Austin’s Airbnb / Short-Term Rental Rules Are Finally Changing

After years of delays, Austin City Council has finally approved new regulations for short-term rentals (STRs)—but the most significant enforcement measures are still on hold.

If you’ve been following Austin’s STR saga, you know it’s been a long time coming. City Council first called for these changes back in 2022, expecting action in early 2023. Now, two years later, we’re finally seeing movement. But even with these updates, major questions remain about enforcement and the city’s ability to manage STRs effectively.

Here’s what’s changing—and what’s still up in the air.

What Just Passed?

The measures that cleared City Council will:

✅ Require STR platforms (like Airbnb and Vrbo) to collect and remit Hotel Occupancy Tax (HOT) on behalf of hosts.

✅ Deploy new technology to streamline permit applications and track down unlicensed STRs.

✅ Move STR regulations out of the Land Development Code and into the Business Code for (hopefully) easier enforcement.

What’s Still Delayed?

Council postponed action on key enforcement measures, but plans to revisit them by October. These include:

🔲 Requiring STR platforms to display license numbers on listings.

🔲 Forcing platforms to remove illegal listings when flagged by the city.

🔲 Setting a cap on how many STRs one owner can operate in a given area.

🔲 Mandating $1M in liability insurance for STR owners.

🔲 Requiring STR owners to provide a local contact who can respond within 2 hours.

🔲 Giving the city stronger enforcement tools, including revoking licenses for problem properties.

The bottom line? These changes should’ve happened years ago. The city has dragged its feet while millions of dollars in hotel taxes went uncollected, and enforcement has been practically nonexistent.

Finally: The City Collects the Taxes It’s Owed

Here’s the frustrating part: The law has always been clear—STRs owe hotel occupancy taxes.

For years, the state of Texas had no problem collecting its 6% hotel tax from short-term rentals, but Austin never fully enforced its 11% local tax. The city asked STR platforms to collect and remit the tax, but the platforms refused unless the city also gave them host data. So instead, the city left it up to individual hosts to self-report and pay their taxes—which most didn’t, because doing so would expose their unlicensed status.

Now, under the new rules, platforms must collect and remit the tax directly. Airbnb and Vrbo aren’t fighting it. They’ll do it. So why didn’t this happen years ago?

The city claimed legal uncertainty, but the real issue seems to be a mix of bureaucratic delays, outdated enforcement strategies, and weak political will.

Austin Needs to Catch Up With Other Cities

Most major cities actively enforce STR rules—why has Austin struggled? One reason is a lack of technology.

Years ago, the city purchased software designed to track down illegal STR listings, but… it didn’t work. Instead of trying again with better tools (like many other cities have done), Austin just let enforcement fall by the wayside.

Now, thanks to pressure from City Council, staff included funding in the 2024-25 budget for new software. But despite securing the budget in August, the city still hasn’t even started looking for a vendor to implement it.

At Thursday’s meeting, CM Vanessa Fuentes pushed staff to follow through, while CM Marc Duchen put it bluntly:

“City government’s technological ineptitude seems totally out of line with a city where I can go outside and throw a rock and hit 12 major technology companies.”

Wait—Where Does This Money Even Go?

A major frustration? Most of the hotel tax revenue from STRs won’t actually help fund core city services.

Thanks to a state law written by the hotel industry, 70% of this revenue must go toward the Convention Center—either running the existing one or building a new one. Meanwhile, only 30% of the funds can support local arts programs and historic preservation.

So, while collecting these taxes is long overdue, the reality is that most of the money isn’t going to help with affordable housing, infrastructure, or other pressing city needs.

What’s Next?

Austin’s STR rules are finally evolving, but real enforcement is still months (if not years) away. Until the city follows through on stronger regulations, unlicensed STRs will continue operating with little consequence—and Austin will keep playing catch-up.

For now, we’ll be watching to see whether Council finally takes action on the more meaningful enforcement measures this fall. Stay tuned. Follow the Open House Austin Instagram and subscribe to our newsletter to stay up to date on the latest Austin happenings!

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Source: The Austin Politics Newsletter