The wild west days of starting a vacation rental without having to worry about regulations are over. As Airbnb, Vrbo, Booking.com, and other vacation rental booking sites have grown expeditiously and booking a vacation rental over a hotel has become the norm, local, county, and state authorities have stepped in to enact laws and regulations to govern short term vacation rentals in their localities.
A short term rental is a dwelling unit (like a house) or portion of such a unit (like a room) that is rented to a person for a short period of time.
The exact definition of a short term rental and the rental period for which it can be considered to be short term, depend on how each state, county, city, or township defines it. The general norm however for a rental to be counted as short term, is any dwelling unit that is rented for less than 29 or 30 days.
Generally, short term rentals are also known as vacation rentals. They are also referred to as transient occupancy, self-catering accommodation, holiday rentals, and home-sharing. However, in some instances, they can be defined differently.
Short term rental laws are the regulations that have been enacted to specifically govern short term rentals. They are also known as vacation rental laws and more commonly referred to as Airbnb rules. They can range from an outright ban on short term rentals to restrictions on their structure, where they are located, and how many guests they can serve. Information on short term rental laws can usually be obtained from your local government or council.
As a vacation rental host, whether you list on Airbnb only, on multiple platforms, or do direct booking, you need to make sure your short term rental property is compliant with all laws and regulations applicable to avoid legal issues. This includes those imposed by your local council, county, and/or state.
Depending on the applicable laws, failure to comply can result in the imposition of fines, suspension of your license to operate a vacation rental, and in a few instances, even a jail sentence.
How a short term rental is defined will determine if your property qualifies to be utilized as an Airbnb vacation rental. For example, does it allow for all types of dwelling units including condos, apartments, and multi-family properties? Does the definition permit renting only a part of your home and does it allow more than one room to be rented? What is the maximum length of stay allowed?
For example, San Jose does not permit short term rentals in accessory dwelling units, Nashville does not allow properties with more than 4 sleeping rooms to be rented out in the short term, the City of Waco recognizes five different categories of short term rentals, and Charleston only permits single stays of up to 29 days.
Some cities impose residency requirements on the homeowner to ensure they are present at all or some of the period during which they rent their home as a vacation rental. Others only allow homeowners’ primary residences to be rented out. Even those that allow remote hosting can require a designated contact be made available 24/7 in case an issue arises, as is needed in Poconos.
In some areas, restrictions on the total period that a host can rent out their property applies. For example, London restricts vacation rentals to 90 days a year while Los Angeles only allows 120 days in a year.
While rental arbitrage is permitted in most areas, In cities and counties where residency requirements apply, rental arbitrage can be tricky unless you are renting out a room in a property that you rent and live in.
As vacation rentals crowd out housing availability in already crowded cities, many localities are imposing limitations on the number of properties an individual can rent out in the short term.
Santa Monica, for example, only permits one home-share per host while other cities, have imposed a limit on the total number of such rentals allowed in their city.
Many local governments require vacation rental hosts to obtain a permit and/or license to operate a short term rental. This usually requires submission of appropriate documentation and a fee to be paid, and must usually be renewed annually.
Sometimes hosts may be required to obtain licenses at both city and state levels. Some municipalities also require property managers to obtain a business registration for their vacation rental business.
While all homes must comply with local building codes, additional codes may apply to properties that are to be used as short term rentals.. Sometimes permission must be obtained before a homeowner can renovate their property for the purpose of operating a vacation rental. Such regulations often apply in historical districts.
Zoning laws for vacation rentals can be wide-ranging and are to be found in most areas. These can range from which areas in the city property owners are permitted to run a short term rental. For example, they could be barred in residential designated areas and only permitted in commercial or mixed-use zones. Other zoning laws include parking (if on-street parking is allowed and if so how or how many parking spaces are to be provided per property), trash collection, etc.
