Fayette County Neighborhood Council will be sending you information on short-term rental properties (STRs) in a series of emails. This follows unanimous Urban County Council approval of two short-term rental ordinances, one concentrating on licensing and the other on zoning. The purpose of our emails will be to develop recommendations for changing the ordinances to improve them. The Urban County Government has also established a web site to provide additional information on STR regulation and will be updating it periodically. Please use this link to follow that information from LFUCG–www.LexingtonKY.Gov/STR.
FCNC will start with information about the short-term rental industry in Lexington drawn from the web site of industry analyst AirDNA at the time the legislation was passed in July 2023:
1. There were 1,250 active STRs in Lexington affiliated with Airbnb and/or VRBO during the month.
2. The average daily rent was $184.
3. The annual occupancy rate was 57 percent of days offered.
4. The average monthly revenue was $2,274.
5. 94 percent of Lexington STRs were for whole homes while only 6 percent were for private rooms within a house.
6. The average size of an STR was 2.5 bedrooms holding and 6 guests.
7. Advertised minimum stays of listings were:
– a. 7 percent required one week or more.
– b. 45 percent required one night.
– c. 38 percent required two nights.
– d. 10 percent required from three to four nights.
8. The highest density of short-term rentals in Lexington appears to be in the older part of Lexington near East Main Street and the area around the University of Kentucky. The number of STRs has been expanding, as has their density.
What does the above information suggest?
a. Louisville started regulating STRs in 2015, and Lexington did not introduce regulations until more than 1,000 STRs were in operation. That delayed establishment was too late and has led to problems in the creation of the two ordinances. Are the ordinances optimal for Lexington?
b. Most Lexington STRs are in relatively small houses that otherwise could be part of our affordable housing stock. STR use has diverted these dwellings from long-term housing use and has had an impact on price and availability of housing in key areas where it is most in demand.
c. Almost all Lexington STRs appear to be strictly commercial, with no residential component, given the very high percentage of them that are rented by the house rather than by the room. It is not known what proportion of the rentals by the room are offered by an owner who resides in the dwelling.
d. With an average occupancy of 6 guests, it seems likely that many whole-home STRs violated Lexington occupancy standards for one- and two-family rental use, which generally had been a maximum of 4 unrelated renters per household.
e. Most Lexington STRs advertised a willingness to rent for a very short span of days, just like a hotel. Rental properties in Lexington had been restricted to rental by the week or longer.
f. STRs appear to be profitable and convenient for a significant number of Lexington landowners and investors.
FCNC believes that the spread and density of short-term rentals into neighborhoods is harmful. The question will be whether changes are necessary in the recently passed ordinances to offer more protection for neighborhoods and residents.
Walt Gaffield, President
Fayette County Neighborhood Council, Inc.