The short-term rental (STR) industry has experienced incredible growth over the past decade, offering PMCs and property owners lucrative opportunities. However, this rapid expansion has led to increased scrutiny and regulatory changes aimed at balancing the interests of PMCs, guests, and local communities. This article explores the ever-shifting regulatory landscape while providing some helpful tips to maintain a compliant, but healthy business.

Understanding the Regulatory Landscape

Local Variations and Definitions

STR regulations vary widely by jurisdiction. Some areas define STRs as rentals lasting less than 30 days, while others have different criteria. For instance, certain cities may differentiate between entire home rentals and room rentals, each with its own set of rules. It’s on you to understand the specific definitions and requirements in your area to operate legally and avoid penalties.

State-Level Involvement

Historically, STR regulations were primarily managed at the municipal level. However, there’s a growing trend of state governments enacting laws that impact STR operations. For example, in 2024, New York State passed legislation allowing counties to establish STR registries, requiring platforms like Airbnb and Vrbo to submit detailed data on listings and occupancy. This shift underscores the importance of staying informed about both local and state regulations.

Common Regulatory Requirements

Licensing and Permits

Most jurisdictions require STR operators to obtain specific licenses or permits. These may include business licenses, zoning permits, or special STR permits. Failure to secure the necessary documentation can result in fines or even a suspension.

Safety and Health Standards

Ensuring guest safety is a top priority. You must comply with regulations for building codes, installation of smoke and carbon monoxide detectors, and regular property inspections. Meeting these standards keeps you compliant while guest trust and satisfaction.

Tax Obligations

STR operators are typically responsible for collecting and remitting various taxes, such as occupancy taxes, sales taxes, or tourism levies. Understanding your tax obligations and maintaining accurate records is key to avoiding legal issues and financial penalties.

How to Comply Without Negatively Affecting Operations

1. Stay Informed and Proactive

Keep a pulse on updates to local and state regulations. Joining local STR associations or following industry news sites like Skift or VRM Intel can provide timely information. Being proactive allows you to adapt quickly to changes and protect your operations.

1. Implement Compliance Software

Leveraging technology can make compliance efforts less manual. Tools like AutoHost, a Track Certified Partner, offer features such as guest screening, ID verification, and automated communication to help PMCs keep their ducks in a row.

1. Engage with the Community

Building positive relationships with neighbors and local authorities can benefit you in many valuable ways, especially when STR regulations are locally established and enforced. A proactive approach to community concerns, a demonstrated commitment to responsible hosting, and conspicuous investments or being a good community steward can lead to more favorable regulatory attitudes.

1. Diversify Your Portfolio

Consider offering both short-term and long-term rental options. This flexibility can help mitigate the impact of restrictive STR regulations and maintain steady income streams.

What Are the Hot-Button Issues?

STR regulations continue to evolve, and local governments are becoming more sophisticated in how they enforce them. But what are the issues that have created this more stringent regulatory environment, and what proactive steps can you take to address them?

Top regulatory concerns include:

Housing availability: Many cities worry that STRs reduce the number of available long-term housing units—the kind that people who plan to stay in and contribute to a community need. Laws often limit the number of nights a property can be rented or restrict rentals to a host’s primary residence.

• Rent only your primary residence if that’s the law—and keep documentation on file.
• Use software like TrackPMS to monitor booking volume and avoid exceeding local night limits.
• Be transparent with local officials and get ahead of changes by participating in public meetings or STR advocacy groups.

Neighborhood disruption: Noise complaints, parking problems, and rowdy guests can damage your standing with local residents.

• Enforce quiet hours and guest behavior policies via your booking agreement.
• Use smart home tools like noise monitors and smart locks to ensure compliance.
• Provide neighbors with a 24/7 contact number they can call in case of issues.
• Include local rules in guest communications and post them visibly in the home.

Health and safety standards: Fire exits, smoke detectors, and insurance coverage are now part of many municipalities’ STR requirements.

• Install smoke detectors, carbon monoxide alarms, and fire extinguishers, and test them regularly.
• Display an emergency exit plan inside the property, especially if you’re in an area prone to fires or flooding.
• Conduct regular safety inspections and consider third-party certifications such as Airbnb “verified” listings, VRHP certification, or the Breezeway Safety Program.
• Maintain short-term rental insurance that covers liability and property damage.

Tax compliance: States and localities want their fair share of lodging taxes (often called transient occupancy taxes or TOT). PMCs must often register with tax authorities and remit taxes regularly.

• Use PMS tools like Track’s incredible Trust Accounting features that automatically collect and remit even the most complex taxes, or work with a CPA who specializes in vacation rentals.
• Keep detailed financial records and reconcile them monthly.
• File returns on time—even for $0—if required in your area.

Platform accountability: Jurisdictions are pushing platforms like Airbnb and Vrbo to share data and enforce local rules, meaning PMCs have less wiggle room to operate under the radar.

Keep your listing details consistent across all platforms (e.g., max occupancy, permit number, location).

• Avoid distribution platforms that have, or develop, bad reputations in your area.
• Stay informed on updates or local agreements that could affect your listings.
• Ensure your PMS syncs properly to avoid double bookings or stay lengths beyond local caps.

Keeping an eye on these issues allows PMCs to adapt faster—and even participate in shaping reasonable regulations through local STR coalitions or advocacy groups such as Rent Responsibly, the Short-Term Rental Advocacy Center, or VRMA. It’s always a good idea to be an active member of your local Chamber of Commerce or city planning department, too.

Conclusion

The evolving landscape of STR regulations presents challenges but also opportunities for hosts to professionalize and protect their operations. By staying informed, applying technology, and engaging with stakeholders, PMCs and owners alike can ensure compliance without compromising on their growth goals.

Which leads to an interesting question: Are STR regulations ultimately bad for business?

It depends.

To be fair, the STR business was the Wild West, regulationally speaking, for a pretty long time. It’s no wonder that things are just catching up and seemingly all at once. It might even seem like public sentiment has turned against us. But in a very real way, it’s the sign of a maturing industry whose time has come. Regulations help level the playing field, provide clarity about community standards, and encourage local alliances. In other words, regulations aren’t inherently bad for business.

But the kicker is whether they’re data-based, consistently and fairly applied, and created with input from people who know this industry well. Non data-based regulations that seem to target specific business types or have little basis in reality aren’t good for anyone. All the more reason to become an advocate in your community and keep a pulse on these decisions.