For example, Whitefish only allows short term rentals in 5 of its municipal districts and Jacksonville requires hosts to apply for and obtain a land use permit to evaluate the potential impact of a short term rental on the neighborhood before it can obtain a license
Vacation rental properties are usually required to have higher standards of safety than regular homes, to ensure the safety and wellbeing of a rotating number of guests. This can include requirements for smoke and carbon monoxide detectors, fire extinguishers, emergency exits, swimming pool fencing, appliance maintenance, electrical system compliance, stair and balcony safety, etc.. Often, local governments will require an inspection of the property to ensure all safety standards are met prior to giving approval.
For example, Miramar Beach requires a Certificate of Balcony Inspection for exterior balconies and stairs for 3-story properties, Salem requires an annual housing inspection, and Malibu requires property owners to have obtained a valid Onsite Wastewater Treatment System (OWTS) operating permit.
Localities will often impose noise regulations to control the maximum level of noise during the day and night. For example, Joshua Tree noise regulations include restrictions on “any loud, excessive, or intrusive noise”. Guests who break these laws can leave you with a fine or result in having the police called onto your property by angry neighbors.
Occupancy limits ensure vacation rentals are not overcrowded and are generally based on the number of bedrooms. Some councils may even impose restrictions on the total number of visits a short term rental property can accommodate during the day.
In Las Vegas, for example, maximum occupancy is restricted to two people per bedroom, excluding children under the age of 12.
Local landlord-tenant laws can apply when hosting longer stays depending on the jurisdiction.
For example, if your municipality defines a short term rental as a rental not exceeding 30 days, any stay longer than that could be recognized as a medium on long term rental, changing the laws around the host-guest relationship. This could mean that your guest could find protections within local tenancy laws and you won’t be able to evict them if they refuse to leave. Screening your guests and asking them to sign a rental agreement beforehand can help protect you as host.
While any vacation rental host should make sure to have short term rental insurance for their property, some cities may require it and even ask for proof. Hosts who only list on Airbnb can usually list AirCover as their insurance.
Some localities may require vacation rental hosts to obtain written permission from immediate neighbors before operating a short-term rental. Many homeowner associations restrict short term rentals in their neighborhoods and these are more often than not recognized by law. In such instances, potential property managers will have to obtain written consent from the association in order to operate.
Miami, for example, requires written permission from the relevant condo or homeowner association prior to granting approval while the city of Jackson requires proof that neighbors up to 300ft have been notified of your intentions to operate a short term rental.
Some cities or communities may have regulations regarding placing physical signage on the property and other advertising, more often restricting such marketing efforts.
Some localities require hosts to register the information of all their guests (not just the person who booked) and store the information for a specific period of time.
For example, self-catering holiday rentals in Belfast must maintain a register of visitors, record the personal information of guests, and store the information securely for at least one year.
The property manager, be they just a co-host or the property owner, is usually considered to be the responsible party for any transgressions due to their vacation rental business. However, exceptions are to be found in some places and in certain circumstances.
Like any business, short term rentals are required to pay taxes. Most often these include lodging/hotel-motel taxes as apply to the hospitality industry and VAT as applies to business in general. Taxes can apply at the city, county, and state levels and often, property managers are required to register with appropriate revenue authorities.
For example, all hosts who rent out an entire property in Florida are required to register with the Florida Department of Revenue. For hosts who list on Airbnb, the platform collects and remits many (but not all) taxes that apply on behalf of the host.
It’s not just new hosts who need to know the short term rental laws and regulations that apply to their properties and businesses. As more localities clamor for greater regulation, hosts need to stay updated on any amendments or new laws enacted.
For example, Dallas recently passed new rules banning short term rentals in certain neighborhoods and imposing greater requirements. And in New York, when the city began cracking down on illegal short term rentals, some hosts were surprised to find they had been breaking the law the whole time.
If you’re unsure what laws and regulations apply to your property, visit your local council and find out. If you need more specific information it may be advisable to consult with a legal professional.