The Common Law
Renting your rental house during SXSW?
I rent a house in East Austin. My neighbor made a killing last year renting out his house during SXSW to a bunch of Norwegian musicians. I'd like to do the same thing this year but I know there's been a lot of moving parts with the City and whether this is allowed. Can I rent my place without getting pre-approval from the City?
The hip and cool will flock to Austin in a matter of days for SXSW. As the event gets bigger every year, locals are tempted with an interesting money-making proposition—temporarily move out of their apartment or house and make a small fortune renting the place to visitors. But before you start counting your money, it's a good idea to understand how the City regulates short-term rentals (STRs).
The City Council passed the initial ordinance regulating STRs in 2012 and has amended it multiple times. Owners of STRs are required to obtain an operating license (City of Austin Ordinance No. 20160223-A.I), which applies to all properties that are rented for less than 30 consecutive days. The owner must pay an initial license cost and occupancy taxes.
There are three types of STRs—Type 1 (owner occupied single-family, multifamily, or duplex), Type 2 (not owner occupied single-family or duplex), or Type 3 (not owner occupied multifamily). It sounds like you fall into Type 2. Bad news for you. The City heavily regulates Type 2 STRs by placing a cap on the STRs permitted to legally operate in each census tract in the city. More bad news for you. Per City Council, the City is no longer accepting applications for Type 2 STRs.
An advertisement promoting a STR without a license can serve as clear evidence of a violation and is cause for the City to issue an administrative citation. It's worth noting that the City's enforcement team is more vigilant during major events like SXSW, ACL, or F-1.
The City's current ban on Type 2 STRs is a contentious issue. It has generated a lawsuit challenging the ordinance, an ethics complaint filed against Austin City Council member Pio Renteria, and the founding of a private company that aims to aid the City's enforcement of the STR ordinance. The Common Law will keep you posted if changes are made to the STR ordinance in the future.
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Marrs, Ellis & Hodge LLP, www.jmehlaw.com.
The material in this column is for informational purposes only. It does not constitute, nor is it a substitute for, legal advice. For advice on your specific facts and circumstances, consult a licensed attorney. You may wish to contact the Lawyer Referral Service of Central Texas, a non-profit public service of the Austin Bar Association, at 512-472-8303 or www.austinlrs.com.