Home-Sharing Notches a Win in Kentucky

by Christina Sandefur
December 19, 2018

Great news for property rights in Kentucky! The Louisville City Council recently rejected a proposal to impose a three-month moratorium on issuing home-sharing licenses for secondary homes. The Goldwater Institute joined dozens of property owners in urging the city to adopt a more reasonable approach.

Despite the popularity of home-sharing, a growing number of cities nationwide are barring homeowners from allowing people to stay in their homes on a short-term basis. These restrictions don’t just violate private property rights; they also inflict untold costs on communities and destroy opportunities for families to make extra money to pay their bills, keep up with their mortgages, maintain their homes, and improve their local economies. And anti-home-sharing rules take choices away from travelers. In Kentucky, home-sharing is a popular alternative to hotels for patrons of the annual Kentucky Derby.

While Louisville has opted not to join the anti-home-sharing fervor, homeowners aren’t yet in the clear: Although the city rejected a temporary moratorium on home-sharing in non-primary residences, on January 24, the Planning Commission will consider a proposal to implement a permanent primary residence rule.

Prohibiting people from renting a home short-term if the home is not their primary residence unfairly and arbitrarily punishes responsible homeowners for no good reason. Offering one’s property for rent rather than living in the home oneself does not change the property’s use, nor does it make the home any less a residence or change the residential nature of the neighborhood. If a long-term rental or owner-occupied home is considered a residential house, then a short-term rental should be treated the same.

True, people do sometimes cause nuisances, such as noise or traffic problems. But that’s also true of people in long-term rentals and owner-occupied homes, and there are already laws on the books that forbid such nuisances. City officials should focus their attention on enforcing those existing rules rather than passing new rules that impose blanket prohibitions even on people who use their property responsibly. Banning short-term rentals across the board makes no more sense than forbidding all holiday parties just because sometimes people have friends over who get rowdy or park on the streets. Existing traffic and noise laws are enough—there’s no reason to punish the innocent.

Indeed, restricting home-sharing to owners’ primary residences does nothing to protect people against any danger that home-sharing might cause. After all, these rules don’t require homeowners to be present when renting out a home. So even if the rules were intended to ensure that home-sharers monitor guests to prevent noise or other disturbances, they don’t actually accomplish that goal. 

That’s why the relevant question should not be whether an owner is renting her home on a short- or long-term basis, but whether the owner or tenants are causing nuisances.Louisville already has a permitting process for short-term rentals, and existing ordinances already target specific wrongful behavior. Subjecting home-sharers to additional regulations unnecessarily punishes people from renting their own property in responsible ways and in compliance with the city’s existing regulations.

Moreover, prohibiting people from renting their homes unless the home is their primary residence is extreme and may run afoul of the United States and Kentucky constitutions. For example, by allowing Louisville residents to offer their homes as short-term rentals but forbidding similarly situated non-residents who own property in Louisville from engaging in that same activity, the city would treat in-state and out-of-state persons differently, in violation of the federal Commerce Clause.

Louisville officials were right to reject the moratorium on home-sharing in secondary homes, and they should continue to reject such proposals in the future. Louisville and cities nationwide can avoid legal liability and foster the spirit of hospitality by targeting specific nuisances instead of harshly punishing people who are not causing disturbances to their neighborhoods.

Christina Sandefur is the Executive Vice President at the Goldwater Institute.