Hamilton County, Tennessee Short-Term Rental Regulation: A Guide For Airbnb Hosts

Starting a Short-Term Rental Business in Hamilton County

Hamilton County, Tennessee, recently passed new regulations for short-term vacation rentals like Airbnb and VRBO properties in unincorporated areas of the county. As of April 2023, property owners must obtain a permit and follow specific rules to legally operate an STVR:

• Pay an annual fee of $750 to receive an operating certificate
• Pass an annual inspection
• Limit occupancy to 14 people for a 5 bedroom home
• Post a sign with the STVR certificate number and owner/manager contact, who must respond within 2 hours
• No loud noise between 10pm-7am
• Pets must be leashed when outside
• Provide on-site parking, no street parking allowed

The goal of the new regulations is to address concerns from neighbors about issues like parking, noise, and pets while still allowing STVRs to operate. If an STVR receives 3 violations, their permit can be revoked or not renewed, and the county may take legal action.

Chattanooga and other cities in Hamilton County have their own STVR regulations that differ from the county rules. For example, Chattanooga distinguishes between owner-occupied "homestay" rentals and "absentee" investor-owned rentals, with different zoning allowances and fees for each. The city of Collegedale requires a $300 permit and inspection for STVRs.

Some residents have complained that STVRs disrupt their neighborhoods. "This is every weekend. You know, we moved out here for the peace and quiet. We're not getting it," said Sale Creek resident Steve Roark about an STVR next door where renters throw bottles in his yard. On the other hand, STVR owners argue the rentals provide needed income. "Many property owners in the area, including retirees, single mothers, and widows, have invested their savings into short-term rentals and depend on this income as their primary means of support," claims a lawsuit filed by STVR owners against the city of Chattanooga's regulations.

The debate continues, with the county considering prohibiting STVRs in residential zones altogether while STVR owners fight the rules in court. Those interested in starting an STVR business in Hamilton County should carefully review the regulations, which continue to evolve. The county provides a checklist for STVR permit applicants detailing requirements for address signs, smoke alarms, parking, pet leashing, and more.

Short-Term Rental Licensing Requirement in Hamilton County

As of April 2023, all short-term vacation rentals (STVRs) in unincorporated areas of Hamilton County must obtain a permit and pass an annual inspection in order to legally operate. The requirements to receive an STVR permit include:

1. Pay an annual fee of $750, which includes $250 for the inspection
2. Pass inspections from the county's building inspection department, fire marshal, and groundwater department (if the property has a septic system)
3. Provide a sign posted at the front of the property showing the STVR certificate number and contact information for the owner/manager, who must be able to respond within 2 hours
4. Limit occupancy based on the number of bedrooms (e.g. maximum of 14 people for a 5-bedroom home)
5. Provide adequate on-site parking; no street parking is allowed
6. Ensure pets are leashed when outside
7. No loud noise between 10pm-7am

To apply for an STVR permit, property owners must submit an application to the Hamilton County Development Services department located at 1250 Market Street, Suite 3046, Chattanooga, TN 37402. The application checklist and forms are available on the county's website.

After submitting the application, an inspection will be scheduled within 48 hours. If the property does not pass the first inspection, there is a $250 re-inspection fee each time thereafter until the property passes. Once approved, the Development Services department will issue the STVR permit within 48 hours.

Fines and penalties for operating an STVR without a permit include:

1. Revocation of the STVR permit for 1 year after 3 violations
2. Legal action taken by the Hamilton County Attorney against the property owner
3. Daily fines of $50 for violating county regulations

It's estimated the permitting process takes about 1-2 weeks from submitting the application to receiving the permit, if no re-inspections are needed. As of October 2023, the county identified 176 STVRs operating illegally without a permit. Property owners are given a 30-day notice to come into compliance before legal action is pursued.

Required Documents for Hamilton County Short-Term Rentals

To apply for a Short-Term Vacation Rental (STVR) permit in Hamilton County, property owners must submit the following documents:

Completed STVR Application Form - Available on the Hamilton County Development Services website, this form collects basic information about the property owner, rental property address, number of bedrooms, maximum occupancy, and parking details.

Proof of Ownership - Applicants must provide a deed or other legal document showing they own the property to be used as an STVR. If the applicant is not the owner, they must submit a notarized letter from the owner authorizing the use of the property as an STVR.

Site Plan - A basic site plan sketch showing the location of the dwelling, other structures, driveways, parking areas, and property lines. This helps verify adequate parking is provided on-site.

