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By Natalie Brooks•Last Updated August 27, 2025

Navigating Short-Term Rental Regulations in Major Cities: 2025 Guide

Photo by SHIRAZ HENRY on Unsplash

Introduction: The Evolving Landscape of Short-Term Rental Regulations

Short-term rentals, powered by platforms like Airbnb, have dramatically changed the way people travel and invest in property. However, as these rentals have grown in popularity, major cities worldwide have responded with increasingly strict regulations. This 2025 guide breaks down the latest rules, explains their impact, and offers actionable steps for hosts and investors to stay compliant in an ever-shifting landscape.

Why Cities Regulate Short-Term Rentals

Major urban centers often face housing shortages, neighborhood disruption, and safety concerns linked to the rise of short-term rentals. To balance the interests of residents, property owners, and tourists, city governments now deploy a mix of licensing, zoning, and operational rules. These measures aim to:

Protect long-term housing stock
Maintain community safety
Generate tax revenue
Ensure fair business practices

For example, Paris and Barcelona have imposed strict annual rental caps, while many U.S. cities require detailed registration and licensing for every short-term rental property. In 2025, some cities have adopted even more robust enforcement strategies, with significant penalties for non-compliance [1] .

Licensing and Registration Requirements

Most major cities now require property owners to obtain a specific license or permit before listing a property for short-term rental. This is a crucial compliance step:

Licenses ensure properties meet local housing and safety standards
Annual renewals and inspections are increasingly common
Failure to register can result in hefty fines or removal from rental platforms

For instance, San Diego requires a
Short-Term Residential Occupancy (STRO)
license, with costs ranging from $125 to over $1,000 depending on property type and location. Hosts must also obtain a
Transient Occupancy Tax (TOT)
number [4] . In Chicago , hosts must register their properties and obtain either a Vacation Rental License (non-primary residence) or a Bed and Breakfast License (primary residence). The process includes annual fees and strict documentation requirements [3] .

To begin, hosts should contact their
city’s housing or business licensing office
. In many cases, cities provide online portals for applications. If unsure, search for “[Your City] short-term rental license” to find the correct regulatory agency and step-by-step instructions.

Zoning and Operational Restrictions

Beyond licensing, cities often restrict where and how short-term rentals can operate:

Zoning Laws: Rentals may be limited to certain neighborhoods, such as commercial or mixed-use zones. In some cities, non-owner-occupied rentals are only permitted in specific districts.
Rental Day Caps: Annual limits on the number of nights a property can be rented. For example, Paris restricts rentals to 120 days per year, while some areas of Barcelona are even stricter [1] .
Occupancy Limits: Rules about the maximum number of guests, sometimes tied to the number of bedrooms or total square footage.
Building Restrictions: Certain buildings (such as co-ops or those on a “prohibited” list) may ban short-term rentals entirely, as seen in Chicago’s Prohibited Building List [4] .
Owner-Occupancy Requirements: Some cities only allow rentals if the owner lives on the premises during guests’ stays, as in Los Angeles [5] .

Before investing or listing, research your city’s zoning code and any applicable neighborhood association rules. Contact your local planning department if you need clarification on permitted uses for your property type and location.

Tax Obligations and Compliance

Short-term rental income is subject to local taxes. In the U.S., most cities and states levy a Hotel Occupancy Tax (HOT) or similar transient lodging tax. For example, Texas applies HOT statewide for rentals under 30 nights [3] . Many cities require hosts to collect and remit these taxes either directly or through the rental platform.

To ensure compliance:

Register for any required tax IDs (such as a TOT number in San Diego)
Keep detailed records of all rental income and occupancy dates
Consult a tax professional for local and federal reporting requirements

You may also be responsible for additional fees, such as business license renewals or special assessments. Check your city’s official tax office website or contact them directly for up-to-date requirements.

