Not all homes are used or available for use year-round. 118,000 units in Massachusetts are reported as being used for “seasonal, recreational, or occasional use,” equivalent to 4.0% of the total housing stock. This includes vacation homes used solely for personal stays as well as homes that are made available for seasonal or short term rentals. The share of seasonal units varies widely across the state. On Nantucket and Martha’s Vineyard, fully 60% of all housing units are set aside for seasonal use. On Cape Cod, the figure is 36%, and it’s 13% in Berkshire County. No other region has a seasonal use share of greater than 3.5%.
In December 2018, the Massachusetts legislature passed, and Governor Charlie Baker signed, a bill to regulate and tax short-term rentals in Massachusetts. This law extends the room occupancy tax that was levied on hotel stays to short-term rentals, creates regulations regarding short-term rentals, and explicitly grants powers to local city and town governments regarding short-term rentals throughout Massachusetts. The same law established a Public Registry of Lodging Operators (maintained by the Department of Revenue).
All types of lodging that must pay occupancy tax (hotels, bed and breakfasts, lodging houses, and short-term rentals) must register with the state. As of July 2024, there were 43,400 short term rentals (STRs) listed on the registry. This constitutes 93% of registered entities. Since the Registry does not publish the number of rooms in each hotel or motel, it is not possible to determine the share of registered units/rooms in STRs versus more traditional lodging operations. Six towns have no registered short-term rentals.
Registered short-term rentals are flagged by DOR as owner-occupied or occupied for 14 days or less. By law all units must register, but units occupied by guests for fewer than 15 days a year do not need to collect tax. Units rented for greater than 15 days are subject to community impact fees (if the municipality implemented them), the Cape Cod & Island Water Protection Fund Excise tax, and occupancy tax. If a unit is owner occupied it is not subject to the community impact fee unless a town opts to require that owner-occupied units pay it, and that is only in the cases of owner-occupied duplexes/triplexes.
Not all STRs are full units. Some are “rooms” or “suites”. Since these are not impacting whether a unit that could otherwise be sold or rented to a long-term occupant, they were excluded from the analysis. Analysis was performed on 34,000 STRs that are not owner-occupied, not tax exempt and do not specify that they are “Rooms” or “Suites.” This covers about 78% of the 43,410 registered STRs.
One percent of the state’s housing stock is registered at the DOR as a short-term rental. Half of all registered STRs statewide are in Barnstable County despite having only 6 percent of the state’s housing units. 10 percent of Barnstable County’s housing stock is registered as an STR with the state. This is just over one quarter of all seasonally vacant units. Dukes and Nantucket Counties each have over 20 percent of their housing stock registered as an STR. Berkshire County is home to three percent of the state’s registered STRs and 2 percent of its housing units. Provincetown has the highest share of housing that is registered as STRs with the Department of Revenue at 27 percent.
Outside of the Cape and Islands, towns with high rates of registered STRs are typically coastal communities or rural towns in the Berkshires with a smaller number of housing units and a few STRs. (Such as Hancock, which leads Western Massachusetts with 12% of its housing stock used for STR.) Some towns have low rates of registered STRs but high seasonal vacancy such as Tolland in Hampden County where 57 percent of units are seasonally vacant but only 3 percent of housing units are registered with the DOR. Nantucket and Dennis have the largest number of registered short-term rentals, followed by Boston.
In FY2021, STRs accounted for 43 percent of total tax revenue, but have fallen to 20% in FY2024. Nominally, revenues from both forms of lodging have grown substantially. Between FY2023 and FY2024, traditional lodging revenue grew eight percent and STR revenue grew 35 percent. Owners may opt to list a property as a short-term rental for a variety of reasons. They may want to have access to it occasionally while also receiving income. For owners who do not plan to use the property, even seasonally, short-term rentals generate more income than long term leases. The average daily rate for an STR in the AirDNA dataset was $346 in 2022, adjusted for inflation to 2023 dollars. In 30 days of short-term renting at the average daily rate, an STR operator could expect to earn over $10,000 in 2022, in real 2023 dollars. For comparison, Median gross rent, a measure of rent which includes the cost of utilities was found to be $1,653 in 2022, in real 2023 dollars. At the average nightly rate, and not accounting for expenses, an owner could book their short-term rental for just 5 days per month over the course of a year and would earn as much as a one-year lease at the median gross rent.