Texas Court Strikes Down Austin Short-Term Rental Rules

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A Texas state appeals court recently declared as unconstitutional some very substantial elements of Austin's short-term rental ordinance. In particular, the court took issue with Austin's handling of so-called "Type-2" rentals, which encompases non-owner occupied residential properties (e.g., single-family investment properties) leased for fewer than 30 days at a time. They city is no longer issuing STR permits for Type 2 properties and had planned to ban them outright in 2022. However, the court ruled that Austin's law "significantly affects property owners' substantial interests in well-recognized property rights while...serving a minimal, if any, public interest." The court also noted that many of the city's concerns about STRs--noise, disorderly conduct, public urination, improper parking, public intoxication, etc.--are already prohibited under separate law.

The ruling was handed down on Nov. 27th, and we've yet to see how exactly the city will change the current STR ordinance or whether the city will appeal the decision. The council will likely try to keep as much of the current ordinance as possible related to STR permitting and marketing. My understanding is that the city can still regulate Type 2 STRs (and all other types), but the court has ruled that the city cannot ban Type 2 rentals or otherwise refuse to permit them so long as other appropriate conditions are met. You can read the court's full opinion here and see more details here.

@David Ivy Thanks for the update. What's your sense of how this is effectively being enforced now? Is the City issuing permits or do they have the authority to only do type 1? For example if I buy a small house and put it on Airbnb and pay taxes, can I apply for a permit after the fact? I am trying to assess risk level here. Perhaps I need to homestead it, therefore make it type 1?  I have a sense that this is all muddled and the public has no clue where it's going. 

Your take is appreciated.


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