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What is the Austin Short-Term Rental Ordinance?

Updated 2026-05-28

The Austin Short-Term Rental Ordinance establishes the legal framework for operating vacation rentals within the city. It categorizes properties into three distinct license types (Type 1, Type 2, and Type 3) based on owner occupancy and property type, each with its own set of rules.

The regulations aim to balance the economic benefits of tourism with the preservation of neighborhood character, housing availability, and public safety.

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How it works

To operate legally, a host must first identify their property's STR type: Type 1 for owner-occupied residences, Type 2 for non-owner-occupied single-family homes, or Type 3 for non-owner-occupied multi-family units. The host must then apply for an annual operating license from the Austin Code Department, which includes submitting required documentation, paying a fee, and obtaining a unique license number.

This number must be included in all property listings. Operators are also responsible for collecting and remitting hotel occupancy taxes to both the city and the state and must adhere to 'good neighbor' policies regarding noise, trash, and occupancy limits.

Why it matters

This ordinance directly dictates whether and how a property can be used as a short-term rental in Austin. Understanding the requirements is critical for legal compliance, as violations can result in substantial fines, legal action, and license revocation.

The regulations, particularly the phase-out of Type 2 licenses in residential zones, significantly impact property investment strategies and the overall supply of certain types of vacation rentals in the city.

Examples

  • A homeowner who lives in their house full-time decides to rent out a spare bedroom on weekends. They must apply for and maintain a Type 1 STR license.
  • An investor who owns a house in a residential Austin neighborhood but does not live there is no longer able to legally operate it as a short-term rental because the city has phased out new and renewed Type 2 licenses.
  • A property manager for a downtown condominium building applies for Type 3 STR licenses for five different units they manage, ensuring each listing displays its unique license number.
  • A host with a valid STR license receives a notice of violation and a fine after their guests repeatedly violated the city's noise ordinance after 10:30 PM.

Frequently asked questions

What are the different types of STR licenses in Austin?+
Austin defines three types of STRs. Type 1 is for owner-occupied properties (homesteads). Type 2 is for non-owner-occupied single-family properties, though new licenses are no longer issued in residential zones. Type 3 is for STRs in multi-family buildings, such as apartments or condos.
Do I need a license to operate an Airbnb in Austin?+
Yes, any property rented for a term of fewer than 30 consecutive days requires a Short-Term Rental Operating License from the City of Austin. This is true regardless of the listing platform used, whether it's an OTA like Airbnb or Vrbo, or a direct booking site built with tools like Lodgify.
What is the 'phase-out' of Type 2 STRs in Austin?+
The City of Austin has ceased issuing new Type 2 (non-owner-occupied, single-family) licenses in areas zoned for residential use. This legislative action was designed to limit the conversion of long-term housing into commercial vacation rentals in residential neighborhoods.
What are the hotel occupancy tax requirements for STRs in Austin?+
STR operators in Austin are required to collect and remit a total of 17% in hotel occupancy taxes. This is composed of 9% for the City of Austin and 6% for the State of Texas. Some booking platforms may collect and remit these taxes on the host's behalf, but the property owner is ultimately responsible for compliance.
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