Floor Plan - A sketch of the home's layout noting bedrooms, smoke alarm locations, fire extinguishers, and emergency egress windows and doors. This is used during the fire marshal's inspection to confirm safety requirements.

Parking Plan - Documentation of the number and location of on-site parking spaces. At least 1 space per 2 occupants is required, and no street parking is allowed.

These documents must be submitted to the Hamilton County Development Services department located at 1250 Market Street, Suite 3046, Chattanooga, TN 37402. The STVR permit application fee is $750, which covers the cost of building, fire, and groundwater inspections.

After the application and supporting documents are submitted, an inspection will be scheduled within 48 hours. Once the property passes inspection, the Development Services department will issue the STVR permit within 48 hours.

New STVR permit holders must also apply for a Hamilton County business license either online at www.countyclerkanytime.com, by mail, or in person at the County Clerk's office.

Failing to obtain an STVR permit before operating can result in fines of $50 per day for violating county regulations. After 3 violations, the county may revoke the STVR permit for 1 year or take legal action against the property owner.

Hamilton County Short-Term Rental Taxes

Short-term rental owners in Hamilton County must collect and remit several types of taxes:

Sales Tax - The combined state and local sales tax rate in Hamilton County is 9.25%, consisting of the 7% state rate plus the 2.25% local rate. Sales tax applies to short-term rentals of less than 90 continuous days. The rental owner or hosting platform like Airbnb must collect sales tax from the guest and remit it to the state.

Occupancy Tax - Hamilton County levies a 4% occupancy tax on short-term rentals of less than 30 continuous days. This is in addition to the sales tax. Starting in 2021, short-term rental marketplaces like Airbnb are required to collect and remit the occupancy tax to the state on behalf of hosts.

Business Tax - Rental of real property for less than 180 days is subject to the state business tax. Short-term rental owners must register for a county and city business license and file business tax returns. Business tax only applies if annual gross sales exceed $10,000.

Property Tax - Short-term rentals are subject to property taxes, just like other residential properties. The property tax rate in Chattanooga is $2.25 per $100 of assessed value. Residential property is assessed at 25% of appraised value.

Possible deductions for short-term rental businesses may include:

1. Mortgage interest
2. Property taxes
3. Utilities
4. Cleaning fees
5. Maintenance and repairs
6. Depreciation of furniture and equipment
7. Hosting platform fees
8. Business licenses and permits

It's important for short-term rental owners to keep detailed records of income and expenses in order to properly file taxes and claim allowable deductions. Many owners hire a tax professional experienced with short-term rental taxation to ensure compliance with all state and local tax laws. Failure to collect and remit required taxes can result in fines and legal action.

Tennessee Wide Short-Term Rental Rules

In 2018, Tennessee passed the Short-Term Rental Unit Act, which established state-wide standards for short-term rentals while limiting the ability of local governments to ban them outright. The Act defines a short-term rental as a residential property rented for less than 30 consecutive days.

Under the state law, local governments in Tennessee cannot prohibit short-term rentals or restrict the use of property as a short-term rental unless the prohibition is necessary to protect public health and safety. However, the law does allow for some local regulation of short-term rentals.

Key state-wide short-term rental requirements that apply in Hamilton County include:

1. Business License - Short-term rental operators must obtain a business license from the county and/or city.
2. Tax Collection - Hosts must collect and remit state and local sales taxes as well as occupancy taxes. The state sales tax rate is 7%, and the Hamilton County occupancy tax rate is 4%. Short-term rental platforms like Airbnb are authorized to collect and remit these taxes on behalf of hosts.
3. Business Tax - If annual revenue from short-term rentals exceeds $10,000, hosts must also pay business taxes. Short-term rentals fall under Classification 3 for business tax purposes.
4. Safety Requirements - Smoke alarms and carbon monoxide detectors must be installed and maintained in all short-term rental units. Each sleeping room must have a working smoke alarm and there must be a working carbon monoxide detector within 10 feet of each bedroom.

While the state law limits local prohibitions on short-term rentals, it does allow for some local regulations to protect health and safety. As a result, Hamilton County and cities within the county, like Chattanooga, have established some additional rules for short-term rentals, such as requiring permits, setting occupancy limits, and restricting the location of non-owner occupied rentals.

The state law provides a baseline for short-term rental regulation, but hosts in Hamilton County must also be aware of and comply with the local permitting and operating requirements. Failure to register and obtain required permits can result in fines and legal action by the local government.

