The Southold Town Board put the finishing touches on its new plan to manage short-term rentals on July 1, not long after the Town Attorney’s office sent letters to about 200 people renting without permits. A public forum on the changes is in the works for August.
The town warned earlier this spring that homeowners without an existing rental permit will not be allowed to participate in the short-term program without a valid rental permit.
Pictured: Southold Town Planner Mara Cerezo gave an overview of the new short-term rental plan on July 1.
Short-term rentals of less than 14 days are currently prohibited in Southold Town, though this law, on the books since 2015, has proven difficult to enforce. The town is now planning to issue a limited number of short-term rental permits through a lottery, beginning in 2028.
The Town Board has been working on drafting the law in its Code Committee since January of this year.
A 2024 task force recommended the changes, which would include changing the definition of short term rentals to rentals of less than 30 days and capping the number of these rentals allowed in each hamlet in an effort to curb “land-use impacts that affect the character, stability and long-term housing supply of residential neighborhoods.”
The cap is initially slated to be 1 percent of the housing stock in each hamlet, though board members said at a July 1 Code Committee meeting that they may consider changes to that cap after public hearings are held later this year or as the new program gets underway.
Timeline to Include August Public Forum, Hiring of Three Staffers
At the July 1 Code Committee meeting, Town Planner Mara Cerezo presented a timeline for implementing the program that would begin with a public information session, likely this August. She proposed a formal public hearing in the fourth quarter of 2026.
The new code would rely on the hiring of three new staff members in 2027 — which the town would need to begin budgeting for now — with the program launch anticipated for Jan. 1 2028.
Those staff members would include a Director of Code Enforcement, an additional building inspector and an office assistant in the building department, said Ms. Cerezo.
“We’re talking about hiring three people. Let’s just live in this space for a minute, knowing it’s budget season, and this is going to take a lot to implement,” she told the Town Board, members of the Short-Term Rental Task Force and Building Department representatives at the meeting. “If staff is not added, there’s a question of whether the code as written is going to be enforceable.”
“Frankly, we can’t do this without more staff,” agreed Town Attorney Ben Johnson. “If you’re not going to commit to it, let’s change course quickly.”
“That’s gotta be addressed in next year’s budget. We have to start that today,” said Town Supervisor Al Krupski.
Warning Letters Sent
The town began using new software, Rentalscape by Deckard Technologies, in 2025, enabling it to know the length and price of rentals booked on short-term rental websites, and find out in real time when short-term tenants are arriving and leaving the properties.
It used the findings from that software to issue a series of warning letters sent out in mid-June.
The requirement to post a rental permit number on advertisements, not the rental of property on a short-term basis, appears to be the basis for the letter, which was provided to The Beacon by a resident who received one.
While rentals of fewer than 14 days are currently illegal, anyone who advertises property for rent of any length of time is required to have a rental permit and list that rental permit number on advertisements for their rental.
The letter notified property owners that “during a routine review of rental listings on third-party platforms, the town identified that your property appears to be actively advertised for rent. The Rental Permit requirement exists to protect public welfare by ensuring that rental properties are safe, legally compliant, and well-maintained in accordance with applicable building, fire and safety codes. Operating without a permit may expose you to code enforcement action and monetary penalties.”
The letter adss that it “does not address or otherwise concern the separate issue of transient or short-term rental activity, defined as a rental for a period of fewer than 14 consecutive nights, which may be subject to different or additional regulatory requirements.”
The letter included a QR code link to the application for a rental permit.
Chief Building Inspector Mike Verity said his office “took a pretty hard hit and had a quick learning curve” after people who received the letters began calling asking how to bring their properties into complience.
Mr. Johnson said there were several bumps in the roll-out of the letter campaign, including people who had rental permits but had not listed their permit number on the advertisement of the rental. He said second notice letters are slated to go out later this summer, followed by a third letter warning that the town “we’re going to be knocking on your door.”
“The purpose, at this point, is to get people to come in for rental permits,” he said.
Two Permits Required
Regular rental permits are good for a two-year period and cost $300. If enacted, the short-term rental permit would be another permit, in addition to a rental permit, said board members at the Code Committee meeting.
Anyone applying for the short-term rental permit would need to provide their regular rental permit among the documentation required to enter the lottery.
Short-term rental permits would also be valid for two years, and would be subject to a lottery every two years. “Permits shall automatically expire at the end of the two-year term. Permit holders shall have no vested right or expectation of renewal,” according to the latest draft of the local law distributed to the board at the meeting.
A fee for the short-term rental permit has not yet been established.
