GETTING STARTED WITH SHORT-TERM RENTALS

March 22, 2023

Introduction: Getting Started with Short-Term Rentals

Over the last ten years, short-term rentals through platforms like Airbnb have exploded in growth. That growth, however, has been met with increased regulation by states and cities, including the City of Philadelphia, which passed a law regulating short-term rentals in 2015.

Listing your home for short-term rentals on Airbnb might be easy enough, but are you complying with all of Philadelphia’s zoning and licensing regulations?

Whether you rent out a home for most of the year as a full-time business or are just renting out your house on weekends, failing to comply with Philadelphia’s short-term rental regulations can put your business at risk of being fined or shut down with liens and violations that attach to your property.

So to help you avoid those risks, let’s examine some of the most important rules governing short-term rentals in Philadelphia.

What is a Short-Term Rental?

Philadelphia law divides short-term rentals into two broad categories: (1) renting out space in your primary residence, and (2) renting out a property that is not your primary residence. As we will see, the regulations for renting out your primary residence are simpler than those applicable to a property you do not live in.

Limited Lodging

If you rent out your primary home for 90 days or less and for no more than 30 days at a time, your short-term rental qualifies as limited lodging. Limited lodging is the most basic form of short-term rental in Philadelphia and does not require a permit or license from the city.

For example, if you’ve listed your primary residence on Airbnb but only plan to rent it out for a few weekends throughout the calendar year, you do not need to obtain any short-term rental permits to operate.

Limited Lodging Home

If you wish to rent your primary residence for more than 90 days but less than 180, then you will need to obtain a “limited lodging home” use registration permit. The prohibition on renting for no longer than 30 days at a time also applies.

Note that the information presented here is not an exhaustive list of short-term rental regulations and other safety, business, and tax rules may apply.

Short-Term Rentals for a Home that is Not Your Primary Residence

Once your short-term rental operation starts to operate as essentially a full-time business, stricter regulations kick in.

If you plan to rent out a home that is not your primary residence, then you will need to obtain a “visitor accommodations” use permit. You will also need a visitor accommodations use permit if you are renting out your primary residence for more than 180 days.

Further, if the short-term rental is not your primary home, you are also required to apply for a Commercial Activity license, amongst others.

So, if you own a home in Philadelphia that you rent out on Airbnb year-round, whether or not it is your primary residence, you need to make sure you have received the visitor accommodations permit. But as detailed below, obtaining the visitor accommodations permit is not always possible because of zoning restrictions.

Short-Term Rentals and Zoning

Like most American cities, Philadelphia has specific zoning codes that govern the types of property uses allowed in different areas of the city.

Some areas of the city are zoned strictly for residential purposes, while others may be zoned for mixed-use, and others for industrial businesses. As a result, some zones may prohibit uses that other districts allow.

In the context of short-term rentals, it is important to remember the distinction between a primary and non-primary residence. Short-term rentals in your primary home (as long as they are under 180 days per year) do not require special zoning permits to operate. Instead, all you need to do is comply with Philadelphia’s limited lodging and limited lodging home short-term rental guidelines and you will be compliant with the zoning code.

The situation is different if you are operating short-term rentals in a property that is not your primary residence (or if you are hosting for more than 180 days). In this case, you are required to obtain a visitor accommodations permit.

However, many zoning districts do not allow individuals to obtain visitor accommodations permits. Thus, before buying a property that you plan to operate full-time for short-term rentals, you should confirm whether it is located in a zoning district that allows you to apply for a visitor accommodations permit.

For example, let’s say your non-primary residence is located in a district zoned CMX-3, which generally allows for retail and service uses. CMX-3 permits applications for a visitor accommodations permit. So, pending receipt of the permit, you can legally operate your short-term rental property in that zoning district.

Conclusion

Whether you are an experienced Airbnb short-term renter or are just getting started in the business, complying with local regulations is an important aspect of a host’s job. Our office can help guide you through Philadelphia’s short-term rental law. Contact us to learn more at (215) 717-2200.