Does Hamilton County Strictly Enforce STR Rules?

Based on discussions from Chattanooga residents on Reddit and BiggerPockets, Hamilton County appears to be cracking down more on illegal short-term rentals in recent years, but enforcement is still lacking compared to other cities.

In 2022, the City of Chattanooga found that over half of short-term vacation rentals were operating without a valid permit. The city spent tens of thousands of dollars on software to identify illegal listings and issue violations. However, some Redditors expressed skepticism that the crackdown would lead to lasting change without continued enforcement. "As long as it remains an issue of ethics--and not an issue of legality--then you're not gonna see much change," one user commented.

Compared to major cities like San Francisco, New York and New Orleans that have implemented strict regulations and caps on short-term rentals, Hamilton County is still relatively Airbnb-friendly. The county allows STRs in most areas as long as hosts obtain a permit and business license. However, the approval process has gotten more stringent in recent years.

Despite the rules, many hosts still operate under the radar. One Redditor shared, "I live in a building that seems to be being entirely flipped for short-term rentals...There are 9 units in the building, but as of a few months ago, I'm now clearly the only full-time resident."

Realtors and investors appear to own a large share of STRs in Hamilton County. When the city announced a moratorium on new non-owner occupied permits in 2021, most of those interviewed by local media were real estate professionals. Some residents argue this presents an ethics issue, with realtors snatching up affordable housing to convert into vacation rentals.

In summary, while Hamilton County has taken steps to better regulate short-term rentals, enforcement remains inconsistent. The county is more welcoming to STRs than major cities but has gradually added more red tape for hosts in recent years. Still, a sizable number of hosts, often real estate investors, continue to skirt the rules. The county will need to dedicate more ongoing resources to enforcement and further tighten regulations to really get illegal STRs under control.

How to Start a Short-Term Rental Business in Hamilton County

Ensure your property is eligible - Check that your property is located in a zone that allows short-term vacation rentals (STVRs). As of April 2023, Hamilton County allows STVRs in all zones except manufacturing districts. If you are part of a homeowners association (HOA), also verify that STVRs are permitted.

Apply for a Short-Term Vacation Rental permit - Submit an STVR application and $750 fee to the Hamilton County Building Inspection Department. The application requires proof of ownership, a site plan sketch, a floor plan noting bedrooms and safety equipment, and a parking plan showing 1 on-site space per 2 guests. Thoroughly review the STVR Applicant Checklist on the county website to ensure you provide all required information.

Pass inspections - After submitting your application, schedule inspections from the county's building inspection department, fire marshal, and groundwater department (if you have a septic system). Ensure your property has visible address numbers, working smoke alarms in each bedroom and hallway, and adequate guardrails. If you don't pass the first inspection, there is a $250 re-inspection fee. Use the county's inspection checklist to prepare and avoid re-inspection fees.

Obtain an STVR permit - If your application is approved and inspections are passed, the county will issue your STVR permit within 48 hours. The permit is valid for 1 year. You must post the permit number and manager contact information on a sign visible from the street. Tip: Laminate your permit sign to protect it from the elements.

Get a business license - Apply for a Hamilton County business license either online at www.countyclerkanytime.com, by mail, or in person at the County Clerk's office. You will need your STVR permit first. Keep detailed records of all income and expenses from your rental business to properly file taxes.

Prepare your property for guests - Furnish your rental with essential amenities like linens, kitchenware, and toiletries. Install a lock box or keyless entry system. Create a house manual with property information, parking instructions, and your contact info. Hire a cleaner or property manager if needed. Use an STVR checklist to ensure you don't overlook key amenities guests expect.

List your property on STVR platforms - Once your property is permitted and guest-ready, create listings on popular vacation rental sites like Airbnb and VRBO. Hire a professional photographer, write a detailed description, and set a competitive nightly rate. Look at similar STVR listings in your area to get a sense of going rates and amenities offered.

Manage bookings and guests - Once your listing is live, be prepared to promptly answer guest inquiries, manage reservations, and coordinate check-ins. Establish clear house rules around noise, parking, pets, etc. Have a system for cleaning and restocking between guests. Consider hiring a co-host if you need help. Use a channel manager to sync bookings across multiple platforms and avoid double bookings.

By following these steps and tips, you can successfully launch and operate a short-term rental business in Hamilton County. Stay organized, provide excellent customer service, and ensure compliance with all county regulations to set your STVR up for success.

