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Navigating Local Short-Term Rental Rules and Regulations

What is considered a short-term rental?

short-term rental regulations

A short-term rental, also known as a vacation rental, is home or designed to host guests for a period of 30 days or less. Any stay longer than 30 days is generally considered to be a long-term rental. Short-term rentals are fully furnished and usually include all of the amenities needed for someone to comfortably live in that home for a short stay.

While hosts can market their property however they see fit, most rely on various booking platforms. These platforms connect them to potential guests and facilitate the booking of their property. The two most popular platforms are Airbnb and VRBO. Short-term rentals often provide the opportunity for more rental income, but also require much more work on a day to day basis. However, not all homes are legally allowed to operate as a short-term rental. Regulations are often set and enforced by the city in which the property is located. So before investing in a new property, it’s important to fully research and understand that specific area’s short-term rental regulations.

Local short-term rental regulations may restrict or prohibit new listings

Short-term rental regulation restrictions

Many short-term rental regulations are designed to help protect the local community. With the rising popularity of hosting platforms like Airbnb and VRBO many property owners have chosen to rent their homes to vacationers rather than locals. This can potentially hurt the fabric of a neighborhood, which is often designed for families and not tourists. It can also have a negative impact on locals looking for affordable long-term rental options. Because of this, many cities have started to enforce new regulations to make short-term rentals don't only benefit the homeowner, but also the community.

While regulations are neighborhood and/or city specific, below are some of the most common regulatory limitations:

  • Owner occupancy often required Many areas require that the owner show proof of owner occupancy. This regulation is often specific to neighborhoods with a residential use. This helps ensure that the homeowner actually lives in that house and is a true resident rather than simply an outside investor. This is intended to help maintain the fabric of the neighborhood - keeping residential neighborhoods full of residents rather than tourists. Homeownership is usually verified by the city before issuing a short-term rental license. However, the verification varies depending on your location.

  • Maximum guest restrictions Some cities prohibit allowing too many guests to stay in one house, which is often dictated by the amount of rooms listed. Some cities may prevent more than 2 guests per room, while some simply have a guest maximum per home. Again, it depends on the exact location, some cities don't control this at all. It's designed to maintain the intended use of the home while also preventing parties which can disturb other nearby residents.

  • Zoning specific regulations Many of the regulations are zoning specific. This helps adjust the legality of short-term rentals based on the intended use of any specific zone. Generally speaking, short-term rentals regulations are much more relaxed in commercial areas than they are in residential areas.

  • Permitting and licensing Many cities are now requiring a short-term rental license. The licensing process usually has a fee associated with it, and also verifies that the subject property is compliant with all of the local regulations. In addition to short-term rental use restrictions, some cities also have parking requirements, fire suppression requirements, insurance verification, and more. Also, Airbnb has starting assisting some of the larger cities with the verification process - requiring new hosts enter permit numbers before they'll publish a listing.

Taxes, permitting, and license fees specific to short-term rentals

  • Licensing and permitting fees Before you even host any guests the simple process of securing a permit can often be costly. Many cities have implemented a thorough permitting process in order to obtain a short-term rental license. This helps cities ensure compliance while also making sure they get a piece of the pie up front. While some cities don't have any permitting or license requirements, most major cities do. The permitting fee is usually charged on an annual basis and can sometimes cost more than $1,000 depending on the location and type of permit needed.

  • Taxes Short-term rentals are often taxed in a similar manner to hotels. This can come at a surprise to many homeowners, and can be a costly oversight. Depending on the city, the tax obligation of a short-term rental can sometimes exceed 20% of the nightly rate. This can have a huge impact on the bottom line, especially if you are working with slim margins. Most cities enforce an occupancy tax, but some also have hotel taxes, sales and use taxes, flat occupancy fees per night, and more.

Where to find regulatory information

short-term rental regulation research

Finding up to date short-term rental regulations can be a difficult and time consuming process. While the majority of short-term regulations are dictated by the city, many neighborhoods and HOA’s have their own set of rules as well. So you need to make sure you do your homework at all levels. The steps we generally recommend you start with are:

  1. Search Airbnb’s Help Center for your city/county Airbnb has published regulatory information for some of the more popular cities throughout the world. While their webpage is not always 100% up to date, it can often be a good starting point. Take Airbnb's New Orleans page for example. To see if your city has a page like this, we recommend searching the Airbnb Help Center for that specific city and checking for any page labeled “Rules”. These pages often summarize the various regulations, but also include links to the city pages for further research.

  2. Search Airbnb’s Help Center for your state Airbnb also has a page dedicated to summarizing the local tax obligations for every state. Simply type in your state in the search bar at the top and click on the link for the occupancy tax information (which is usually the first result). From there you can view the state-wide tax requirements, along with the taxation policies of each individual county within that state.

  3. Visit your city/county webpage for STR regulatory information Google “short-term regulations” followed by the city and/or county you are researching. From there, find the articles that come directly from the city website. Because .gov websites drive more domain authority, they are usually near the top of the search results. Some cities have webpages and departments dedicated to short-term rentals, while others might require a deep dive into their municipal code. The municode website is a great resource when you need to start digging a little deeper into the code books. However, be warned - it can be a very time consuming process to find the information you need.

  4. Check any neighborhood / zoning / district restrictions In addition to city enforcement, neighborhoods can often have their own HOA's or organizations that restrict short-term rentals. Look up any rules and regulations specific to your specific neighborhood or district. Sometimes this level of detail is included within the county Municipal Code, but not always. Also, check the property records or zoning maps to see the specific zoning designation of your property and check it against any potential restrictions as well.

  5. Double check with your realtor before any purchase As long as you have a half way decent realtor, they should be somewhat familiar with short-term rental regulations for their area. And if they aren't, the probably know who to ask. If you are buying a property with the intent of listing it as a short-term rental, always double check with your realtor to verify that it's legally allowed in that area.

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