Eyeing Arizona? Make Sure You Follow Phoenix Short-term Rental Regulations Before Starting an Airbnb in The Valley
Considering that new Airbnb hosts in Phoenix have been making more money than anywhere else, you may want to invest in this red hot market yourself. Arizona and Phoenix short-term rental regulations are more lenient than those in most US cities and states. Any serious investor would give this booming market a second look.
Short-term Rental Laws in Arizona
The home-sharing economy has flourished in Arizona since 2016 when the state government enacted a bill prohibiting counties, cities and towns from banning vacation rentals. The state also limited how local governments could regulate short-term rental operations.
Such laws were a huge win not only for STR owners in Arizona, but also for the U.S. peer-to-peer renting industry as a whole.
Arizona is one of only 6 states that have enacted local bans on short-term rental regulations — others being Florida, Idaho, Indiana, Tennessee and Wisconsin.
But after receiving complaints from residents of various towns, lawmakers have since attempted to amend the above laws. In 2019, the state government succeeded in adding further restrictions on how STRs can operate within Arizona.
As of this writing, current state laws allow cities to enact ordinances to:
- Protect public health and safety, such as fire and building codes, health and sanitation, traffic control, and pollution;
- Enforce residential use and zoning rules especially when it comes to noise, property maintenance, protection of welfare, and nuisance issues;
- Limit or ban rentals for housing sex offenders, selling illegal drugs, liquor, pornography, obsenity, topless dancing and other adult-oriented businesses;
- Require operators to provide emergency contact information to the city in case of a complaint;
- Require owners to get a transaction privilege tax license (more on this below) and posting their license number on all their advertisements;
- Prohibit hosts from holding special events that would require a permit or license, and from using their building as a retail space, restaurant or banquet hall; and
- Restrict rentals to overnight stays.
Arizona Short-term Rental License
As mentioned above, the State of Arizona levies a sales tax, otherwise known as a transaction privilege tax (TPT) on vendors. If a business is selling a product or service that’s subject to a TPT, a license from the Arizona Department of Revenue will be needed. A municipal privilege tax and business license from the city where the business is based will also be required.
Tax rates vary depending on the type of business activity, the city, and the county.
Rental owners must renew their license every year and include their license number in all their ads and listing descriptions. Operators who break these rules are fined $250 for the first offense and $1,000 — sometimes more — for a subsequent one.
Additionally, a transient lodging tax is imposed on guests staying at short-term rentals for less than 30 days. Guests who stay beyond that may qualify as “permanent residents” and will be exempt.
Online rental marketplaces like Airbnb, Vrbo and others are required to collect and remit these taxes to the State authorities on behalf of the guests and vendors.
Phoenix Short-term Rental Ordinance
In 2019, around 26,000 homes, apartments, condos, RVs and bedrooms were being leased in metro Phoenix. In 2020, the Phoenix City Council passed the Short-term Vacation Rental Ordinance requiring all STR owners to register with the City government and Maricopa County. (Details can be found here).
The ordinance lists all the prohibited uses of vacation rentals, and fines are imposed for violations: $500 for the first offense, $1000 for a second offense, and $1500 for a third offense within 12 months.
Rental owners are required to put their emergency contact info in a visible place in their home. In case a complaint is lodged against their property, and police officers arrive to check on the situation, the owner must respond to police inquiries within an hour – either in person or over the phone.
Aside from standards for building construction, design and maintenance, local authorities also impose rules on habitability, health, and safety of residential units. You may contact the Planning and Development Department to see which specific rules that apply to your listing.
There’s also a Loud Party Ordinance. This particular ordinance tries to prevent nuisance issues encountered at large gatherings and events, including excessive noise, traffic, litter, serving alcohol to underage persons, public drunkenness, fights, and obstruction of public streets by crowds or vehicles. In such situations, the cost for police response will be charged against those found responsible for such parties.
Other than these rules, short-term rentals have relative freedom to operate in downtown Phoenix. There are no limits on the number of properties one can operate; no yearly caps on the number of nights they’re rented; and there isn’t any residency requirement.
Many neighborhoods have homeowners associations, though. Be sure to check HOA rules because the State of Arizona doesn’t prohibit HOAs from regulating short-term rentals. Of the 13,000 single family homes for sale in metro Phoenix alone, 9,000 have an HOA. So there’s about a 75% chance that an HOA could vote to restrict the lease on your rental, or even ban it completely. Get to know the village and building laws in the area you’re eyeing.
Scottsdale AZ Short-term Rental Laws
The nuisance party rules are a bit stricter in neighboring Scottsdale, which has an estimated 4,000 rental properties.
Current rules require rental owners found hosting an unruly gathering to pay a minimum $750 fine on the first offense, to upwards of $2,500 for a fourth violation. These are updated fees from an existing ordinance against loud parties.
Whenever a disturbance occurs, the City requires emergency contacts to respond in person within an hour to the location of their property. If they don’t arrive within an hour, a $250 fine will be imposed. And if they don’t respond at all, they face a civil offense and will be fined $500.
When it comes to the number of guests allowed per stay, the Scottsdale city code limits short-term rentals to no more than 6 adults and their children.
Also, you can’t rent out your guest house or portions or accessories of your main house to multiple different people, like a hostel. You have to rent out the units of your property all at the same time.
Check the city’s official website to get details on Scottsdale’s short-term rental laws.
Transient Lodgings in Peoria
In Peoria, rentals leased for less than 30 consecutive days are considered “transient lodging.” Whether they be houses, apartments, condominiums, townhouses, mobile homes/trailers, group homes, even residential spaces or single rooms rented to a college student – these are reported under a hotel/motel classification and are levied a 5.6% tax rate.
Owners of these rentals are required to get a TPT license that must be maintained in their names, not in a property management company’s.
Get more information by visiting the city’s official website.
Tempe Short-term Rental Ordinance
Owners of STRs in Tempe are likewise required to register with city authorities and provide updated emergency contact info.
And as in other cities in the State of Arizona, Tempe STRs are subject to TPT which is payable at the Arizona Tax office.
Glendale Short-term Rental Laws
Just a 20-minute ride from downtown Phoenix, Glendale has a population of 247,800. It’s the 7th largest city in Arizona and has a high livability score of 73. (Phoenix is at 63.)
The cost of living in this dense, suburban city is 7% lower than the national average. The property tax rate is .802%, slightly lower than both the state and federal averages. The median home value is $214,700.
Visit the city’s official website to get further information on Glendale’s short-term rental laws.
The Bottom Line
While current regulations in Greater Phoenix remain limited – and favorable for short-term renting – it’s by no means a closed deal. Efforts have constantly been made to amend the original 2016 law, and more changes are still being proposed .
As of January 2022, a lawmaker wanted to repeal that 2016 measure so communities and local officials can regain control of their towns and have better oversight of STRs.
Do your research and follow local news so you can stay abreast with new or in-process regulations. Doing so could save you from headaches and unexpected obstacles later on.
Knowing and following laws is part of being a responsible host and a good neighbor — which are critical in running a successful short-term rental business.
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