Who to Contact in Hamilton County about Short-Term Rental Regulations and Zoning?

For questions about short-term vacation rental permits and regulations in unincorporated areas of Hamilton County, contact:

Hamilton County Development Services

1. 1250 Market Street, Suite 3046
2. Chattanooga, TN 37402
3. Phone: (423) 209-7970
4. Email: developmentservices@hamiltontn.gov

The Development Services department handles applications and inspections for the county's STVR permit. Their website provides checklists, forms, and FAQs.

For properties within the city limits of Chattanooga, contact:

City of Chattanooga Land Development Office

1. 1250 Market Street, Suite 1000
2. Chattanooga, TN 37402
3. Phone: (423) 643-5800
4. Email: stvr@chattanooga.gov

The Land Development Office oversees Chattanooga's STVR regulations, which distinguish between homestay and absentee rentals. Their website has details on the application process, fees, appeals, and more.

To verify your property's zoning, consult the Hamilton County GIS map or contact the Chattanooga-Hamilton County Regional Planning Agency at (423) 643-5900.

Additional resources for Hamilton County STVR hosts:

1. Chattanooga Short Term Rental Alliance - A local group advocating for fair STVR regulations. Their Facebook page shares news and tips.
2. Chattanooga Airbnb Hosts Forum - An active Facebook group where local hosts discuss regulations, marketing, property management, and more.
3. Bigger Pockets Chattanooga Forum - Discussions about investing in short-term and long-term rentals in the Chattanooga area.
4. /r/Chattanooga Subreddit - Redditors debate STVR issues like the impact on housing affordability and neighborhoods. Search "short-term rental" or "Airbnb" to find relevant threads.

Staying connected with other local hosts and STVR alliances can help you navigate the evolving regulatory landscape in Hamilton County. Be sure to thoroughly review all county and city requirements before launching an STVR to avoid fines and legal issues. With proper planning and compliance, an STVR can be a profitable business venture in the growing Chattanooga market.

What Do Airbnb Hosts in Hamilton County on Reddit and Bigger Pockets Think about Local Regulations?

On the Chattanooga subreddit, many discussions revolve around the impact of short-term vacation rentals (STVRs) on housing affordability and neighborhood character. Some key threads:

In a post titled "Private property rights group files lawsuit against Chattanooga over short-term vacation rental regulations," Redditors debate the merits of the lawsuit. One commenter notes, "So out of curiosity, I googled the organizers/leaders of the The Greater Chattanooga Coalition for Private Property Rights. They are all either realtors and/or in the construction business. And two of them don't even appear to live in Chattanooga city limits."

Another highly upvoted post asks, "True or False: Out of Town Investors Are Snatching Up Single Family Homes/Duplexes/Condos." The data analysis finds the number of properties owned by out-of-town companies has increased from 43.83% to 48.21% over 3 years. Commenters share anecdotes like "I live in a building that seems to be being entirely flipped for short-term rentals...There are 9 units in the building, but as of a few months ago, I'm now clearly the only full-time resident."

In a thread on the city's crackdown on illegal STVRs, hosts voice frustration with the permitting process. One said, "It was on the door for almost a month, and I found it taped on the door on East Main Street," admitting they hadn't visited the property in a month. Another complained, "The Airbnb app let me make a listing; how am I supposed to know I had to do anything else?"

On BiggerPockets, a popular real estate investing forum, there are a few posts from hosts navigating Chattanooga's STVR regulations:

One host asked about applying for an owner-occupied STVR permit when the owner actually travels most of the year. Replies advised there may be a minimum residency requirement for the owner-occupied permit.

Another post from June 2020 notes, "Right now, considering the city ordinances are under review, we're working outside the city limits for STRs. Unincorporated Hamilton County and Marion County are good options."

An investor considering buying a property to use as an STVR asked about the risk of changing regulations. Commenters noted, "For some reason, if the STR route didn't work out, I would still be able to cash flow about $190 a month, which I know is a bad COC return, but as an exit strategy, I could up rents to 2k a month."

Overall, the sentiment from hosts seems to be that Hamilton County's STVR regulations are becoming increasingly restrictive, with more oversight on permitting and crackdowns on illegal rentals. Some are frustrated by the rules, while others are looking to invest in STVRs outside city limits to avoid the new ordinances. Hosts don't seem very optimistic the county will loosen STVR restrictions anytime soon based on the direction regulations are headed.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.