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Your Quick, 4-Step Guide to Short-term Rental Regulations in Austin, Tx
Looking to invest in the Texan capital but not sure whether city rules are friendly towards Airbnbs? If you’d like to know more about short-term rental regulations in Austin, read on.
You’re right in considering Austin for short-term rentals (STRs). It’s the fastest growing large city in the United States and, before the pandemic, was the 9th city where STRs were making the most money.
Austin is a boomtown that sees huge spikes in visitor travel during the massive music, film, tech and auto festivals held there each year. So it’s no wonder Austin is red-hot in the real estate industry. It’s the largest Airbnb market in the entire state of Texas!
Austin Type 2 Short-term Rentals
In 2016, the Austin City Council passed an ordinance that would ban STRs that are not owner-occupied — otherwise known as Type 2 STRs — in residential areas by April 2022.
The regulation shouldn’t stop investors, though. You can still rent out properties in public utility districts or downtown, provided the owner and HOA allow them. You can also consider buying a duplex and living in one of the units while renting out the other.
It’s worthwhile to note that the above ordinance is still being contested. In 2019, it was declared unconstitutional by the Texas Court of Appeals and the Texas Public Policy Foundation. It’s still a somewhat gray area. So stay tuned to current events so you’ll know if developments arise regarding Airbnb laws in Austin, Texas.
Short-term Rental Regulations Austin, Tx
For now, it’s best that you get acquainted with existing rules that govern Austin short-term renting, in general. These rules are found in the zoning regulations (Chapter 25-2, Subchapter C on Use and Development Regulations, Subparts B and C ) of the city’s municipal code.
Ordinances were passed in 2013 and 2016 to amend them. But in this post, we’ll outline the most current rules that you need to be familiar with to help you decide.
1. Find out what type of short-term rental you have.
The city of Austin defines a short-term rental as a residential unit or accessory that’s leased out for less than 30 days. The 3 types of STRs allowed by the city government are:
a. Type 1 are owner-occupied properties or those associated with an owner-occupied principal residence. This type allows the rental of an entire home when the owners are out-of-town. If only part of it is leased, it should include, at a minimum, a sleeping room with a shared bathroom. It should be limited to a single guest, and the owner should be around during the stay.
b. Type 2 rentals are not owner-occupied or associated with an owner-occupied principal residence. These are single-family or duplex properties that can be rented entirely and are mostly located in residential areas. They’re usually leased year-round. As mentioned earlier, though, there’s an existing plan to phase out this type of rental by 2022.
As of this time, Type 2’s aren’t allowed in a lot within 1000 feet of a lot where another Type 2 STR is located. But there are ones allowed in commercial zones districts such as the central business district (CBD) and downtown mixed use (DMU) areas.
c. Type 3 are multifamily or commercial properties like apartments and condos, likewise unoccupied by the owner. The entire dwelling can be rented and must comply with applicable geographical caps.
Owners of Type 3’s must provide documentation of the total number of buildings on the property and the number of units they’re leasing out on each building.
2. Obtain an operating license.
Complete a short-term license application, for which you have to pay a non-renewable fee of $643, inclusive of a $50 notification fee. The license is renewable every year, and upon renewal, you’ll have to present the following:
a. Proof of payment of the hotel occupancy tax. Owners need to charge guests a 9% occupancy tax for each stay, which they must remit to the Austin Office of Financial Services each quarter. They also have to send a quarterly report to the City Controller’s Office.
There’s a State Tax of 6% that Airbnb collects and remits on behalf of hosts in Austin. If you’re using another platform that doesn’t collect this tax for you, you’ll have to do it yourself.
b. Proof of property insurance. Provide a declaration, information or the summary pages of your insurance policy.
c. Certificate of Occupancy. You can get this from the Development Services Department by calling 3-1-1. Alternatively, you can show proof of an approved life safety inspection.
d. Photocopy of your driver’s license.
e. Notarized authorization from owners allowing you to manage the property. (This is for 3rd party agents only.)
You can complete this application process online or mail the necessary documents to the Austin Code Department. Visit their website to get all the relevant information you need on getting an Austin short-term rental license.
3. Abide by the rules.
When advertising your rental, you must include your license number and the occupancy limit for your property. Only 10 related adults or 6 unrelated adults are allowed at a time.
To find out the requirements for property inspections and various restrictions on noise, music and outdoor assemblies, see the city’s FAQ page on code compliance.
4. Comply with other regulations.
It’s important that you understand and abide by other rules and contracts that bind you, such as leases, HOA, condo board or co-op rules, or policies established by tenant organizations. Airbnb advises hosts to read lease agreements carefully and to keep updated with landlord, community and relevant organizations at all times.
Conclusion
As you can see, there are still various ways you can invest in short-term rentals in Austin. Study the above rules, cross-check with relevant sites, and choose the particular neighborhood that you believe will suit your personal business goals. You can use sites like AirDNA to analyze data about your chosen market so you can make intelligent, fact-based decisions.
Once you’ve secured your property, you’re all set. And if you need help managing your rentals, we’ll do it for you. Cohostit provides turnkey management services — from marketing to cleaning, optimization to issue resolution. All the day-to-day tasks that can make short-term renting a bit complex, challenging, and tedious
Click here to book a call and see if you qualify.