Blog > Short-Term Rental Permits & Licenses.
Short-Term Rental Permits & Licenses.
Abimbola Omotere & Blessing Odesola | Friday, 07 August 2022
The popularity of short-term rentals has increased over time; in some areas, vacation houses can be found nearly on every street; however, as this industry grows, so does the risk of the disturbances that visitors cause in the neighborhood by partying late into the night, parking in prohibited areas, etc. As a result, local government agencies intervened to rescue the day by passing many regulations and authorizations to control STRs.
Therefore, it is crucial that you are informed of some of the rules, permissions, and taxes that may be necessary for the rental company in your jurisdiction if you intend to rent out your property for a short term
But before going through the list of the basic permits required in various destinations in the world. Let’s see if the type of rental you have in mind is actually a short-term rental.
Table of Contents
What are short-term rental permits?
Types of short-term rental permits
What are Short-Term Rentals (STRs)?
While the word "short-term rental" varies depending on where you are, in general, it refers to the short-term renting of an apartment or a house. The distinction between the business and long-term rentals and other intermediate rentals is made by the length of stay, the licenses required, and the kind of structure that may be utilized for the business. Depending on the locale, short-term rentals may also be referred to as Airbnb, transitory rentals, vacation rentals, short-term rentals, resort dwelling units, holiday homes, villas, temporary sleeping accommodations, etc.
What is the length of stay?
The length of stay establishes how long a visitor may reside in your home before it qualifies as a short-term rental. Most governments or places have a 30-day limit, however, some have lower or higher limits.
While in the U.S. short-term rentals are often for less than 30 days and are known as Airbnb rentals or vacation rentals, short-term rentals in the U.K. are defined as rentals for a period of not less than 90 nights in a calendar year and are known as temporary sleeping accommodations.
STRs are rented on a weekly, nightly, and occasionally monthly basis depending on the length of stay in the jurisdiction where the property is situated, in contrast to long-term rentals where property owners typically rent out their homes, apartments, or rooms for at least one to six months (or longer).
How does the type of structure affect STR?
Property as a whole, individual rooms, or shared rooms are all examples of structures that can be shared. However, there can be limitations on the kind of STR structure that is allowed in specific locations.
In New York, for instance, un-hosted rentals in multiple dwelling buildings for more than 3 families (living independently) are prohibited, and failure to abide by this law results in a penalty of up to $2,500 per day.
Other restrictions might even be in effect in some other places, such as the requirement for STR accommodations to have a certain number of bedrooms or the maximum occupancy of a bedroom, which is two people per bed in Isle of Palms (South Carolina).
What are short-term rental permits?
Permits are the formal documents that authorize a host to operate a short-term rental business on a property. Licenses and certificates are other names for permits. Depending on your city, state, or country, different permits and licenses may be needed for STR. Before starting their business, property owners are urged to research the one that is necessary for their area.
Types of Short-Term Rental Permits
Host Permit: Prior to renting out a property, some localities need hosts to register and get a short-term rental license. The license attests to the hosts' compliance with the many laws that apply to their place of business, including those that deal with safety, noise, litter, parking, etc. Additionally, it makes sure that there are no more vacation rentals than are allowed in the area. The licensing department may request that the property be inspected, certain documents pertaining to the building's safety may be required, a specific fee may need to be paid to obtain the permit, and renewal may be necessary every year or every two years.
Business licenses: In certain local governments, these are required to conduct business. In places where short-term rentals are viewed as a business, hosts are obliged to obtain one. In most instances, you can get it for free or for a small fee. Make sure you acquire one online, via mail, or in person, and register your short-term rental business with your local authority. In some regions, it is typically acquired jointly with tax permits. To find out if you require one, get in touch with your local tax office.
Zoning permits: Cities and counties are divided into zones with specific uses to maintain order in the community and also ensure that holiday rentals are allowed in the city zone where the property is located, hosts might need a zoning permit. For instance, in San Luis Obispo County, California, operating a short-term rental property is allowed, but it has to be situated 200 feet or less from another rental property of the same nature.
Planning Permits: In the UK and some other countries, landlords are required to obtain planning permits based on the intended use of the entire house. However, hosts that want to rent a home short-term for more than 90 days per year in the United Kingdom are advised to apply for a planning permit, also known as a land use permit prior to starting the business because the permit takes several weeks to be approved. You will likely be required to give at least;
In the United States, hosts who do not own the full home may not need to apply for a planning permit, but it is still preferable to do so if they welcome visitors.
Building Permits: These are approval documents issued by the building department of local jurisdictions that allow a construction project or remodeling project on a property. Planning permits are usually collected alongside a building permit for the construction of a project. A use that differs from what was available in the planning permit even if a re-modeling will not occur may also require a building permit in a jurisdiction.
A building permit is important as it verifies compliance with the applicable codes for the new use. It is also popularly known as the Certificate of Occupancy. There may be a need to review your planning permit to suit the new use especially if re-modeling is involved. It is also referred to as the remodel permit or change of use permit depending on the location of your property.
It ensures that the project complies with local building, health, safety, and construction codes for safety regarding issues like electricity, plumbing, hazard detection and suppression procedures, emergency exits, fire extinguisher, etc., in each zone. There are few renovations that can be done without a building permit as long as the intended use of the property did not change but some places require a building permit for almost any renovation carried out by homeowners or contractors even if the stated use still stands. Contact your local building department to know if the renovation or upgrading you have in mind requires a building permit to avoid penalties.
Advertising Permit: This is the certificate issued by the authority of a jurisdiction enabling a business to publicly display words, symbols, and/or pictures designed to advertise the business on various platforms. Advertising of STRs on booking channels is prohibited in some places except a permit is obtained. In some other jurisdictions, the permit is only required to advertise a business on street boards and the amount paid may depend on certain requirements and specifications, like the size, lighting, and location. Noncompliance can lead to legal consequences.
Tax Permits: Taxation is an important aspect of the lodging business. Ensure you obtain the tax permits required to remit taxes to state and local authorities. The major types of tax that are associated with short-term or vacation rentals are Lodging Tax, Sales and Use Tax, and Transient Occupancy Tax (TOT). Ensure that you know the tax that applies in your jurisdiction and you are knowledgeable about the tax rates, collection, filling, remittance, due dates, and the penalties for non-compliance before starting the vacation rental business. Contact your revenue department or sign up here to access the information.
Health and Safety Permit: this is the permit required under health, safety, and inspection laws for the current and normal operation of a business. Some places refer to the permit as a health and safety permit, while others refer to the permit aa s fire permit. It is issued by the health, safety, or inspection departments. STR hosts are required to check if this permit is required in their jurisdiction.
Parking Permit: this is the permit or badge that enables drivers to park in specific locations. It is a common method of managing parking rights in apartment buildings and on-street parking spaces. STR hosts that own accommodation in apartment buildings may not necessarily need to obtain one but may need to inform guests about the requirement to get a one-off guest permit, if their vehicle cannot fit into the garage or if the guest parking needs cannot be met.
Now that you are aware of the various permits required to operate a vacation rental business successfully. Sign up with the lodge compliance premium package for the permit and other regulations that affect your vacation rental to avoid compliance issues.