One Size Does Not Fit All

The most obvious takeaway from last week’s Press Sessions event in East Hampton, “The Evolving South Fork Rental Market,” is that one size doesn’t fit all when it comes to local real estate.

Two topics were foremost on the minds of everyone, from panelists to members of the audience. The first was short-term, largely unregulated rentals brokered by online matchmakers like Airbnb, HomeAway and Vrbo, and the effect on the local economy, on neighbors, on those who used to rely on full-season rentals to make money, and on those who host visitors to help afford to stay on the South Fork.

Full-season rentals took a hit thanks to the recent Great Recession, which made more affordable shorter-term rentals a more attractive option, one panelist said. Starting at about the same time, Airbnb and similar platforms started nosing more intrusively into the rental market, offering a solution for both homeowners who wanted to earn extra income and would-be visitors who did not want to, or could not, make a commitment to a five- or six-figure full-season rental.

It was interesting to hear two widely divergent points of view on that count. A panelist who rents what is basically a bedroom in his home in Southampton Town noted that by doing so he can pay his property taxes and have congenial interactions with people from near and afar — and that Southampton Town, where he lives, is unlikely to be approving any hotel/motel types of developments in the near future. His own Airbnb activity helps fill a need, he said.

A completely different point of view came from an East Hampton Town resident whose home in Montauk has been beset by neighboring Airbnbs rented out by out-of-towners who offer multiple-bedroom, multiple-tenant situations that can mean parties that last late into the night. They have inspired him to call at least one “neighboring” property owner in the middle of the night to offer a taste of what he, who actually lives in the vicinity, experiences firsthand. He noted, too, the effect of Airbnb on Montauk’s hotels and motels, depressing their rates, while the motels continue to pay taxes to promote tourism, which Airbnbs do not.

A key takeaway: There is a significant difference between an owner-occupied home, where a resident opens a room or two to paying visitors, and a 10-bedroom investment property whose owners are nowhere to be seen when problems arise with tenants’ behavior. Some have pointed out that even very short-term rentals allow visitors to have a taste of the South Fork, whetting their appetite for longer visits and perhaps even purchases of their own home in this area. Others have said that the shorter the stay, the lower the stake in this region. Local government must adapt to the new economy created by Airbnb and the like, and it could be helpful to keep this distinction in mind as it does.

The second topic of interest was a new state law, intended to protect year-round tenants, primarily in New York City, that prohibits landlords from collecting more than one month’s rent in advance or as a security deposit. The consensus last week was that the new law has the unintended consequence of being a total disaster for seasonal landlords on the South Fork, who rely on — and can pretty easily be scammed out of — a full payment, with security, at the beginning of the traditional rental season from Memorial to Labor Day.

There’s basically no way, under the new law, for landlords to protect themselves from property damage, or tenants who fail to pay rent during the high season. The consensus: The summer of 2020 will be tumultuous, between fears of the law’s fallout and efforts to find workarounds to address its shortcomings. Buckle up.

That the state law simply doesn’t fit the South Fork’s seasonal rental model is barely worth pointing out. State Assemblyman Fred W. Thiele Jr. is seeking exemptions for seasonal and vacation rentals, but it’s unlikely that the state will change the legislation before leases need to be signed for this summer. This is unfortunate, because many people rely on seasonal rentals to keep their mortgages afloat, and summer renters are likely to contribute to the overall local economy by visiting retail stores, supermarkets, restaurants and the like.

The lesson seems to be that specifics, especially of geography and economy, matter a lot when it comes to the best interests of tenants, landlords, neighbors and the local community at large. What is good for the goose may not, after all, be so good for the gander. The importance of the topic — the region’s economy is interwoven into its resolution — means much more discussion is warranted.