Orlando Short Term Rental Regulation: A Guide For Airbnb Hosts

What are short term rental (Airbnb, VRBO) regulations in Orlando Florida?

Short-term rentals like Airbnb and VRBO have become increasingly popular in Orlando, as the city attracts millions of tourists each year to visit its world-famous theme parks and attractions. However, hosts looking to capitalize on this demand need to be aware of the city's strict regulations before listing their property. Failure to comply with permitting, zoning, and tax requirements can result in significant fines and legal issues. Here's a comprehensive guide on what you need to know about operating a short-term rental business in Orlando.

Starting a Short Term Rental Business in Orlando

As of July 1, 2021, new ordinances passed by the Orlando City Council require all short-term rental businesses to register with the city and pay an annual fee. For the first year, the registration fee is $275, and then it drops to $125 for each subsequent year. The new regulations also limit hosts to only accepting one booking at a time, with no more than two guests allowed per bedroom. The maximum occupancy for any single rental is capped at four guests total.

These rules were implemented in response to complaints from residents about the proliferation of "party houses" in residential neighborhoods, which often led to noise, parking issues, and safety concerns. The ordinances aim to strike a balance between allowing responsible short-term rentals while preventing the negative impacts on surrounding communities.

Short Term Rental Licensing Requirement in Orlando

To legally operate a short-term rental in Orlando, hosts must first apply for a permit from the city council. The permitting process involves submitting an application, paying the registration fee, and passing an inspection from code enforcement to ensure the property meets all safety and zoning requirements.

However, data shows that compliance with the permitting process has been low so far. As of March 2023, only 116 short-term rentals were officially registered with the city, even though analytics platforms estimate there are over 8,000 active Airbnb and VRBO listings in Orlando. This suggests that many hosts are either unaware of the licensing requirements or are willingly operating illegally to avoid the fees and restrictions.

The city has ramped up enforcement efforts in recent months, with code officers responding to hundreds of complaints and issuing fines to non-compliant properties. Hosts found operating without a permit can face penalties of $250 per day, up to a maximum of $5,000. Repeat offenders may even have their properties declared a public nuisance, leading to criminal charges.

Required Documents for Orlando Short Term Rentals

To successfully apply for a short-term rental permit in Orlando, hosts will need to gather several documents:

• Proof of a current Florida Department of Business and Professional Regulation (DBPR) Vacation Rental License. This state-level license is required for any rental property offered for periods of less than 30 days and can be obtained online through the DBPR website.
• A completed Short-Term Rental Application from the City of Orlando. This form requires detailed information about the property, including the address, owner's contact information, and the name and phone number of a local representative who can respond to any issues within two hours.
• Proof of registration with Orange County for the purposes of collecting and remitting Tourist Development Taxes and Florida Sales Taxes on short-term rental income (more on this in the taxes section).
• A one-time, non-refundable application fee of $50.

Once all the required documents and fees are submitted, the City Planning Division will review the application and schedule an inspection of the property. If everything is up to code, the permit will be issued within 7-10 business days. Permits must be renewed annually by September 30th, along with payment of the yearly registration fee.

Orlando Short Term Rental Taxes

In addition to permitting fees, short-term rental hosts in Orlando are required to collect and remit several taxes on their rental income:

• 6% Florida Sales Tax
• 0.5% Orange County Discretionary Sales Surtax
• 6% Orange County Tourist Development Tax

Altogether, these taxes add up to 12.5% of the total booking amount. Hosts can choose to pass these taxes onto guests by including them in the nightly rate or absorbing the cost themselves.Platforms like Airbnb and VRBO offer to automatically collect and remit these taxes on behalf of hosts in Orlando. However, it's ultimately the host's responsibility to ensure the correct taxes are being paid.

Failure to comply can result in audits, fines, and even criminal charges for tax evasion.To register for tax collection, hosts must first obtain a Florida Sales Tax Number from the Department of Revenue and an Orange County Business Tax Receipt from the Comptroller's Office. Then they need to submit a short-term rental tax application to the Orange County Comptroller and the Florida Department of Revenue.

Once approved, hosts will receive a Certificate of Registration for Short-Term Rentals, which must be posted prominently inside the rental property.

