according to AirDNA.

AMSTRA's McClure, who is an Atlanta real estate attorney as well as a short-term rental owner, said local governments can create a nuisance for landlords of short-term rentals, especially since most are mom-and-pop owners without the resources to fight cities and counties in court over restrictive ordinances.

“It's a move in the right direction because there’s a lot of heavy-handedness when it comes to these ordinances. It’s hard for the little people to protect your rights,” she said. “What we are doing here is preserving the rights that already exist. We’re not plowing new territory here.”