The Common Law
Renting your house during SXSW?
I own a home in South Austin. Do I need to get permission from the City to rent it during SXSW?
I rent an apartment really close to Downtown. Last year other tenants in my building rented their apartment and made a bucket of money. Can I do that? Do I need to get the landlord's permission?
Austin will once again become the center of the hip and cool universe during SXSW. This means that many Austinites start contemplating the same basic question – temporarily moving out of an apartment or house to make a small fortune renting the space to visitors. Before you post your pad online and start packing your bags, it's important 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. 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's generally easier for Type 1 (owner-occupied) properties to obtain STR approval from the City. In contrast, the City heavily regulates Type 2 STRs by limiting them to only certain commercial zoning districts and placing a cap on the STRs permitted to legally operate in each census tract. The policy behind the more stringent rules for Type 2 STRs is that the City doesn't want entire streets or neighborhoods to become STRs. The City's treatment of Type 2 & 3 STRs has been a historically contentious issue.
Owners of STRs are required to obtain an annual operating license (City of Austin Ordinance No. 20160223–A.I). This applies to all properties (including rooms and guesthouses) that are rented for less than 30 consecutive days. The owner must pay an initial license fee of $443 ($236 to renew a license) and hotel occupancy taxes. Renters are not allowed to obtain STR licenses without involving the owner in the application process. Also, most residential leases either expressly prohibit use of rental units as an STR or require the owner's express approval.
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.
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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.