Orlando-wide Short Term Rental Rules

Beyond the permitting and tax requirements, the City of Orlando has several other rules that short-term rental hosts must follow:

• Rentals are limited to only one booking at a time. Hosts cannot rent out individual rooms to separate parties simultaneously.
• The maximum occupancy is two people per bedroom, plus two additional guests, up to a total of four people. For example, a one-bedroom rental can have no more than four guests, while a two-bedroom rental can have up to six guests.
• The rental space must be 50% or less of the total livable square footage of the property. This means that a host cannot rent out an entire single-family home unless they live on-site in a separate area.
• The owner or a long-term tenant must occupy the property for at least 51% of the year. This rule prevents investors from buying up residential properties solely for use as short-term rentals.
• Rentals must comply with all applicable building, fire, health, and safety codes. Properties must have working smoke detectors, fire extinguishers, and carbon monoxide detectors, as well as posted emergency evacuation routes.
• Hosts must provide guests with a copy of the city's noise ordinance and a 24-hour contact number for the local representative who can address any issues that arise.
• No events, parties, or weddings are allowed at the rental property without prior approval from the city.
• One off-street parking space must be provided for each rental bedroom.
• Exterior signage advertising the rental is prohibited.

Violations of any of these rules can result in fines from code enforcement officers. Fines start at $250 per day and can escalate to $500 per day for repeat offenses. If a property racks up more than $5,000 in fines, the city can revoke its short-term rental permit entirely.

Does Orlando strictly enforce STR rules?

Orlando has some of the most restrictive short-term rental regulations in the state of Florida, particularly for properties in residential neighborhoods. The city primarily relies on a complaint-based system for enforcement, with code officers investigating properties after receiving reports from neighbors about potential violations.

Since the short-term rental ordinance was enacted in July 2021, the city has received over 700 complaints. Many of these complaints have resulted in fines for non-compliant properties, with some repeat offenders accruing tens of thousands of dollars in penalties. The city has also filed lawsuits against several property owners who continued to operate illegally after multiple violations.

However, the data suggests that enforcement has been inconsistent so far. With only 116 registered short-term rentals and an estimated 8,000+ active listings, it's clear that the vast majority of hosts are still operating without permits. The city simply doesn't have the resources to proactively investigate every property, so many illegal rentals are likely slipping through the cracks.

This has led to frustration among compliant hosts, who feel that they are being unfairly targeted while their non-compliant competitors are able to avoid the costs and restrictions of the permitting process. Some have called for the city to adopt a more proactive enforcement approach, such as requiring platforms like Airbnb to share data on active listings and bookings.

Compared to other major cities in Florida, Orlando is definitely one of the least Airbnb-friendly destinations due to its strict regulations. For example, Miami has taken a more laissez-faire approach, with no permitting requirements for short-term rentals in most residential areas. Other tourist hotspots like Panama City Beach and Daytona Beach have also been more welcoming of vacation rentals.

That being said, Orlando still has a thriving short-term rental market due to the constant influx of tourists visiting Disney World, Universal Studios, and other attractions. Many hosts are willing to operate illegally and risk fines in order to capitalize on this demand. The potential profits often outweigh the costs of compliance, especially for larger properties that can command high nightly rates.

How to Start a Short Term Rental Business in Orlando

Despite the challenges, it is still possible to legally operate a short-term rental business in Orlando. Here are the key steps you'll need to follow:

• Check your property's zoning to make sure short-term rentals are allowed. Most purely residential areas do not permit rentals under 30 days. Look for properties zoned for mixed-use or commercial activity.
• If your property is part of a homeowners association (HOA) or condo board, get written approval to operate a short-term rental. Many HOAs have their own restrictions on rentals that may be even stricter than the city's rules.
• Apply for a Short-Term Rental Permit from the City of Orlando. Fill out the application, pay the $275 fee, and schedule an inspection with code enforcement. Make sure your property meets all the safety requirements and occupancy limits.
• Register with the Florida DBPR and obtain a Vacation Rental License. This can be done online through their website. The application fee is $50 per year.
• Register with Orange County to collect and remit the required taxes. Apply for a Florida Sales Tax Number and an Orange County Business Tax Receipt. Submit a short-term rental tax application to the Comptroller's Office.
• Obtain proper insurance coverage for your short-term rental. Standard homeowners insurance policies often exclude claims related to paying guests. Look for a policy specifically designed for vacation rentals that covers liability, property damage, and loss of income.
• Create your listing on Airbnb, VRBO, or another booking platform. Be sure to include your permit number and occupancy limits in the description. Set competitive rates based on comparable properties in your area.
• Develop a system for screening guests, handling bookings and payments, and coordinating cleaning and maintenance between stays. Consider hiring a professional property management company if you don't have the time or expertise to handle these tasks yourself.
• Keep detailed records of all your rental income and expenses for tax purposes. Short-term rental income is subject to both federal and state income taxes, in addition to the county lodging taxes. Consult with a tax professional to ensure you are properly reporting your earnings.
• Stay up-to-date on any changes to Orlando's short-term rental regulations. The city council has indicated that they may revisit the ordinance in the future to address ongoing concerns from residents and the tourism industry. Be prepared to adapt your business if new rules or restrictions are implemented.

