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Holiday rental owners balk at fees

Holiday rental owners who responded to the survey represent 87 unique property listings of the 403 (File photograph)

A majority of holiday rental owners who responded to an industry survey said that they have not yet paid in full fees owed to the Government after the passing of legislation last year.

The Vacation Rental (Application and Registration) Fees Act 2023, enacted on September 1, required holiday home owners to pay between $1,500 and $2,500 per property to operate.

The Bermuda Rental Association of Vacation-Home Owners said the legislation was passed without proper consultation and that the law is discriminatory.

It conducted a survey that showed that one third of respondents had no intention of paying the fees.

Existing owners who responded to the survey represented 87 unique property listings of the 403 found on popular holiday rental platforms such as Airbnb and VRBO.

The findings showed that 63 per cent of those who answered had not yet paid the fees in full.

A marked decrease was also highlighted in terms of the number of holiday rentals available according to AirDNA, a group often sited by the Bermuda Tourism Authority.

The survey said: “From a high of 764 vacation rentals in 2019 to now, the vacation rental industry has lost 361 listings, or approximately 47 per cent of its vacation rental inventory.

“In 2023 alone, the year that the Vacation Rental Fees Act was introduced, approximately 150 listings disappeared.

“Based on the Season Kick-off Survey results, 43 per cent of vacation home owner respondents who exited the industry identified the implementation of the Vacation Rental Fees Act as a primary reason for their departure.”

A spokeswoman for the holiday rental group said: “From the outset the Bermuda Rental Association of Vacation-Home Owners Association has been calling for an economic impact assessment to support a major intervention such as what the Government is doing with vacation rentals.

“Anything less than a proper impact assessment is irresponsible and reckless, as it toys with people’s livelihoods and our fragile economy. And, yes, we should point out there is no data from the Government to support any of their claims, which is why many people haven’t paid.”

When the legislation was enacted, Vance Campbell, then the tourism minister, told the House of Assembly: “We believe these fees are not exorbitant, nor are they prohibitive.”

He added that the Government saw “no adverse impact on the number of vacation rentals on the market”.

The findings showed that of respondents who have not paid the full fee, 35 per cent said they planned to make their property or properties unavailable by either snoozing, delisting or blocking out their listing’s calendar.

Of those who have paid the fees, approximately 33 per cent stated that they do not plan on listing their properties for the 2024-25 season.

More than 52 per cent of respondents who have paid their fees said they have fully absorbed the fees themselves, while 12 per cent have passed the full amount on to their guests. The rest shared the costs with their guests.

Going forward, of the owners who have paid their fees, nearly 70 per cent indicated a strong likelihood of increasing the cost of their rentals even further.

Whether having paid their fees or not, 88 per cent of all present owners indicated that they would not seek a long-term tenant if they stopped operating in the holiday rental market.

The most cited reason for not wanting to operate in the long-term rental market was “headaches” with tenants such as non-payment, difficulty collecting rent, damage and lack of landlord protection.

Of the holiday homeowners who are no longer in the industry, 57 per cent said they would definitely not return to market, 29 per cent indicated that it was a possible consideration, and the rest suggested that they would.

The group responded to a recent statement by Jason Hayward, the Minister of Economy and Labour, who said he would rather see Bermudian families living in the rental properties than tourists on a temporary basis.

He said a shake-up of tenancy laws was being explored to encourage landlords to rent to locals.

The Bermuda Rental Association of Vacation-Home Owners said there was an abundance of neglected and derelict properties that could be used for affordable housing.

It cited the Grand Atlantic — originally slated for affordable housing — and stock that was taken up by digital nomads enticed to the island by the Government.

The group reiterated that there are cumbersome costs associated with the industry that runs only from April to September.

It added: “If the vacation rentals in Bermuda decided to close for the month of May and June, what would happen to the economy on the island? Would the airlines come in half-empty?

“With reference to housing, Government hasn’t provided any data to ascertain that vacation rentals cause lack of housing. That is crucial.”

They questioned whether there would be enough beds to accommodate the tourist season when holiday rental owners are looking to leave the industry.

The survey has been presented to the Government and talks were said to be continuing.

A tourism ministry spokesman said last night: “The tourism sector is a vital contributor to Bermuda’s economy, and the island’s vacation rentals inventory is critical to supplementing our hotel properties.

“There are some key statistics outlined in the Economic Development Strategy report that highlight the impact of the real-estate, housing, tourism and accommodation sectors in Bermuda.

“The accommodation sub-sector, which consists of hotels, cottage colonies, guesthouses, and private home vacation rentals, has over the past five years expanded on average by 5.9 per cent. The accommodations sector presents one of the greatest opportunities for direct and indirect growth in Bermuda.

“This is a segment of our tourism industry that, until now, has had no significant fees levied on the operation of their vacation units. The vacation rental fees are considered fair and reasonable and are being equitably applied according to the ARV of each property.

“We encourage those who have yet to pay their vacation rental fees to ensure they comply. Government will continue to engage with all our industry partners and stakeholder groups to ensure that each is supported.”

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Published May 01, 2024 at 2:33 pm (Updated May 01, 2024 at 2:33 pm)

Holiday rental owners balk at fees

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