Vacation Rental Business Licensing - Navigating New Landscapes


Short term stays at private apartments, hostels, and vacation rentals across the country are becoming popular due to the emergence of companies such as Airbnb or VRBO.  New entrants into the short term rental market must be aware of the regulatory and license requirements that many cities and towns are imposing in response to this new trend.  As a result of increased regulation, you may be required to obtain a business license or occupational license before legally renting out space within your home to travelers. Some states even require inspections from the local zoning, building or fire departments. Furthermore, this field isn’t just experiencing an increase in rental licensing requirements – city officials at times disagree on how much regulation is needed, and thus regulations have been fluctuating in cities throughout the country on an annual and even sometimes monthly basis. Owners of short terms rentals must remain diligent and stay informed of the changing landscape of the home sharing licensing platform.

Regulatory Landscape

Seattle, Washington has a thriving short term rental market. With a growing market come new regulations, revised regulations, and headaches for apartment owners of short term rentals. In June of 2016, Seattle passed an ordinance that limits the number of days in a year a short term rental can be made available. However, in late April 2017 a new ordinance was proposed that would strike the current law, and replace it with a regulation limiting owners to operating a maximum of two dwelling units as short-term or vacation rentals. Aside from this change, the drafted proposal would also require rental owners to meet the existing City business License requirement, obtain an operator regulatory license, certify that the property is the primary residence of the operator, meet the disclosure requirements related to safety and emergency procedures, and disclose the City business license number in all advertisements. In short, owners would be subject to dozens of applications and hours of back and forth with various city officials should City Council pass the proposal.  

The case of Seattle’s new stringent regulations is a microcosm for the home rental industry nationwide and vacation rental business licensing. San Francisco recently passed a registration requirement for Airbnb hosts city-wide.  In May of 2017 North Bay Village, a community near Miami’s Upper Eastside, passed regulations for owners of short term rentals who fail to obtain a short term rental license. The regulations include fines up to $250.00 for first time offenders, $500.00 for second time offenders, and a 1 year ban for third time offenders. Chicago is also currently evaluating new rules that would impose a special tax on home-sharing hosts and impose limitations on the number of units in buildings that can be rented out on the home sharing platforms. Other cities where regulations are being contemplated or heard before a City Council include Washington D.C., Knoxville, St. Paul and Austin. Dozens of additional cities and town nationwide are sure to follow.

This regulatory environment is quickly changing as industry leaders, home owners associations and travelers weigh in on the pros and cons of home sharing licensing requirements.  Before you open your home to travelers, let LicenseLogix navigate through the license requirements.  We have experience licensing businesses in fluctuating industries and streamline the process.  Additionally, our regulatory research professionals constantly monitor changing regulations so that you can focus on the business side of short term rentals.  Click here to learn more.