Who to contact in Orlando about Short Term Rental Regulations and Zoning?

If you have questions about Orlando's short-term rental regulations or need assistance with the permitting process, here are the key city departments to contact:

City Planning Division
Phone: 407-246-2269
Email: cityplanning@orlando.gov
Website: City Planning Division

The City Planning Division is responsible for reviewing and approving short-term rental permit applications. They can provide guidance on zoning requirements, occupancy limits, and other rules.

Code Enforcement Division
Phone: 407-246-2686
Online: Report a Violation
Website: Code Enforcement Division

The Code Enforcement Division investigates complaints about illegal short-term rentals and issues fines for violations. They also conduct inspections of properties seeking permits to ensure they meet all safety and building code requirements.

If you suspect that a property in your neighborhood is operating as an illegal short-term rental, you can file a complaint with Code Enforcement online or by phone. Provide as much detail as possible, including the address, dates of suspected rental activity, and any evidence such as online listings or photos.

What do Airbnb hosts in Orlando on Reddit and Bigger Pockets think about local regulations?

On the Airbnb subreddit and Bigger Pockets forums, hosts and real estate investors have expressed frustration with Orlando's strict short-term rental regulations. Many feel that the city is unfairly targeting responsible hosts while failing to address the broader issues of affordable housing and neighborhood quality of life.

One host on Reddit wrote:"I've been operating a permitted Airbnb in Orlando for over a year now, and it's been a constant struggle. The permitting process was a nightmare, with multiple inspections and paperwork hoops to jump through. And even after getting approved, I still get harassed by code enforcement every time a neighbor makes a baseless complaint. Meanwhile, I see dozens of illegal listings in my area that seem to be operating with impunity. It's incredibly frustrating as someone trying to do things by the book."Another host shared:"

The City of Orlando has very restrictive zoning ordinances when it comes to short term rentals. Unless the zoning is R3 transient residential the property wont be legally compliant for short term rentals. I've had several properties get denied for permits because they were in purely residential zones. It's made it nearly impossible to find properties that cash flow as short-term rentals in the city limits."

On Bigger Pockets, a real estate investor warned others about the challenges of operating in Orlando:"I've been investing in short-term rentals in Florida for over a decade, and Orlando is by far the most difficult market to navigate. The regulations are constantly changing, and enforcement is highly inconsistent. I've had properties that operated without issue for years suddenly get hit with violations and fines.

And the permitting process is so convoluted that many investors don't even bother trying to comply. It's a huge risk to buy properties in Orlando right now with the intent of using them as short-term rentals."Another investor suggested looking at nearby markets instead:"

If you're dead set on investing in short-term rentals near the theme parks, I would focus on Osceola County instead of Orange County/Orlando. The regulations are much more favorable there, with no permitting requirements in most areas. Polk County is another option, although it's a bit further from the attractions. But in general, I would steer clear of Orlando proper unless you have a very high risk tolerance."

Overall, the sentiment among Airbnb hosts and real estate investors in Orlando seems to be one of frustration and uncertainty. While the potential for high rental income is certainly there, the regulatory hurdles and enforcement risks make it a challenging market to navigate. Many are choosing to invest in other Florida cities with friendlier short-term rental policies, such as Miami, Panama City Beach, or Kissimmee.

As one host put it:"Orlando may be the vacation capital of the world, but it's far from the short-term rental capital. The city has made it clear that they prioritize the concerns of residents over the rights of property owners. Until that changes, I wouldn't recommend anyone try to start an Airbnb business here unless they're prepared for a long, expensive battle with the bureaucracy."

In conclusion, while Orlando's short-term rental market may seem attractive due to the city's booming tourism industry, the reality is that operating a compliant and profitable rental business here is far from easy. The city's strict zoning requirements, permitting process, and tax collection rules create significant barriers to entry for hosts. And even those who do manage to obtain a permit face the constant risk of complaints, violations, and fines from code enforcement.

For investors and entrepreneurs considering starting a short-term rental business in Orlando, it's essential to do thorough due diligence on the local regulations and weigh the potential risks and rewards carefully. Consulting with a qualified real estate attorney and tax professional is highly recommended before making any purchases or signing any leases.