Safety, Insurance, and Operational Standards

Most cities require that short-term rental properties meet safety standards similar to hotels. Common requirements include:

Smoke and carbon monoxide detectors
Fire extinguishers and clear exit routes
Regular inspections for health and safety compliance

Some cities also mandate proof of liability insurance or minimum insurance coverage for hosts. In San Antonio, for example, fire safety standards and occupancy limits are strictly enforced [3] . Many platforms provide their own insurance, but you may need additional coverage to meet local regulations.

To comply, review your city’s short-term rental ordinance or contact the local fire department for a checklist of required safety features. Consult your insurance provider about coverage for short-term rental activity.

Case Studies: Major Cities and Their 2025 Regulations

Here’s how key cities are managing short-term rentals as of 2025:

Paris: Capped at 120 rental days per year; strict enforcement of licensing; heavy fines for violations [1] .
Barcelona: Tighter restrictions in tourist-heavy districts, with some outright bans.
San Diego: Licensing tiers based on property type; 1% cap of city’s housing stock for rentals; strict TOT and safety requirements [4] .
Chicago: Shared Housing Ordinance; Prohibited Building List; annual registration; allows non-primary residence rentals with proper licensing [4] .
Houston: New registration and compliance rules arriving in 2026; currently, less restrictive than Austin but hosts must comply with existing building codes and occupancy taxes [3] .
Los Angeles: Only owner-occupied rentals permitted for short-term stays; strict zoning and licensing [5] .

These examples illustrate the diversity of approaches and the need for localized research. Always check for the latest updates directly through your city’s official channels.

How to Stay Compliant: Step-by-Step Action Plan

To operate legally and avoid fines, follow these steps:

Check Local Rules: Search for your city’s official short-term rental ordinance. Use search terms like “[Your City] short-term rental regulations” or “[Your City] Airbnb laws.”
Apply for Licenses: Visit your city’s business or housing department online portal, or call them for application forms and documentation checklists.
Review Zoning Maps: Confirm your property’s location is eligible for short-term rentals. Contact your local zoning office or planning department if you need guidance.
Register for Taxes: Obtain any required transient occupancy or hotel tax numbers. Your local tax assessor or finance office can provide instructions.
Meet Safety and Insurance Standards: Schedule necessary inspections, install required safety equipment, and update your insurance policy for short-term rental coverage.
Monitor Changes: Laws can change quickly. Sign up for city newsletters or alerts, and periodically check official city websites to stay informed.

If your city lacks an online portal, you can usually apply in person at the city hall or by calling the business licensing division. Consider consulting a local attorney or property manager for complex or unique situations.

Challenges and Solutions for Hosts

Short-term rental hosts frequently encounter obstacles such as:

Complex or changing regulatory requirements
High licensing and compliance costs
Restrictions on rental days or guest numbers limiting profitability

Solutions include:

Networking with local host associations for updates and support
Using property management services familiar with local compliance
Exploring alternative rental models, such as mid-term (30+ days) rentals, which may be less regulated

Some cities may offer public comment periods or appeals for exceptions-check your local government’s website for engagement opportunities.

Alternative Approaches and Future Trends

As regulations intensify, some property owners shift to long-term or mid-term rentals, which are often less regulated but still profitable. Others focus on cities with more favorable short-term rental environments. For example, Houston may remain less restrictive than Austin in coming years, though new regulations are expected by 2026 [3] .

Stay alert for policy updates-many cities are actively revising their rules in response to community feedback and market conditions. Joining industry groups and monitoring city council agendas can help you anticipate and adapt to changes.

Summary and Key Takeaways

Operating a short-term rental in a major city now requires careful attention to licensing, zoning, taxes, and safety standards. Each city’s rules differ, and enforcement is stricter than ever. To succeed:

Research your city’s requirements thoroughly
Apply for all necessary licenses and permits
Comply with occupancy, zoning, and safety rules
Stay informed about legal changes

For personalized guidance, contact your city’s business licensing office or consult a local legal expert. For the latest policy updates, use official city government websites and reputable industry resources.