Short-Term Rentals: Key Considerations for Local Governments

Short-term rentals (STRs) have transformed how people travel and how local governments manage housing, tourism, and compliance. As platforms like Airbnb and Vrbo continue to maintain their popularity, cities and counties are working to balance economic opportunity with community well-being.

This article explores how local governments can define, regulate, and manage short-term rentals effectively to help ensure compliance, fairness, and a thriving local economy.

What Is a Short-Term Rental?

A short-term rental is typically defined as the rental of a residential home or accessory dwelling for a limited period, usually less than 30 days. The exact definition and length of stay can vary by state or jurisdiction.

These rentals are also referred to as transient rentals, vacation rentals, short-term vacation rentals, and resort dwelling units. Local governments typically determine what qualifies as a short-term rental within their jurisdictional code or ordinance.

Types of Short-Term Rentals

Short-term rentals can take several forms depending on property type and occupancy status. Common categories include:

• Entire Homes: When an owner rents out their full property for short stays, whether they live there part-time or are an absentee owner.
• Accessory Dwellings: Rentals of separate units on the same property—such as a guest house or garage apartment—are considered STRs whether the owner lives onsite or not.
• Individual Rooms: Renting out one or more rooms within a primary residence for a short period can also qualify as a short-term rental, regardless of whether the owner remains on-site.

Some jurisdictions also distinguish between owner-occupied and non-owner-occupied rentals or between single-family and multi-family dwellings.

Jurisdictional Differences

Definitions and rules around STRs vary widely. Some local governments make distinctions based on:

• Zoning type (residential vs. commercial or mixed-use)
• Occupancy (whether the owner is present during the rental)
• Dwelling type (single-family vs. multi-unit)

Local government websites should clearly outline how short-term rentals are defined, licensed, and regulated to avoid confusion for residents and STR operators. 

The Future of Short-Term Rentals

The rise of platforms like Airbnb and Vrbo shows that STRs are no longer limited to major cities—they’re a global phenomenon. With hundreds of listing platforms now active, local governments have had to adapt their approaches to regulation, taxation, and compliance.

Some STR owners are unaware of the rules that apply to them, which makes education, outreach, and enforcement essential. Modern short-term rental software can help local governments streamline registration, track compliance, and manage taxes efficiently.

The right solution can enable communities to identify untapped revenue, simplify tax collection, and strengthen compliance through licensing tools, automated reporting, and communication features such as real-time notifications.

Frequently Asked Questions About Short-Term Rentals

Can Local Governments Restrict or Regulate Short-Term Rentals?

While regulations vary by state, most local governments can adopt ordinances that govern STRs. These may include:

• Property registration or licensing requirements
• Safety inspections and occupancy limits
• Noise, parking, or zoning rules
• Penalties for violations

Such measures promote safety, fairness, and accountability while protecting community character.

What Taxes Apply to Short-Term Rentals?

Short-term rental operators are often required to collect and remit applicable sales, lodging, or occupancy taxes. These taxes help create parity with hotels and motels and can support vital public services such as public safety, education, and infrastructure.

What’s the Best Way for Jurisdictions to Manage Short-Term Rentals?

There’s no one-size-fits-all approach, but data-driven technology is a strong starting point.

By collecting accurate information on local STR activity, local governments can:

• Identify compliance gaps and unregistered properties
• Enforce fair and consistent regulation
• Evaluate community impacts over time

Well-managed STR programs can strengthen local economies by encouraging responsible tourism while protecting residents’ quality of life. 

How Can Governments Balance Benefits and Challenges?

Local governments can work to maintain balance by:

• Engaging residents and stakeholders early and often
• Establishing clear complaint-handling processes
• Creating policies that promote fairness for both residents and STR operators
• Sharing educational resources and compliance guidance

Simple measures—like clear standards for noise, parking, and occupancy—help reduce friction and maintain neighborhood harmony.

Building a Strong STR Management Framework

When supported by thoughtful policy and the right tools, short-term rentals can enhance a community’s vitality and revenue without overburdening government staff.

By investing in modern technology, proactive communication, and transparent regulation, local governments can turn short-term rentals into long-term community benefits.