5 compliance requirements to keep in mind when starting a short-term rental business

Management
Posted on
March 3, 2022

Although listing a property on Airbnb or Vrbo is as easy as uploading a few photos, providing a few details and linking a bank account, there is much more involved to renting responsibly.

The narrative surrounding short-term rentals is often negative and misinformed, with media focusing on the "party rentals" and the misleading listings. While those stories can be true and those listings do exist, they aren't representative of the short-term rental industry at large. Most property managers are responsible and comply with local rules and regulations surrounding businesses, taxes and short-term renting.

By complying with local requirements when establishing your own short-term rental business, you are helping create a more sustainable short-term rental industry.

Items you will want to pay attention to include:

Business licenses and permits

Many cities require business owners to apply for a license and/or permit before they begin operating. The requirements may depend on how much income you expect to bring in from your short-term rental, or how many nights per year your rental will be occupied.

Zoning requirements

Zoning ordinances are a common way cities and towns regular short-term rentals. These regulations can limit where a property is located, what type of properties are allowed, how many guests can stay in the property and how many cars can be parked nearby — and that’s just getting started. A Google search of “zoning” and your city’s name will likely take you to the appropriate zoning ordinances, but double check that the source is trustworthy.

Taxes

Occupancy taxes (sometimes called a lodging, tourist or hotel tax), are assessed by local governments to ensure visitors to the area help share the costs of public infrastructure. The taxes are common at the state level, but can also be charged by regional, county or city governments. Although the tax is designed to be paid by the guest, it is the responsibility of the host to collect the money and submit it to the government. Many online booking platforms handle occupancy taxes on behalf of hosts and guests, but hosts should always check with their local government to ensure all taxes are being assessed correctly.

Tip: Futurestay works with property managers to ensure all taxes are accurately set and collected. Activate your account or reach out to your Customer Success manager to check your tax settings.

Housing or rental agreements

When your property is part of a homeowners association or if you live in a condo, timeshare or apartment community, you may be subject to additional regulations on the community or neighborhood level. Start by reviewing any legal documents you were provided when you took possession of your property, which could include a declaration of covenants, conditions and restrictions for homeowners associations or a lease agreement for an apartment. It may be a good idea to take the extra step to reach out to the homeowners association or your landlord to let them know of your intentions, even if short-term rentals are not restricted.

Building codes

Your short-term rental should be a safe and clean environment for your guest — and that’s not just a suggestion. Many local governments have published guidelines on habitability, health and safety of residential properties. Some may require an inspection before you can host your first guest. Search for building codes on your city’s website or call the building department to verify local requirements.

Find a community

The rules can be confusing and overwhelming, but they are important. The consequences for ignoring or violating local ordinances can range from small fees to a loss of your property — a gamble that is not worth taking for many property managers.

The good news is that you don't need to navigate short-term renting on your own. Tools like Futurestay offer professional resources to help property managers meet the regulatory requirements of maintaining a short-term rental business, and organizations like Rent Responsibly provide a community of support and advocacy.

Rent Responsibly is a network and platform for local short-term rental alliances that helps connect owners, hosts and managers with each other and with the resources they need to foster a sustainable short-term rental industry.

Mai Catania
Head of Customer Success

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