You're standing in a Pine Point cottage in late June, and the listing sheet in your hand says the current owner cleared a healthy chunk of the mortgage last summer renting the place out by the week. The agent mentions the Airbnb reviews are glowing. You start doing the math on how fast this pays for itself.
Here's the part that doesn't show up on the listing sheet: that rental income belongs to the seller, not the house. On May 20, 2026, the Scarborough Town Council passed a short-term rental ordinance after more than two and a half years of committee meetings, a failed first reading, and one deadlocked 3-3 vote. Buried in that ordinance is a rule that changes how you should read every STR-friendly listing in town. Registration does not transfer with the deed. Whoever buys the property has to requalify from zero, and depending on where the parcel sits, they may not qualify at all.
The Rental History on the Listing Isn't Yours Until You Reapply
Under the registration system the town built, a short-term rental registration is tied to the person who holds it, not the address. Sell the house, and the registration ends with the sale. The buyer has to apply fresh, get approved, and in most of Scarborough, prove the property will be their primary residence before they can legally rent it out for stays under 28 consecutive days.
That single detail turns a familiar due diligence question into a much harder one. It's no longer "how much did this place earn last summer." It's "can I legally replicate that income at all, given who I am and where this house sits." Those are two different questions, and only one of them shows up in the listing photos.
A Half-Mile Line Now Decides What You Can Do With the Property
The ordinance splits Scarborough into two rental regimes based on distance from the shoreline.
Inside a designated coastal beach zone, roughly a half mile from the coast, non-owner-occupied short-term rentals are still permitted. This band covers the town's classic vacation-rental geography: Pine Point, Higgins Beach, and the beach-adjacent stretches near Prouts Neck and Ferry Beach. If you're buying here purely as an investment property you never plan to live in, this is the zone where that plan can still work under the new rules.
In Scarborough's residential districts outside that zone, non-owner-occupied short-term rentals are prohibited. An owner-occupied short-term rental is still possible there, but it requires a special exception from the town, and the property has to be the operator's primary residence. You can't buy a house in one of Scarborough's inland residential neighborhoods and run it as a pure rental investment while living somewhere else. The zoning ordinance now treats that use as a different category, and it's largely off the table once you're outside the coastal band.
So the same rental income the seller earned last year might be legal for you to replicate, illegal for you to replicate, or legal only if you move in and make the house your primary address. Which of those three applies depends on a line on a zoning map that most buyers never think to ask about.
The Debate Behind the Rule
This ordinance didn't happen quickly, and the fight over it tells you something about who it affects. Scarborough started discussing STR regulation back in the summer of 2023. A November 2023 public meeting saw most residents oppose any limits at all. A registration-and-inspection draft failed its first Town Council reading in October 2025 on a 3-3 tie. The version that finally passed in May 2026 split rentals into owner-occupied and non-owner-occupied categories specifically because, as reported by the Portland Press Herald, some residents wanted assurance that people who bought houses in town actually lived in them.
Not everyone welcomed the change. Scott Townsend, a local realtor, spoke against capping non-owner-occupied rentals at an ordinance committee meeting, arguing that the rule stripped rights from residents who, in his words, "may have bought a home under the premise" that they could go on renting it.
That objection captures the exact risk a buyer inherits today. If you're purchasing outside the coastal zone with rental income in your financial plan, you're buying into a use the town has decided it no longer wants there, no matter what the previous owner was doing.
Part of the pressure to finally pass something came from Augusta. A new state housing law, LD 1829, limits how much municipalities can restrict residential density and took effect July 1, 2026. Scarborough officials publicly pushed back on the law, at one point calling for its repeal, but the deadline added urgency to settling the town's own STR rules before the state framework complicated things further.
What to Check Before You Write an Offer
If a Scarborough listing markets rental income as part of the value proposition, treat these as pre-offer questions, not closing-week paperwork:
- Where exactly does the parcel sit relative to the coastal beach zone boundary. A few hundred feet can move a property from "non-owner-occupied allowed" to "owner-occupied only, with a special exception required."
- Whether you intend to live in the property. If the answer is no and the parcel is outside the coastal zone, the rental plan you're pricing into your offer may not be legal to execute.
- Whether the current registration, if one exists, is active and in good standing. Registrations expire every December 31 and require renewal at least 45 days before that date. An expired registration tells you nothing about whether a new one would be approved for you.
- Whether the property has any outstanding code violations or unpaid town fees. The registration process checks for both, and either one can block approval regardless of the rental history.
None of this is a reason to walk away from a coastal property with a strong rental track record. It's a reason to confirm the zone and your own occupancy plans before that income enters your budget.
| Inside the coastal beach zone (roughly half a mile from shore) | Residential districts outside the zone | |
|---|---|---|
| Non-owner-occupied STR | Permitted | Prohibited |
| Owner-occupied STR | Permitted | Requires special exception, must be primary residence |
| Registration | Required, non-transferable, renews annually | Required, non-transferable, renews annually |
What This Means If You're Selling
If you've been operating a short-term rental in Scarborough and you're getting ready to list, the honest move is to be specific with buyers about what does and doesn't transfer. Your registration ends when you sell. Your rental income history is real and worth sharing, but it describes what you earned as a registered operator, not a guarantee available to the next owner. A buyer who assumes otherwise and finds out at the town clerk's office that they need a special exception, or that their intended use isn't permitted at all, is a buyer who may come back with cold feet or a lower number.
Being upfront about the zone your property sits in, and about the registration steps a buyer would need to take, sets accurate expectations from the first showing instead of a renegotiation after inspection.
A Few Questions Worth Asking Directly
Does an existing short-term rental get grandfathered in when the property sells? No. The registration is tied to the person who holds it and does not carry over to a new owner. A buyer has to apply as if no history existed, and approval depends on their own occupancy status and the property's zone.
What if I want to rent for a month or two instead of by the week? The ordinance's registration and inspection requirements apply to stays of less than 28 consecutive days. Longer-term rentals fall outside this framework, which is worth knowing if your plan is closer to a seasonal lease than nightly bookings.
Is the coastal beach zone the same as a flood zone or shoreland zone? No. It's a separate boundary created specifically for this ordinance, based on distance from the coastline. A property can sit inside one zone and outside another, so it's worth confirming the STR boundary on its own rather than assuming it lines up with other overlays you may have encountered.
Scarborough's coastline has always carried a premium. What changed in May is which buyer that premium is actually available to, and the answer now depends on paperwork most people don't think to ask for until it's too late to matter.
If you're looking at a coastal Scarborough property and want a straight read on which side of that line it falls, Michael Mahoney can help you check before you write the offer, not after. Let's Connect.
