Phoenix Short Term Rental Regulation: A Guide For Airbnb Hosts

What are short term rental (Airbnb, VRBO) regulations in Phoenix, Arizona?

In Phoenix, Arizona, individuals looking to venture into the short-term rental business, utilizing platforms like Airbnb and VRBO, must navigate a series of regulations set forth by the city. To start a short-term rental business in Phoenix, prospective hosts are required to obtain a formal registration and license from the City of Phoenix. This process involves submitting an application and following the outlined steps on the MyPHX311 website.

Additionally, hosts must register their rental property with Maricopa County to comply with Arizona state law.Alongside the licensing requirements, hosts in Phoenix must secure a Transaction Privilege License from the Arizona Department of Revenue to collect and remit sales taxes. Maintaining a minimum of $500,000 in liability insurance is also mandatory to protect both hosts and guests. To ensure transparency and compliance, hosts are obligated to display their permit number on all short-term rental advertisements.

When it comes to taxes, Phoenix imposes an 8.6% sales tax and a 14.5% transient lodging tax on stays of less than 30 days. Platforms like Airbnb and VRBO handle the collection and remittance of these taxes on behalf of hosts. The city has established rules governing short-term rentals, including prohibiting non-residential use, requiring emergency and complaint contact information, and setting penalties for violations ranging from $500 to $3,500.

Enforcement of these regulations in Phoenix is relatively strict, with the potential for permit suspension for repeated violations. Despite this, Phoenix is generally considered an Airbnb-friendly city, with no restrictions on the number of properties a host can operate or caps on rental nights.

Hosts who wish to start a short-term rental business in Phoenix must follow a series of steps, including obtaining the necessary licenses, registering their property, and complying with the city's Short-Term Vacation Rental Ordinance.

Starting a Short Term Rental Business in Phoenix

The City of Phoenix takes a proactive approach to regulating the short-term rental industry, recognizing both the economic benefits and the potential challenges that can arise from the rapid growth of this sector. The city's Short-Term Vacation Rental Ordinance, which was first introduced in 2016 and has since been updated, serves as the foundation for the regulatory framework governing STRs in Phoenix.

Before embarking on a short-term rental venture in Phoenix, it's crucial for hosts to familiarize themselves with the city's requirements and ensure that their operations are in full compliance. Failure to do so can result in significant penalties, including the suspension or revocation of a host's permit.

Short Term Rental Licensing Requirement in Phoenix

The cornerstone of Phoenix's STR regulations is the requirement for all hosts to obtain a short-term rental license from the city. This license is mandatory for any property that is rented out for less than 30 consecutive days. The licensing process involves submitting an application, paying a fee, and providing various documents to demonstrate compliance with the city's regulations.

The application process for a short-term rental license in Phoenix is relatively straightforward, but it does require hosts to gather and submit several key pieces of information. This includes details about the property, the owner, and the intended use of the STR. Hosts must also provide proof of liability insurance, a valid transaction privilege license, and other supporting documents.

Once the application is submitted, the City of Phoenix will review the information and, if approved, issue a short-term rental permit. This permit must be prominently displayed on all rental listings and advertisements to ensure compliance with the city's regulations.

Required Documents for Phoenix Short Term Rentals

In addition to the short-term rental license, hosts in Phoenix must also secure several other important documents to operate their STR legally. These include:

• Transaction Privilege License: Hosts must obtain a Transaction Privilege License from the Arizona Department of Revenue, which allows them to legally collect and remit sales taxes on their rental income.
• Liability Insurance: Phoenix requires STR hosts to maintain a minimum of $500,000 in liability insurance coverage to protect themselves and their guests in the event of an accident or incident.
• Permit Number Display: All short-term rental listings and advertisements must prominently display the host's permit number issued by the City of Phoenix.

Failure to obtain these required documents can result in significant fines and penalties, so it's crucial for hosts to ensure that they are in full compliance with the city's regulations.

Phoenix Short Term Rental Taxes

The City of Phoenix imposes a multi-layered tax structure on short-term rentals, which includes both a sales tax and a transient lodging tax. These taxes are designed to ensure that STR hosts contribute their fair share to the city's revenue, which is used to fund essential public services and infrastructure.

The sales tax rate in Phoenix is 8.6%, which applies to the total rental income generated by the STR. In addition to the sales tax, the city also levies a transient lodging tax of 14.5% on all short-term rental stays of less than 30 days.

It's important to note that these taxes are typically collected and remitted by the STR platforms, such as Airbnb and VRBO, on behalf of the hosts. However, hosts are still responsible for ensuring that their rental income is accurately reported and that all applicable taxes are paid in full.

Phoenix-wide Short Term Rental Rules

Beyond the licensing and tax requirements, the City of Phoenix has also implemented a comprehensive set of rules and regulations governing the operation of short-term rentals within the city limits. These rules are outlined in the Short-Term Vacation Rental Ordinance and cover a wide range of topics, including:

• Prohibited Uses: STRs in Phoenix are strictly limited to residential use and cannot be used for commercial or non-residential purposes, such as running a business from the property.
• Emergency and Complaint Contact: Hosts are required to provide emergency and complaint contact information to ensure that guests can reach them in the event of an issue or concern.
• Penalties for Violations: The city has established a tiered system of penalties for STR violations, ranging from $500 to $3,500, depending on the severity of the infraction.
• Liability Insurance: As mentioned earlier, hosts must maintain a minimum of $500,000 in liability insurance coverage to protect themselves and their guests.
• Permit Number Display: All short-term rental listings and advertisements must prominently display the host's permit number issued by the City of Phoenix.

