How local governments enforce short-term rental laws

Short-term rentals (STRs) are no longer flying under the radar as far as local governments are concerned. For years, towns, cities, and counties have been ramping up regulation on the STR industry — and many jurisdictions have updated their laws several times to reflect the latest evolution.

This focus on regulation comes as short-term rental numbers grow and governments wrestle with issues including neighborhood disruption, affordable housing, and property rights. Local laws are an attempt to balance business opportunities for STRs with neighborhood quality of life while realizing the financial benefits that short-term rental taxes bring.

However, passing a law is one thing. Enforcing it is another, especially when a municipality may have thousands of STRs. In recent years, many local governments have taken steps to give teeth to their STR laws with stronger enforcement, using a variety of methods.

One of the biggest trends in STR law enforcement is enlisting marketplaces, such as Airbnb and Vrbo, to help with regulation efforts — especially when it comes to making sure STRs are properly licensed. Often, marketplaces are required to include valid permit numbers in their listings and are fined heavily if they list unlicensed STRs.

New Orleans, which has struggled for years to effectively regulate STRs, recently passed a law that will take effect in March 2025. Under the ordinance, platforms that facilitate STR booking and payment must verify that a property has a city-issued STR permit before booking can take place. Marketplaces are also required to reverify listings on a regular basis and provide monthly reports to the city with information on all listings booked and proof of their eligibility. Platforms that don’t follow the rules can be fined $1,000 per illegal listing per day.

Rhode Island passed a law requiring marketplaces to make sure all STR listings have Rhode Island business registration numbers with expiration dates. They must also notify hosts to register their STRs every year. Marketplaces are required to provide quarterly reports to the state with information on listings, registration numbers, and occupancy. The law goes into effect January 30, 2025.

In Monterey, California, all listings on STR marketplaces must include a valid license number, and marketplaces have 10 days to remove noncompliant listings once notified by the county. Failure to do so can result in fines of up to $1,000 per offense.

Many local governments have turned to technology to help enforce STR laws. Increasingly, they’re using software solutions that scrape online data to find STRs and determine if they’re following local laws such as licensing requirements.

Newark, New Jersey, recently announced a push to better enforce its STR laws. The city uses a software platform to help identify operating STRs and increase compliance. It can also impose fines of up to $2,000 per violation for those who don’t follow the law.

In Portland, Oregon, the city launched a new STR permit application site in an effort to cut down a large backlog of applications that was hindering the city’s enforcement efforts. The system shares information about pending and permitted STRs with the aim of significantly improving turnaround times.

Often, local governments use a combination of approaches to strengthen STR enforcement. In San Antonio, Texas, the city is leveraging higher fees and new requirements for online marketplaces. It has also created new options for STR ordinance enforcement, including civil enforcement with administrative hearing officers, mandatory meetings with the Development Services Department director for operators with numerous violations, and permit revocation penalties of up to three years for violations.

In Santa Barbara, the city extended a multipronged pilot program to improve STR enforcement. Santa Barbara’s approach has included hiring special investigators and a financial analyst who gather evidence, communicate with operators, and visit properties. Team members start by encouraging owners to cooperate voluntarily. If that doesn’t work, they can move on to civil or criminal charges. The city can punish STR law violations with a maximum penalty of $1,000 or six months in jail.

In some cases, state governments have given local governments more power to regulate STRs. In Connecticut, new state legislation authorizes municipalities to adopt ordinances requiring STRs to be licensed, to regulate STR operations, and to engage consultants to help develop STR ordinances.

On the other hand, state-level efforts to limit local governments’ powers to regulate STRs are often defeated. Earlier this year, Florida Governor Ron DeSantis vetoed a controversial STR bill that would have invalidated recent local regulations and decreased local governments’ control over STRs going forward. Local governments, STR management companies, and the Florida Realtors opposed the legislation.

It’s always a good practice for STR operators to follow local laws, but with local governments stepping up enforcement efforts, there’s even more reason for hosts to become familiar with regulations — from licensing requirements to lodging tax rules — and take steps to comply.

On the tax front, STR operators can seek help from Avalara MyLodgeTax, which simplifies and automates lodging tax compliance. MyLodgeTax makes sure you’re registered with the right jurisdictions and filing all required returns on time. We’re here to help. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.