Ed 
Austin’s short-term rental (STR) market underwent its biggest regulatory overhaul in a decade in 2025. The Austin City Council originally introduced three ordinances at a February 27, 2025 public hearing covering licensing, zoning, and tax enforcement. After deferral, the full package was adopted in September 2025. For investors and property owners operating in the STR space, the adopted rules introduce new compliance requirements, stricter enforcement, and revised zoning policies that affect both profitability and operational viability.
At Neuhaus Realty Group, we specialize in guiding investors through regulatory shifts to ensure compliance while maximizing returns. Below is a breakdown of the proposed changes, their potential impact, and how investors can prepare.
Key Changes in the Proposed STR Regulations
Ordinance No. 1 – STR Licensing & Enforcement
This ordinance establishes stricter licensing requirements for STRs, enforces compliance, and introduces penalties for violations. All STRs must obtain an operator’s license that is non-transferable upon sale. As adopted: licenses are now valid for two years rather than one ([Austin Development Services](https://www.austintexas.gov/department/short-term-rentals)). The proposal included a 1,000-foot separation rule limiting multiple STRs owned by the same person in close proximity; as adopted, this became a site-to-site rule allowing up to two STRs per lot, with a multifamily cap reduced from 25% to 10% of total units in residential buildings ([Austin Monitor](https://austinmonitor.com/stories/2025/09/council-oks-new-rules-for-short-term-rentals/)). STR platforms such as Airbnb and Vrbo will be required to remove unlicensed listings within 10 days of notice from the city, though these platform-side requirements do not take effect until July 1, 2026 ([Avalara MyLodgeTax](https://www.avalara.com/mylodgetax/en/blog/2025/10/austin-short-term-rental-hosts-marketplaces-face-new-regulations.html)). STRs must have a 24/7 local contact who must respond within two hours to complaints. Noise limits of 75 dB at the property line apply between 10 a.m. and 10 p.m., with stricter standards overnight, and fines of up to $500 per day per violation can apply. Repeat violations can result in license revocation.
Read the Full STR Licensing & Enforcement Draft: Click Here
Ordinance No. 2 – STR Zoning & Land Use
This ordinance redefines STRs as an accessory use and updates how they are classified in Austin’s zoning code. As adopted, STRs are permitted in all residential zoning districts as an accessory use provided the owner holds a valid operating license. The previous Type 1, Type 2, and Type 3 classifications were eliminated and STRs are now regulated primarily under Title 4 of the city code (business regulations and permit requirements) rather than the Land Development Code ([City of Austin](https://www.austintexas.gov/news/austin-city-council-adopts-short-term-rental-code-amendments)). Zoning-based prohibitions on STRs were removed, though HOAs and private deed restrictions may still apply.
Read the Full STR Zoning & Land Use Draft: Click Here
Ordinance No. 3 – STR Hotel Occupancy Tax (HOT) Collection & Compliance
This ordinance strengthens tax enforcement by requiring STR platforms to handle tax collection and reporting. This was the one piece adopted at the February 27, 2025 hearing and took effect April 1, 2025 ([KUT](https://www.kut.org/housing/2025-02-27/austin-tx-short-term-rental-rules-changes-texas-legislative-session)). STR platforms must collect and remit hotel occupancy taxes (HOT) directly to the city. Austin STRs remain subject to a combined 11% local hotel occupancy tax (9% city occupancy plus 2% venue project tax) on top of state taxes, with quarterly filing requirements. STR operators who fail to report or pay HOT taxes may have their licenses revoked.
Read the Full STR Hotel Occupancy Tax Draft: Click Here
Strategic Considerations for Investors
These regulatory changes signal a more structured, compliance-driven environment for STR operators in Austin. While this will reduce opportunities for non-compliant operators, it also presents an advantage for those who can adapt and meet the new requirements. Key considerations for investors include reviewing current STR properties to ensure compliance with licensing and tax requirements, assessing portfolio adjustments where the site-to-site separation rule and the 10% multifamily cap affect existing holdings, monitoring platform compliance ahead of the July 1, 2026 effective date for marketplace requirements, and evaluating the impact of new zoning rules on long-term investment strategies.
Where Austin STR Owners and Investors Stand Now
The February 27, 2025 hearing at Austin City Hall (301 W. 2nd St.) is closed. The full ordinance was subsequently adopted on September 11, 2025 with most provisions effective October 1, 2025. For current licensing questions, contact Austin Development Services at 512-974-9144 or [email protected], Monday through Friday, 8 a.m. to 4 p.m. ([Austin Development Services](https://www.austintexas.gov/department/short-term-rentals)). License fees as of 2025 are $836.30 for a new two-year license and $385.30 for renewal.
Original City Council agenda packet: services.austintexas.gov
Partner With Experts in STR Compliance and Investment Strategy
At Neuhaus Realty Group, we work with sophisticated investors and STR operators to navigate regulatory shifts while maintaining strong cash flow and property value. Contact us today for a consultation.
Visit our contact page or call (512) 366-3270
Final Thoughts
Austin’s STR market remains one of the most profitable in the country, but it is also one of the most regulated. These proposed ordinances underscore the city’s commitment to increased oversight, and investors should act now to position themselves ahead of enforcement changes. Those who plan accordingly will not only remain compliant but also strengthen their market position as less-prepared operators struggle with new requirements. For experienced investors looking for expert guidance and strategic insight, our team is here to assist. Contact us to discuss how these changes may impact your portfolio and what steps you can take now to protect and optimize your short-term rental investments.
