I own a rental house that’s not my primary residence. I usually rent it on 12-month cycles. I’m between tenants right now and I have someone who wants to rent it for only eight weeks. Does that make it a short-term rental where I’d need to get it permitted by the city?

No. When considering short-term rentals (STRs), the first thing you should do is determine what type you might be. Type 1 STR is for a single-family residence that is owner-occupied or is associated with an owner-occupied principal residential unit. Type 2 STR is for a single-family residence that is not owner-occupied. Type 3 STR is for a residence that’s part of a multifamily residential use.

It sounds like your rental house would be Type 2. The city of Austin is generally heavy-handed in its regulations of Type 2 STRs (see City of Austin Code Section 25-2-789). But good news for you in this instance – the city’s Type 2 regulations apply to STRs that are “rented for periods of less than 30 consecutive days.” So, if you are looking at having a tenant for eight weeks, this would not trigger compliance with the city’s Type 2 STR regulations.

I read that the city of Austin’s STR regulations were challenged in court and ruled unenforceable. Is that correct? And if yes, does that mean the city no longer enforces STR regulations?

The city of Austin passed an ordinance that was intended to ban all future STR Type 2 properties. A group of property owners sued the city to challenge this ordinance. The trial court ruled in favor of the city; however, the 3rd Court of Appeals in Austin overturned the trial court’s decision and held that the ordinance was unconstitutional and void, which after many more months of appeals became the final ruling. Despite the 3rd Court of Appeals’ ruling that the ordinance is unconstitutional, the city has taken the position that the court ruling only applies to preexisting STRs. So, the city’s practical policy has been to renew existing Type 2 licenses in residential and commercial areas while refusing to issue new Type 2 licenses in residential areas, even though many believe this contradicts the 3rd Court of Appeals decision.

There is lots of speculation that the Texas Legislature will consider passing legislation in the upcoming session that would preempt the city of Austin’s regulations by providing a statewide STR regulations. Previous efforts to pass STR legislation at the state Capitol have failed.

This article appears in The 2022 Gift Guide Issue.

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