More than 85% of short-term rental properties are unregistered in Montgomery County. This has cost hundreds of thousands of dollars from uncollected license fees for these properties, according to a report from the Office of the Inspector General (OIG).
In 2017, the county council established standards and regulations for these short-term residential rentals (STRRs). Properties rented or leased through platforms like Airbnb and Vrbo would fall under this classification. Despite these regulations imposing both a license requirement and a tax, “lax” administration has seen hundreds of rentals slip through unregistered.
Had the county collected these license fees, it would have amounted to nearly $200,000 this year. If the county had enforced the maximum penalty for having an unregistered STRR last year, it could have collected over $650,000.
Additionally, the county has been unable to determine if it has been receiving the appropriate amount of taxes due. This is because two of the largest brokers have submitted tax remittances without documentation, according to the report. This means the county cannot “reconcile tax payments against what was collected.”
Initially, the Department of Health and Human Services was in charge of implementing the 2017 program. However, evidence has shown that the DHHS failed to properly enforce them. Now, the Department of Housing and Community Affairs is in charge of upholding regulations.
The IG’s report recommends that the DHCA not only enforce the STRR program’s requirements, but also communicate them to all current residents and hosts. Additionally, it suggests implementing “formal policies and procedures” and conducting routine audits.
In the past, the DHHS allegedly had no procedures in place to administer the program. The report also found a lack of sufficient staffing.
As of now, the county has hired new people to oversee enforcement of these regulations.
Photo courtesy of John Brighenti
