Short-Term Rentals Are Wreaking Havoc on Homeowners—as Murky Regulations Lead to Rise in ‘Underground’ Listings

When Alyson Austin moved back to her hometown of Wells, ME, to care for her elderly mother, she expected quiet days on their one-lane dirt road. Instead, she’s been adjusting to a new reality: living across from a short-term rental that has eradicated her dreams of a peaceful life.

"I purchased her home so that we could live together, allowing me to care for her full time while continuing to run my business remotely. My mother [is] 90 years old and can be a little sensitive to noise and activity around the house," Austin tells Realtor.com®.

"We live in a quiet neighborhood, and recently the home across the street has become a short-term rental."

Austin's story may well be familiar to many homeowners—with short-term rentals (STRs) steadily increasing in number in many tourist hot spots across the U.S.

In many places, regulations surrounding STRs are hazy at best, allowing for many of these kinds of vacation listings to go unchecked. And local residents are starting to sour on the idea.

It is proving to be a thorn in the side of local authorities, particularly in places like Maine, where tourism supports the economy and visitors are, therefore, an essential asset.

Austin concedes that the STR across the street is rarely rowdy—in fact, it's often occupied by families who enjoy wholesome fun in the backyard. However, its presence has changed the environment of her once-quiet neighborhood.

"There are more cars on the street (our street is a one-lane dirt road), and more cars are obvious to us. So few cars come down the road that any car seems like a lot," Austin says.

In 2020, the town of Wells held a public hearing to outline some general rules for STRs. According to the public hearing, the town would focus on preserving the character of neighborhoods where short-term rentals operate while minimizing administrative burdens.

At the same time, it wants to actively monitor rentals within its borders. Property owners must be responsible for their guests, comply with the laws, and be reachable if issues arise.

STR rules vary by state and town

Short-term rentals have deep roots in Maine. Seasonal cottage and cabin rentals have long been part of the state’s tourism economy. But with the rise of Airbnb and Vrbo, the scale and frequency of STRs have shifted, sparking concerns in many communities.

Newry, ME, a town of just over 400 residents and home to the popular Sunday River Resort, is grappling with soaring home prices fueled by outsiders buying properties to use as short-term rentals. The median list price has nearly doubled in five years—from $460,000 in 2019 to $878,300 in 2024—with a record number of million-dollar homes now on the market.

Residents are divided: Some say Airbnb and similar rentals are pricing locals out of their own community, while others see it as a property rights issue. To address these concerns, the town voted on a proposed “Vacation Rental Registration Ordinance” focusing on safety and environmental standards; though, it would not ban STRs outright.

In a town meeting the following month, Newry's code enforcement officer, Joelle Corey, discussed a 10-day deadline for additional submissions, noting that if the Vacation Rental Registration Ordinance is adopted, the official land-use ordinance will need to be updated so that both use consistent definitions. So far, no ordinance has been approved.

In Maine, regulation happens mostly at the local level. Many towns require hosts to obtain an annual permit; confirm properties meet fire, building, and safety codes; and ensure the zoning allows rentals. Some municipalities have also imposed caps on the number of STRs.

According to Maine's Department of Agriculture, Conservation & Forestry, while STRs “can bring positive economic effects, they can also create nuisances for neighbors and have environmental impacts.” The department has published guidelines for hosts and guests that address a range of topics, including fireworks, firearms, pets, parking, and noise.

The challenge, however, is enforcement.

The gap in accountability

Unlike traditional hotels, STRs often operate with little day-to-day oversight. Neighbors may not know whether the rental across the street is properly licensed—or if anyone is checking.

Maine isn't the only state attracting a new wave of STRs. A recent investigation underscored this issue in Boston, where some hosts skirt city rules by listing their STRs under many names or using false addresses, making it difficult for regulators to track activity, according to Boston.com.

Enforcement has struggled to keep pace with demand, creating what the outlet described as an “underground network” of STRs.

Maine’s smaller towns may face similar challenges, especially during the summer and winter months when rentals can spike. In 2023, 15,267,000 visitors spent more than $9 billion, according to the Maine Office of Tourism.

"We live in a tourist/beach town, so I am not surprised that this is a popular area for short-term rentals," says Austin.

Some Maine cities have begun to tighten oversight. Portland has capped the number of non-owner-occupied STRs and requires visible registration numbers on all listings. Other towns are trying annual fees, zoning restrictions, and limits on how many nights a property can be rented each year.

For neighbors, the hope is that these steps will preserve both the economic benefits of tourism and the sense of community that drew them to their neighborhoods in the first place.

As for Austin and her mother, the concern is less about noisy parties and more about predictability.

"We live in a quiet neighborhood, and recently the home across the street has become a short-term rental. Plus, the home next door just sold, and I worry that it will become a short-term rental, but I am not sure yet," she says.

Meanwhile, some of the professional operators argue that they’re doing their part to ensure STRs coexist peacefully with long-term residents.

"In three of our four buildings, our units are intermingled with long-term residents," says Sébastien Long, CEO of Lodgeur, which manages more than 130 STRs in Houston.

"If there’s a complaint, it’s nearly always us making it against our long-term resident neighbors, e.g., unattended dogs barking all day, cigarette ash flicked onto balconies below, or loud arguments. Those are a lot harder for community managers to address.”

To minimize conflicts, Lodgeur runs what it calls a Responsible Hospitality Program, with guest screening, strict house rules, and noise monitoring technology.

“Our noise monitors give us the data to show that our guests are quiet,” the CEO says. “If the noise sensor is triggered, it’s usually someone falling asleep with the TV on too loud.”

Professional operators, he adds, are accountable not just to guests but also to property managers and owners.

“Every time we pitch a new client, they’re going to call the community managers we work with,” he says. “Unfortunately, there have been enough poor operators and tenants subletting illegally to give the reputation a negative perception in some circles.”