Short-term rentals for tourists to the metro area have replaced potential housing for permanent residents, arguably leading to rising and unaffordable rents.
In June, the Portland City Council approved a $4 per night booking fee and increased the lodging tax by 2% on short-term rentals. (The local lodging tax went from 11.5% to 13.5%, and the state lodging tax is 1.8%.) The new booking fee is earmarked for housing and homeless initiatives, and the tax increase will go toward tourism marketing. Portland fees are now one of the highest for a major urban area.
ADU long-term rental rates are usually a little less than their apartment or condo counterparts because ADUs are built on existing properties. Since 2010, the City has been waiving the development fees on new ADU construction, which can add about $15,000 to the total cost of the less than 800 sq. ft units. In May, the City Council voted to make the waiver permanently available but added the condition that the ADU cannot be used for short-term rentals for the first ten years.
With the increased lodging taxes and the booking fees, the City hopes to balance the attractiveness of short-term and long-term rentals for ADU owners. If you are considering building an ADU on your existing property, or thinking about buying a home with an ADU, the financial analysis is a bit complex. And there are “personality” considerations such as whether you like hosting tourists, or would you rather just have one tenant. But to be sure, there is income to be made and that income can help you deal with rising home values.
For more information on the new ordinance, click here: https://www.portlandoregon.gov/auditor/article/689048
Author: Deanna Wray
Deanna Wray is a licensed Oregon real estate broker and practicing attorney. Her invaluable legal, technical experience and negotiation skills have helped her clients successfully and efficiently buy and sell real estate.