These rules are designed to strike a balance between the economic benefits of short-term rentals and the need to protect the quality of life in Phoenix's neighborhoods. Hosts who fail to comply with these regulations risk facing significant penalties and potential suspension or revocation of their short-term rental permit.

Does Phoenix Strictly Enforce STR Rules?

The City of Phoenix takes a relatively strict approach to enforcing its short-term rental regulations, with the potential for serious consequences for hosts who fail to comply. The city can suspend a host's permit for up to one year if there are three minor violations within a 12-month period or a single serious violation.

However, it's important to note that enforcement can be challenging due to the sheer number of STRs operating in the city and the limited resources available to the city's enforcement team. Some officials have acknowledged that fully policing the short-term rental market is a significant undertaking, and the city may need to explore additional strategies to ensure compliance.

Despite these enforcement challenges, Phoenix is generally considered a relatively Airbnb-friendly city, especially when compared to other major markets. The city has not imposed any limits on the number of properties a host can operate or caps on the number of nights a property can be rented. This has allowed the short-term rental industry to thrive, with many hosts reporting success in operating STRs in Phoenix.

How to Start a Short Term Rental Business in Phoenix

To start a short-term rental business in Phoenix, hosts must follow a specific set of steps to ensure compliance with the city's regulations. Here's a detailed guide:

• Obtain a Short-Term Rental License: The first and most crucial step is to obtain a short-term rental license from the City of Phoenix. This involves submitting an application, paying the required fee, and providing all necessary documentation.
• Register the Rental Property: In addition to the short-term rental license, hosts must also register their rental property with Maricopa County, as required by Arizona state law (ARS 33-1902).
• Secure a Transaction Privilege License: Hosts must obtain a Transaction Privilege License from the Arizona Department of Revenue, which allows them to legally collect and remit sales taxes on their rental income.
• Maintain Liability Insurance: Phoenix requires STR hosts to maintain a minimum of $500,000 in liability insurance coverage to protect themselves and their guests.
• Display the Permit Number: All short-term rental listings and advertisements must prominently display the host's permit number issued by the City of Phoenix.
• Comply with the Short-Term Vacation Rental Ordinance: Hosts must familiarize themselves with and adhere to the rules and regulations outlined in the city's Short-Term Vacation Rental Ordinance, including prohibited uses, emergency and complaint contact requirements, and penalty provisions.

By following these steps, hosts can ensure that their short-term rental business in Phoenix is operating in full compliance with the city's regulations, minimizing the risk of penalties or other enforcement actions.

Who to Contact in Phoenix About Short Term Rental Regulations and Zoning?

For any questions or concerns regarding short-term rental regulations and zoning in Phoenix, hosts and interested parties can contact the City of Phoenix Planning and Development Department. The department's contact information is as follows:

City of Phoenix Planning and Development Department
Phone: (602) 262-7811
Email: pdd.customerservice@phoenix.gov

The Planning and Development Department can provide guidance on the licensing process, answer questions about the city's STR regulations, and assist with any zoning-related inquiries.

Hosts are encouraged to reach out to the department if they have any doubts or need clarification on the requirements for operating a short-term rental in Phoenix.

What do Airbnb Hosts in Phoenix Think About Local Regulations?

The overall sentiment among Airbnb hosts in Phoenix seems to be one of cautious optimism when it comes to the city's short-term rental regulations. While the rules and requirements may seem daunting at first, many hosts have found the process to be relatively straightforward and manageable, especially when compared to the regulatory environments in other major markets.

On the Bigger Pockets forum, one host commented: "Phoenix is one of the more Airbnb-friendly cities in the country. The regulations are straightforward, and the enforcement seems reasonable." Another host noted that while the upfront effort required to comply with the rules is significant, "it's worth it to operate in this booming market."These sentiments are echoed in various online forums and discussions, where Airbnb hosts in Phoenix generally express a positive outlook on the city's approach to short-term rentals. Many hosts report success in navigating the licensing and compliance process, and they appreciate the city's relatively welcoming attitude towards the STR industry.

That said, it's important to note that the experiences of individual hosts may vary, and the enforcement of STR regulations can be challenging, as acknowledged by city officials. Hosts are advised to thoroughly research the requirements, stay up-to-date on any changes, and maintain open communication with the City of Phoenix to ensure the smooth and compliant operation of their short-term rental business.

In conclusion, Phoenix has established a comprehensive regulatory framework for short-term rentals, designed to balance the economic benefits of the industry with the need to protect the city's neighborhoods and quality of life.

By understanding the licensing requirements, taxes, and rules governing the operation of STRs, hosts can ensure that their business is legal and compliant with the city's regulations. While enforcement can be challenging, the overall sentiment among Airbnb hosts in Phoenix suggests that the city is relatively Airbnb-friendly, making it an attractive market for those looking to start or expand their short-term rental operations.

Disclaimer: While we here at BNBCalc strive to keep all of our city 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 city 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.