Short Term Rental Task Force member John Stype, the town’s Deputy Supervisor, said that, if the town looked at the fees in terms of the cost of the program — including the three new salaries, which could cost around $300,000 per year, each two-year rental permit cycle would cost the town $600,000 in new staff. If 100 permits were issued per year, he said, a $6,000 feet for the short-term rental permit “would make it self sufficient, in theory.”
“Short-term rentals make so much more money than a normal rental,” he added. “They could almost make that in a weekend, some of these people.”
Mr. Johnson said those employees would likely have other duties that are not related to short-term rentals.
“We’re never going to make enough money from the permit process to cover the employment of one, two or there people,” he said. “We cannot charge 100 percent of a person’s salary in the calculation. It’s about covering as much cost as we reasonably can.”
“This goes back to ‘why are we doing this?’ We’re doing this for a reason,” said Mr. Krupski.
“This program needs the teeth of enforcement,” said Councilwoman Kate Stevens. “The optics are that there isn’t enough enforcement.”
“It sounds like we need staffing not just to find people who aren’t following the rules, but to help people follow the rules,” said Councilwoman Anne Smith.
Mr. Stype reminded the board of a 2022 fire in Noyac where two sisters died in a short-term rental that hadn’t been inspected for fire safety code violations and did not have a rental permit. That fire is believed to have originated in an unpermitted outdoor kitchen.
“We’re trying to do things properly, as a prudent town should,” he said.
What’s in the New Code?
According to the draft code circulated July 1, no more than one rental permit would be issued to a property owner — whether that be a person, a corporation or a Limited Liability Company, in an effort to curb using residential property as a commercial investment. The task force found in 2024 that more than 40 of the nearly 1,000 short-term rentals listed in Southold were listed by just four property management companies.
While the rentals do not need to be the owner’s primary residence, an “operator” would be required to be available 24 hours a day during the rental period to “respond to any issues, violations or complaints within 60 minutes.”
The operator could be the owner or a property management company or other responsible party.
Property owners would also have to provide a parking plan, a waste removal plan, a list of all the owners of the property, a street-facing photo of the property with the street number visible and proof of not less than $1 million in general liability coverage, which could include a “homeowner’s insurance policy with a short-term rental endorsement,” a landlord or dwelling policy, a short-term rental-specific insurance policy or, if applicable, a commercial general liability policy, with the Town of Southold named as an additional insured, along with a hold harmless and indemnification agreement.
Fines set forth in the July 1 draft range from $3,00 to $10,000 “or the thirty-day rental rate, whichever is greater” for a first offense and fines of not less than $5,000 or exceeding $20,000 “or the thirty-day rental rate, whichever is greater” for subsequent offenses within five years. Each week’s continued violation would constitute an additional violation. Tenants would also be subject to penalties of up to $1,000.
What About the One Percent?
The board briefly debated whether to raise the cap on short term rental permits from 1 percent of the housing stock in each hamlet, before settling on leaving that cap in the draft and revisiting it after hearing from the public and/or beginning to implement the program.
Of the 13,770 residential properties in the town, the short-term rental data company AirDNA showed in August of 2024 that 985 were being used as short-term rentals, Ms. Cerezo had explained to the Town Board at its initial Code Committee discussion of the proposal in January. If 1 percent of homes in each hamlet could be used as short term rentals, only 125 total short-term rentals would be allowed in town — an 87.3 percent reduction in these rentals townwide.
“I don’t think it hurts to start with one percent,” said Chief Building Inspector Mike Verity, who added that the market appeared to be calling for about 1,000 rental units.
“It’s easier to start tough and ease up,” said Zoning Board of Appeals member Margaret Steinbugler.
“We look at this as a quality of life issue,” said Mr. Stype. “We’re looking at some property owners that make over $300,00 a year. They’re obviously a business, and they don’t care about the North Fork. This is a huge business, but whether we need it or not for our community? We survived and grew pre-Covid and we were a tourist attraction. A lot of people came here before this. I don’t think regulating short term rentals will make a big difference in people coming out here to support our local businesses.”
He added that property owners “still can get rental income. They can rent it legally.”
“I don’t think we should fill the entire market need, but I would advocate for a slight increase to 2 percent,” said Councilwoman Alexa Suess. “People do still come here and spend money in our local businesses. It should obviously be regulated, but it does play a role in our economy.”
“This is a real step forward as an arrow in the quiver of community housing,” said Councilwoman Kate Stevens. “It’s about strengthening our year-round community.”
Southold’s efforts do not apply to Greenport Village, which adopted its own new short-term rental law in 2025.
We will share more information when a date for the public forum has been established.
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