On January 1, Raleigh is set to begin enforcing strict rules on short-term room rentals and a ban on whole-house rentals in most of the city through services like Airbnb. Two things could get in the way. 

One, the outcome of October’s city council elections.

Two, the North Carolina General Assembly.

Depending on whom you ask, the latter already did so. On July 1, Governor Cooper signed an update to the state’s Vacation Rental Act that prohibits local governments from forcing property owners to obtain a permit before renting out their properties, which the rules the Raleigh City Council passed in May require. Last week, Brent Woodcox, the General Assembly’s special counsel—an Airbnb proponent and frequent council critic—told the INDY that Senate Bill 483 effectively preempted the city’s regulations. 

But city spokeswoman Julia Milstead says that “after reviewing [the law], we do not believe it has any impact on the city’s current regulations related to short-term rentals.” City attorney Robin Tatum Currin, however, did not respond to the INDY’s request for comment, and the city declined to make available any rationale for its determination, which appears to contradict the explanation of the bill provided by the legislature’s Legal Analysis Division. 

(Attorney and former Wake County commissioner John Burns told the INDY last week he thinks it’s incorrect to say the law either preempts or has no effect on Raleigh’s rules, and the “answer is somewhere in the middle.”)

As if to emphasize their point, House Republicans introduced a bill last week that would have expressly blocked local governments from regulating rental services. It was withdrawn after a heated debate in committee over local control, but it’s likely to return. 

Representative Dean Arp, a Union County Republican, introduced the bill because he believes municipalities are “creating a patchwork of provisions” that limit property owners’ rights to rent out their homes. His bill would have stopped cities from creating outright bans, including Raleigh’s forthcoming prohibition on whole-house rentals. 

While he pulled the bill for now, Arp says it isn’t dead. He plans to make some revisions and bring it back after addressing his colleagues’ concerns. 

And that doesn’t change the fact that SB 483 is already law, Nor does it change the fact that a lawsuit challenging the city’s rules—which require homeowners to pay $176 to get a permit to rent their homes, followed by an $86 annual renewal fee—is in the works, Woodcox says.

Regardless of how the legal issues play out, short-term rentals will be at the forefront of Raleigh’s mayoral and council elections this fall. 

The new regulations—which also limit homeowners to renting out no more than two rooms to no more than two adults at a time—were based on those in Asheville, where Currin previously served as city attorney. In Asheville, which has a tourism-based economy, the city council was concerned that short-term rentals were crowding out housing units and making the market unaffordable. 

In Raleigh, there’s little evidence that short-term rentals are behind the city’s affordability crisis, which stems more from insufficient supply. Indeed, short-term rentals do not appear to be causing many problems at all. In the last five years, the city has substantiated only twenty-three complaints against short-term rental properties—fewer than five per year—and the vast majority of those who have spoken on the issue at public hearings have supported short-term rentals. 

“I just think it’s wrong to tell someone what they can do with their home, especially if they have an opportunity to find ways of being able to take care of themselves and create financial stability and building their wealth,” says Katina Turner, who rented her Northeast Raleigh townhome on Airbnb for two years before getting pushback from her homeowners association. That money was the equivalent of a part-time job—and for some families, she adds, it could be the difference between making a mortgage payment and foreclosure. 

But the majority of the city council that took office in 2017 has seemed skeptical of Airbnb and sympathetic toward horror stories of loud parties and strange cars parked in residential neighborhoods. 

There’s a way to split the difference, says Brian Fitzsimmons, the former chairman of the Wake County Democratic Party who is challenging council member David Cox in District B. 

“There are reasonable ways that we can regulate this service in order to protect our housing inventory, in order to protect the people that live in the neighborhoods,” Fitzsimmons says. “People need to be able to rent out their home. We need to allow whole-home rentals, and we need to allow them in such a way that balances the need for this type of inventory.”  

Contact staff writer Leigh Tauss at ltauss@indyweek.com. 

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