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Audit: Most short‑term rentals in Montgomery County were unlicensed; county relaunch reduced unlicensed listings
Summary
The Inspector General's short‑term residential rental audit found about 1,472 broker listings on major platforms in 2023 and only 177 county registrations, estimating at least $196,000 in potentially uncollected transient taxes; DHCA said system fixes and outreach cut unlicensed counts from ~700 to ~330.
The Montgomery County Inspector General's October 2024 audit of short‑term residential rentals found a large compliance gap between broker listings and county registrations. "We had 1,472 listings that we found on the 2 sites, and in the county system we only found a 177," the Inspector General said, concluding that roughly 85% of broker‑listed properties were operating without a county license.
Auditors subpoenaed Airbnb and Vrbo listings for calendar year 2023, removed listings in municipalities that opted out of the county program, and compared the remaining broker listings to the county license database. The OIG estimated at least $196,000 in potentially uncollected transient tax for the sample year; the office noted that penalties and multiple unlicensed properties per owner could increase the annual fiscal impact toward $1,000,000.
DHCA Division Chief Kimberly Williams described steps taken since DHCA assumed program responsibility in October 2024: an assessment and correction of host‑compliance system coding errors, hiring five staff (including an IT specialist), weekly coordination with the host‑compliance vendor, a relaunch of application instructions, targeted owner outreach, and an executive regulation effective June 12. "We have been tracking the short term rental listings since October 2024," Williams said, and reported that the number of tracked unlicensed properties decreased from roughly 700 to about 330 by April.
Councilmembers asked how complaints are handled and whether code inspectors need warrants to investigate houses. DHCA and the county’s code enforcement staff said complaint follow‑up typically involves code inspectors working with police on response when entry or safety checks may be required; two code enforcement housing inspectors were assigned specifically to STRR issues. Finance staff said platforms remit taxes in bulk without owner‑level backup, limiting the county’s ability to reconcile remittances to individual properties.
The OIG closed two of four recommendations after DHCA updated the registration system and issued some violation notices; two recommendations remain open and relate to establishing and formalizing procedures to maintain a full list of properties and to administer the program consistently. The committee directed staff to prepare a memo for the incoming administration outlining outstanding items.
