Ed This post originally previewed Austin City Council’s February 27, 2025 hearing on proposed short-term rental ordinance changes. Since then, Council has acted, and the regulatory picture is no longer hypothetical. Heres the current status for STR owners and investors.
What actually passed
On February 27, 2025, Council adopted the hotel occupancy tax (HOT) collection ordinance, effective April 1, 2025. Platforms like Airbnb and Vrbo now collect and remit HOT directly to the city (KUT, Feb 27 2025). The substantive licensing, zoning, and enforcement rules were postponed at that hearing while Council waited on the state legislative session.
Council returned to those rules and approved them on September 11, 2025, by a 10-0 vote (Austin Monitor, Sep 2025). Key dates:
- October 1, 2025: Licensing reforms and operator responsibilities took effect.
- July 1, 2026: Platform obligations (license number in listings, honoring delist notices) take effect.
What changed for owners
- Zoning: STRs are now permitted as an accessory use in all residential zoning districts, provided the operator holds a valid license. Prior zoning-based prohibitions were removed, though HOA and deed restrictions still apply.
- Separation rule: The distance requirement is site-to-site, allowing up to two licensed rentals per lot.
- Multifamily cap: Licensed STR units in a multifamily building are capped at 10% of units, raised to 25% if the building includes a commercial use (Austin Monitor).
- Tenant licensing: Tenants may now apply for STR licenses if their lease permits and they have written owner authorization.
- Enforcement split: Licensing violations are enforced against the tenant-operator. Property-code issues remain the owners responsibility.
State preemption (HB 2127)
HB 2127, the 2023 state preemption law often called the “Death Star bill,” was struck down by a Travis County district judge in 2023 but reinstated by the Third Court of Appeals in July 2024. As of late 2025, enforcement litigation is active in other Texas cities, but Austins STR ordinance remains in effect and is being enforced.
Bottom line for investors
The regulatory uncertainty from early 2025 has resolved. If you own or are buying an Austin STR, you need a current operator license, written compliance with the separation and multifamily caps, and platform listings that will need a visible license number by July 1, 2026. For a fuller breakdown of the original proposals and the strategic context, see our companion post from February 15, 2025: Significant Changes Coming to Short-Term Rentals in Austin.
At Neuhaus Realty Group, we help investors structure STR portfolios that stay compliant and profitable through regulatory shifts. If you want to talk through how the October 2025 rules affect a specific property, lets talk or call (512) 366-3270.
Originally published February 17, 2025. Updated May 26, 2026 with the actual ordinance outcomes from the Sep 11, 2025 Council vote.
