Are Airbnbs illegal or not? In New Castle County, it's mostly up to your neighbors

• In Delaware's most populous county, short-term rentals, like Airbnb and VRBO, are prohibited in residentially zoned districts.
• A recent decision by New Castle County's Land Use Department found one short-term rental owner in violation due to the rental home being located in a residential district.
• According to county code, short-term rentals are only permitted in areas zoned commercial neighborhood, commercial regional, office neighborhood, business park and industrial.
• This effectively makes all short-term rentals in "unincorporated" parts of the county illegal since most are located in prohibited zoning districts.

A recent decision by New Castle County on one short-term rental operation has effectively made Airbnb and similar businesses illegal in Delaware’s most populous county – but likely only if your neighbor complains.

That’s because in New Castle County, short-term rentals are prohibited in residentially zoned districts.

But it’s mostly up to surrounding neighbors to call out Airbnb, VRBO and other similar operators on violations as county officials point to its code violation process largely being “complaint driven.”

County land use spokesperson Dawn Thompson said short-term rentals are popular all over, especially in tourist areas, but reiterated that county code makes them illegal in residential zones within “unincorporated New Castle County.

“Short-term rentals are considered commercial lodging, and as such, this type of commercial business is not currently permitted in residential neighborhoods,” Thompson said in an emailed statement. “At this time, we will continue to collect data and enforce the existing statute upon receiving substantiated community complaints.”

The county treats short-term rentals as “commercial lodging,” which is permitted only in areas zoned commercial neighborhood, commercial regional, office neighborhood, business park and industrial.

New Castle County land use officials said they typically receive noise and loud party complaints from neighbors abutting or near homes being used as short-term rentals, creating quality-of-life problems. It’s why, they say, short-term rentals are prohibited in residential areas.

The latest determination by the county comes amid Delaware looking to give counties the option to institute a lodging tax on short-term rentals like hotels.

How we got here

North Wilmington Airbnb owner Paras Turakhias in April was cited for operating “commercial lodging” in a residentially zoned district after a neighbor contacted the county about Turakhias’ short-term rental on Grubb Road.

By mid-June, the county’s Land Use Department determined the short-term rental was illegal and ordered Turakhias to cease operations immediately or face fines for continued noncompliance.

HOW IT BEGAN:Could this New Castle County zoning rule make most short-term rentals like Airbnb illegal?

Turakhias did not respond to emails or phone calls seeking comment for this story but has since received a permit to operate 2817 Grubb Road as a long-term rental.

Turakhias has said the Grubb Road residence was used as a family home, as well as a short-term stay for visitors when they are not using the Wilmington-area property. He said he had no idea of the zoning requirements for short-term rentals in New Castle County.

County spokesperson Brian Cunningham said Wednesday the county has had five "commercial lodging" violations this year, but only two went to hearing, including the Grubb Road residence.

Both were found in violation due to operating in the zoning district that doesn't permit short-term rentals. The other property owner testified during a July 2 hearing on the violation that they also were not aware of the zoning restrictions in New Castle County.

How to comply with county code

Short-term rental owners in unincorporated parts of New Castle County should ideally operate in a permitted district like a commercial neighborhood or business park to avoid any headaches with the county or neighbors.

But most short-term rentals are existing residential properties, which are typically in residential districts.

Indeed, a Delaware Online/The News Journal review of 18 Airbnb listings in unincorporated parts of New Castle County for a stay in August showed all but one listing was in the “neighborhood conservation” district or another district where short-term rentals are prohibited.

Owners could convert to a long-term rental, like Turakhias did, or attempt to get the county to rezone the property to allow for short-term rentals.

However, rezoning is a lengthy, public process with a “wide number of standards” that must be met, county officials said. Plus, rezoning must be achieved through legislative action that includes public input.

The county’s comprehensive plan discourages spot zoning, which could make an attempted rezone of one property in a residential area challenging.

Owners can also opt to rent a room in their home, which is allowed with some restrictions in New Castle County.

Airbnb media relations did not respond to an email requesting comment.

A tax on short-term rentals

House Bill 168 creates a short-term rental lodging tax of 4.5% on every occupancy of a short-term rental in Delaware.

Approved by the General Assembly during the last days of the legislative session and currently awaiting Gov. John Carney’s signature, it authorizes New Castle and Sussex counties to impose an up to 3% lodging tax on short-term rentals.

CITY CONSIDERS REGULATIONS:Here's how Wilmington wants to regulate Airbnb and other short-term rentals

House Substitute 2 for the bill also makes a bunch of clarifications, including reducing the tax rate from 8% to 4.5% and outlining how the funds will be distributed.

The money from the tax will be distributed as follows:

• 62.5% to the state general fund.
• 12.5% to the Beach Preservation Fund within the Department of Natural Resources and Environmental Control.
• 12.5% to established conventions and visitors' bureaus in each county.
• 12.5% to the Delaware Tourism Office.

It also adds Georgetown, Millsboro, Milton, Milford and Western Sussex chambers of commerce to the organizations that make up the Sussex County Convention & Visitors Bureau.

Got a tip? Contact Amanda Fries at afries@delawareonline.com. Follow her on X at @mandy_fries.