"I counted 20 exactly today," Selectboard member Anna Keegan told the room at Grafton Elementary School on September 22, 2026. She was describing how many short-term rentals she could find operating in town that day. She added that the number could be off by "two or three on any given day" because Grafton had no registry to check against.
Two days later, voters disapproved the town's Short-Term Rental Ordinance, 77 to 55. The headline feature of that ordinance was a cap of 47 rental units. With roughly 20 rentals operating, the cap was never going to stop a buyer from renting a Grafton house. What the vote removed was the paperwork, the local-contact rule and the enforcement system that came with it. That changes the due-diligence math for anyone buying in Grafton with rental income in mind. It does not change it the way most people would assume.
The cap sat far above the market it was meant to limit
The ordinance set its limit with simple arithmetic. The 2025 Grand List counted 476 residential, mobile home and seasonal properties, and 10% of that is 47 dwelling units. Applications beyond the cap would have gone to a first-come, first-served waitlist.
Compare that with Keegan's count on hearing day:
- Ordinance cap: 47 dwelling units per calendar year
- Town-side estimate, September 22, 2026: about 20 operating rentals
- Headroom: roughly 27 units, so the town was running at a little over 40% of its own ceiling
Keegan said the cap "came in response to the public" and to concern that rentals could change the character of Grafton. She also said it was "not meant to limit someone's livelihood." She said the board had talked with the Grafton Inn about local rentals serving as overflow lodging for the inn. The ordinance also exempted any rooms, houses or cabins operated by the Grafton Inn from its rules.
So a buyer in Grafton was never close to being shut out by the number. The cap would have mattered only if rentals more than doubled. The parts of the ordinance that would have touched every owner on day one were somewhere else.
What the ordinance would have asked of every owner
Keegan opened her presentation by calling the ordinance, first, a way "to create a registry to identify the owner, the caretaker, their contact info and the address of properties that are short-term rental." The text itself shows how much that registry would have asked for. Under the version the Selectboard approved on May 18, 2026, an owner would have needed to:
- Register every unit annually for $200, which Keegan said was set at roughly one night's rental and would pay for registry software.
- Name a natural person on the registration as the responsible party, as distinct from a corporation or other legal entity. Keegan described this as an owner requirement meant to keep large corporate operators out.
- Provide a caretaker who lives in Grafton, or a local property management company, available 24 hours a day during every stay.
- File a floor plan showing sleeping spaces and fire exits, plus proof of short-term rental insurance or a homeowners policy with an STR endorsement.
- Cap occupancy at two guests per bedroom plus two, and install a Knox Box for any listing over 10 guests.
- Post reflective address numbers at least 3 inches high to Vermont Enhanced 911 standards, use bear-proof trash containers and install fully shielded, downward-facing exterior lights.
- Show the town registration number in every listing, with civil penalties of up to $800 per day and revocation after more than one violation in a year.
Two items on that list would have shaped a purchase more than the cap ever could. The natural-person rule would have put a named individual on the hook for every registration, whatever entity held title. The local-caretaker rule would have added a fixed cost for any owner living outside Grafton. Keegan also said complaints over the prior year or two had been "like zero," and that enforcement would start with warnings.
What still applies on the day you close
Because the vote came through a petition, the ordinance never took effect. Under 24 V.S.A. §1973(e), when a majority of voters disapprove an ordinance in a petitioned vote, it "shall not take effect." The ordinance PDF does show a filled-in effective date of July 17, 2026. The same section, though, says a petition filed under §1973 governs when the ordinance takes effect.
That leaves the state's rules, and they are not light:
| Requirement | Source | What it means for a Grafton owner |
|---|---|---|
| 9% rooms tax plus 3% STR surcharge, 12% total before any local option tax | Vermont Department of Taxes | The surcharge has applied to rents collected on or after August 1, 2024 |
| Platform collection | Vermont Department of Taxes | Airbnb and similar platforms collect and remit the tax. Owners who also take direct bookings must register and collect on those stays |
| Income reporting | Vermont Department of Taxes | Rental income goes on the Vermont personal return, even for platform-only hosts |
| Public building status and sleeping limit | Vermont Division of Fire Safety | A single dwelling unit is limited to eight sleepers unless a Fire Safety report allows more. Going beyond that requires a change-of-use inspection |
| Posted contacts | 18 V.S.A. §4467 | Post a phone number for the person responsible for the unit, plus Health Department and Fire Safety contacts |
| Posted safety guidance | 20 V.S.A. §2678 | Post the state health and safety guidance inside the unit and include it with the listing |
The eight-sleeper line is the one that most often surprises buyers. Under the blocked ordinance, a four-bedroom house would have been allowed 10 guests by its own formula. Under state Fire Safety rules, a single dwelling unit still stops at eight sleepers unless the Division approves more. A rental projection built on 10 guests rests on an occupancy figure that never took effect.
Fire Safety's Short Term Rental Safety, Health and Financial Obligations form is completed and kept at the property, not filed with the state. The Division keeps the right to inspect any public building. Ask the seller for a completed copy, along with documentation of any renovation. Work on a public building requires a Fire Safety permit before it begins, separate from any local planning approval.
Why a search for "Grafton" rentals overstates the town
Anyone modeling rental income will look at platform data first, and in Grafton that is risky. Keegan said a flexible-dates Airbnb search for Grafton returns "over a thousand listings," which quickly "runs into Chester and Townshend and Windham." She found maybe five Grafton listings on Vrbo. Third-party analytics run into the same problem. A data service reporting hundreds of active "Grafton" listings is measuring a wider area than a town with 476 Grand List properties and about 20 known rentals.
That small local supply matters in both directions. Competition for guests who specifically want to stay in Grafton village is thin. Comparable rental performance is thin too, so income estimates borrowed from Chester or Townshend properties may not reflect a Grafton address.
The vote settled this ordinance, not the question
At the hearing, moderator Dave Culver said he did not know who started the petition, and no organizer stepped forward to present it. Resident Bill Curt spoke for disapproval. He said the people who wanted the vote were "mainly long-term residents," and that Grafton had no zoning regulations because people there "respect one another" and do not need to be told how to care for their property. On the record, then, the argument for disapproval was about regulation in general, not about protecting rental income.
The Selectboard's October 5, 2026 agenda has no short-term rental item, and the next regular meeting is set for October 19. At the state level, H.242 would have created a statewide registry with the Department of Housing and Community Development and limited each parcel to one rental. Its last recorded action was a referral to House General and Housing on February 18, 2025. Elsewhere, other Vermont towns kept working on local STR rules through September 2026.
For a buyer, the practical takeaway is narrow and useful. Grafton has no town STR registration, fee, cap or local-caretaker rule today. A Selectboard that wrote a detailed ordinance once has shown what a future version could include. Planning to keep the natural-person and local-contact items workable is a reasonable hedge.
Quick answers
Can I legally rent my Grafton home short term right now? No town ordinance governs it after the September 24, 2026 vote. State tax, Fire Safety and posting requirements still apply.
Does the 47-unit cap affect resale value? The cap never took effect. Even if it had, the town's own count put operating rentals at about 20.
Do I need to collect rooms tax myself? Not for bookings made through platforms that collect it, according to the Department of Taxes. If you take direct bookings, you need to register and remit tax on those stays.
If you own a Grafton property you rent now or plan to rent, its value depends on more than a comparable sale. It also depends on occupancy limits, rental history and how a buyer will read local rules that are still unsettled. Southern Vermont Realty Group works through those details with owners and investors across Southern Vermont. Request a home valuation, and we'll price your Grafton property with its rental potential included.
