A statewide registry of short-term rentals (STR) could soon be coming to Connecticut after the Finance, Revenue, and Bonding Committee voted to advance a bill to the legislature for final approval. A joint favorable substitute version of the bill was placed on the committee’s consent calendar during the committee’s April 22 meeting.

The committee did not discuss changes to the bill contained in the substitute language.

As originally written, HB 7238 would require STR owners and operators to register annually with the Department of Revenue Services (DRS). Registration would include the property address, the name and contact information of the STR operator, whether the operator is the owner of the property, and a description of the property intended to be used as an STR. STR operators would also be required to pay a $100 fee per STR to “cover administrative costs of establishing, updating, and maintaining” the registry.

If the bill passes, existing STR owners would have until January 1, 2026 to register. As of January 1, 2026, no STR owner could begin advertising their property without first registering with DRS.

STR operators who do not register their properties could face a fine of up to $1,000.

Once established, DRS would be required to organize the registry so it is public facing and so that properties are searchable by municipality.

The bill also authorizes municipalities to vote to assess a supplemental sales tax on bookings at STRs of up to 2.75 percent of the total amount of rent an owner receives for a booking. Under the bill, towns would be required to use revenue derived from the tax to “increase the supply of housing in the municipality for renters and prospective homeowners, including, but not limited to, depositing such funds into a housing trust fund.”

If approved, municipalities could not assess the tax prior to 60 days after the vote to approve it. Municipalities would also be required to notify DRS of the amount of the tax and the date it goes into effect. By 2027, DRS would be required to publish a list of municipalities that have approved this tax, as well as the amount of money it has collected.

STRs have become an increasingly controversial political topic in recent years, with many blaming their growth for contributing to issues like local housing shortages and alleging that the lack of regulation has created quality of life issues for long-term residents.

Several council of governments from around the state mentioned similar arguments in their testimony supporting the bill.

Laura Francis, the interim executive director for the South Central Regional Council of Governments, said the proposed STR registry would “empower” the state and municipalities to ensure there is a level playing field between STRs and other lodging choices already subject to regulation, support enforcement of local ordinances, and “protect housing stock in communities where conversion to short-term rentals may be impacting long-term affordability and availability.”

“This bill is a balanced approach. It neither bans short-term rentals nor burdens responsible hosts. Instead, it introduces simply, necessary measures to bring transparency and accountability to an industry that has grown significantly without corresponding public oversight.” Francis wrote.

Several major hotel chains also testified in support of the bill, arguing it would create a “fair and equitable lodging marketplace.”

“For too long, hotels, inns, and bed & breakfasts have been subject to strict regulations, including health and safety inspections, licensing fees, and the full remittance of state and local occupancy taxes. Meanwhile, short-term rental operators—who compete directly for guests—have operated with minimal oversight. This has created an unlevel plying field that places traditional lodging establishments at a disadvantage.” Tina Fleming, the general manager of the Marriott Hartford Downtown, wrote in testimony.

Connecticut law does currently charge a room occupancy rate of 15 percent for STRs. According to a February 2024 report from the Office of Legislative Research, 11 municipalities in the state require STRs to obtain a permit.

DRS opposes the bill, citing concerns about the additional workload it would create for the agency.

“The legislation as proposed creates additional enforcement responsibilities, which has the potential to take us away from our core function of collecting and administering taxes. In addition, this legislation would result in significant administrative costs, including but not limited to additional staffing.” DRS commissioner Mark Boughton wrote in testimony. The bill does not yet have a fiscal note, meaning its projected costs are still unclear.

The majority of testimony supported the bill.

HB 7238 is not the state’s first attempt to regulate STRs. In 2023, one proposed bill would have allowed municipalities to impose a 2 percent occupancy tax on STRs. Another bill from the same year would have allowed municipalities to hire consultants for the purpose of licensing and regulating STRs.

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