Rental Letter Results In 385 New Licenses

OCEAN CITY — Weeks after getting lambasted over the cost of mailing reminders to every property owner in Ocean City to obtain rental licenses if they lease their homes, it appears the initiative was worth the effort and expense.

Over the last two years, Ocean City officials have been monitoring the proliferation of short-term vacation rentals in the resort brokered by third-part online platforms, such as Airbnb and VRBO. The intent is to ensure the hundreds of short-term vacation rentals listed on non-traditional rental company sites are following the same license and tax requirements as everyone else.

The concern has largely been on two fronts including the apparent lack of business licenses for the hundreds of online vacation rentals in addition to the lack of room tax remittal for those that do acquire the requisite business license. Online website like Airbnb and VRBO enable property owners to rent homes, apartments and even single rooms to visitors searching on-line for accommodations by bypassing the traditional rental companies.

Much of the focus over the last several months has been on the third-party online vacation rental brokers because resort officials believe many of those transactions are made without rental licenses and without the appropriate sales and room tax collected. However, a deeper dive by staff revealed some property owners were directly renting their resort homes without acquiring licenses and remitting taxes.

To that end, the Mayor and Council this spring sent out letters to all residential property owners in Ocean City advising them of the rules, instructing them how to acquire the rental licenses and collect and remit taxes, for example. During the public comment period of a Mayor and Council meeting last month, some residents questioned the tenor of the letter, while others took the town to task for the expense of mailing it out to tens of thousands of property owners whether they rent their properties or not.

This week, Council Secretary Mary Knight said while the town took its lumps over the letter campaign for its intentions and its cost, the proof was ultimately in the pudding.

“About a month ago, we had the initiative where we sent out letters to every single property owner in Ocean City stating that they needed a rental license,” she said. “We got chastised by a few people about the cost of doing that mailing.”

Knight said the relatively low cost of sending the letter to thousands of property owners was offset by the results.

“It costs us approximately $10,000, but as of last week, we had received 385 new licenses, which totaled $54,285,” she said. “More importantly, those 385 new rental licenses will be paying their 6-percent Maryland state sales tax. Even more importantly for us, they will be paying our four-and-a-half percent room tax, so it was an excellent initiative and something I think we should consider doing every year.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.