Seaside Heights Rental Owners Complain Occupancy Limits Too Low, Officials Plot Change

Bay Boulevard at the entrance to Seaside Heights, April 2014. (Photo: Shorebeat)

Rental property owners in Seaside Heights say they are missing out on potential tenants because occupancy rates limit the number of people allowed to spend the night – and while the complaints have been expressed in varying terms at borough council meetings, officials say they agree and are working hard behind the scenes to update their methodology in developing certificates of occupancy.

The issue has reared its head at two recent council meeting, during which the owners of rental properties have complained about a uniquely modern issue. Homes have become indisputably larger, but occupancy rate limits have remained what many view as being too low and out of sync with the number of bedrooms in a residence. In some cases, the traditional assumption that each bedroom can fit a minimum of two people has not come to fruition, and since most property owners are advertising their properties on digital platforms such as Airbnb and VRBO, large families never see the listings since they are filtered out of search results due to “too many” guests per party.

One Webster Avenue homeowner said she purchased a property in 2018 and built a new home there with five bedrooms. Her certificate of occupancy allows it to be rented to a party of seven, which precludes large families from leasing it, she said.

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“I’m putting this house up for Section 8 in the next two years if it doesn’t do better,” she said. “We already looked into it – it’s $4,500 a month.”

Borough Administrator Christopher Vaz said contrary to rumors, Seaside Heights has not changed the way it calculates occupancy in likely three decades. The town currently uses a state-developed formula based on square footage and living space to calculate occupancy limits.

“In the past, most people were buying homes and condos for occupancy themselves, and it was really not an issue, but I think now as people are buying for investment, they have a pre-determined number in mind,” he said. “Then they see the occupancy is calculated differently.”

The Seaside Heights water tower and Sunset Beach. (Photo: Shorebeat)

Councilman Mike Carbone said bedrooms alone do not determine occupancy rates since, in theory, nefarious landlords could simply partition off a high number of rooms and pack a small home with a high number of guests. It’s happened before, he recalled.

“It goes by your living area, not your bedroom area,” said Carbone.

Officials do, however, believe there should be some change in the occupancy calculation since more property owners – not necessarily residents – are purchasing homes as investments.

“I have a three bedroom house and I can put five people in it,” said Eric Mischner, who owns a home on Carteret Avenue. “I don’t think I can make money down here.”

Another property owner, Guy Madsen, also said he was considering offering his investment home as a Section 8 rental due to his inability to rent to large groups since his listing never appears when families search on booking sites.

“Unfortunately, I am not being shown or seen by families who may have three or four kids. My bookings at down 40 percent this year, and it has been a steady decrease over the last several years,” he said. “Homeowners are afraid. If I’m down 40 percent, my only options are to sell or rent to Section 8.”

Madsen said he estimated his home could garner $4,200 per month from a rental in the federal subsidized housing program.

Borough officials said they have heard the calls from homeowners and are working on a new formula.

“This mayor and council is aware, and we are studying – and I can’t tell you the particulars – but we are addressing your concern about occupancy,” Mayor Anthony Vaz said at a recent council meeting.

Construction begins on the replacement of the Coral Sands Motel in Seaside Heights, Nov. 29, 2023. (Photo: Shorebeat)

Speaking to Shorebeat, Vaz said he expects a new formula to be proposed for adoption “by the new year” in time for the 2027 season. Other officials agree, but said they need to strike a balance between the underutilization of properties and the consequences that could arise from packing too many people into a given home.

“We just need to make sure that when we write it, it’s written properly,” said Councilman Robert Triano. “It’s something coming down the road, and hopefully it will make everyone happy.”