New Jersey Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in New Jersey?

New Jersey is an attractive destination for short-term rental investments due to its strong economy, consistent rental demand, and solid tourist market. However, before starting an Airbnb or Vrbo business in the Garden State, it's crucial to understand the legality and regulations surrounding short-term rentals.

While Airbnb is legal in New Jersey, each municipality has its own specific rules and requirements for short-term rentals5. Some cities, like Paterson, don't require a business license to operate a short-term rental, while others have more stringent regulations.

Starting a Short-Term Rental Business in New Jersey

To legally operate a short-term rental in New Jersey, hosts must follow these general steps:

Research local zoning laws and confirm that short-term rentals are permitted in your property's zone.

• Register your rental property with the local authorities, if required. For example, in Wayne, landlords must register with the Rent Leveling Board by filing an annual rent roll registration.
• Obtain necessary permits and licenses. In Jersey City, hosts must obtain a permit from the Division of Housing Preservation. In Newark, a short-term rental permit from the Department of Engineering is required before renting or advertising the property.
• Comply with occupancy limits, parking requirements, and other operational regulations. Union Township limits rentals to a maximum of 180 days per year and restricts occupancy to 2 people per bedroom plus 2 additional guests.
• Maintain liability insurance coverage, typically a minimum of $500,000.
• Collect and remit applicable taxes, such as the 6.625% New Jersey sales tax and any local occupancy taxes.

Here are some specific examples of short-term rental regulations in major New Jersey municipalities:

Jersey City (Chapter 255 of the City Code):

1. Prohibits short-term rentals managed by tenants and in rent-controlled units
2. Allows owner-occupied properties to share up to 2 additional units, limited to 60 nights per year when the owner is not present
3. Requires a permit from the Division of Housing Preservation, with a $250 fee and various documentation

Newark:

1. Requires a short-term rental permit from the Department of Engineering before renting or advertising the property
2. Permit application must include owner contact info, proof of primary residence, 24/7 local contact person, and pass fire and safety inspections
3. Permit expires automatically upon change of ownership

Asbury Park:

1. Requires a Short-term Rental Permit for stays under 30 days
2. Hosts must submit a permit application, designate a 24/7 local contact, file Occupant Change Forms for each new guest, and pass annual inspections

Despite some challenges, the overall legal landscape for short-term rentals in New Jersey remains hopeful, especially with travelers rerouting from NYC due to strict Airbnb rules. By carefully navigating local regulations and being a responsible host, investors can find success in the Garden State's growing short-term rental market.

Short-Term Rental Licensing Requirement in New Jersey

To legally operate a short-term rental in New Jersey, property owners must obtain the necessary permits and licenses from their local municipality. While the specific requirements vary by city, here are the general steps based on information from the New Jersey Department of Community Affairs website:

1. Submit a completed short-term rental permit application to your local municipal zoning office or housing department. The application typically requires:

1. Property owner's contact information
2. Short-term rental property address and details
3. Designated local contact person available 24/7 to handle any issues
4. Parking plan to minimize on-street parking
5. Proof of ownership, such as a deed or tax bill
6. Proof of liability insurance with a minimum of $500,000 in coverage

2. Pay the permit application fee, which ranges from $150 to $500 depending on the municipality. For example:

1. Jersey City charges a $250 registration fee
2. Newark's permit fee is $250
3. Atlantic City has a $150 application fee

3. Pass safety inspections from the local construction office and fire department to ensure the property meets all building, fire, and safety codes. This may require an additional inspection fee.

4. Obtain a certificate of occupancy or continued occupancy specifically allowing use as a short-term rental. This verifies the property is safe and code compliant.

5. Once all requirements are met and the application is approved, the city will issue the official short-term rental permit, which must be prominently displayed inside the rental property. The process typically takes around 30 days.

It's important to note that operating a short-term rental without the proper permit can result in significant fines and penalties. For example:

1. Jersey City imposes fines of up to $2,000 per day for each day of unlicensed operation.
2. Union Township considers unpermitted rentals a zoning violation subject to fines and potential legal action.

To avoid issues, always confirm your property is properly licensed before listing it as a short-term rental. Permits generally must be renewed annually, so stay on top of expiration dates and renewal requirements. By carefully following your municipality's regulations, you can run a successful and compliant short-term rental business in New Jersey.

Required Documents for New Jersey Short-Term Rentals

To successfully apply for a short-term rental permit in New Jersey, the following documents must be submitted:

Proof of Ownership: This document, such as a tax bill or deed, shows that the applicant is the legal owner of the property being rented short-term. It can be obtained from the county clerk's office.

Proof of Principal Residence: A driver's license or state ID card confirming that the rental property is the applicant's primary residence.

Utility Bills: Two recent utility bills (less than 30 days old) providing additional proof of residency. Duplicates can be requested from utility companies.

Liability Insurance Proof: A policy statement evidencing a minimum of $500,000 in liability coverage to protect against potential claims. This is available from the applicant's insurance provider.

Bylaws or Governing Documents: For properties located in a condominium, homeowners association, or cooperative, these documents confirm compliance with the association's regulations on short-term rentals. They can be obtained from the association or through legal filings.

Zoning Compliance Certificate: This certificate, requested through the local zoning office, affirms that the property meets all zoning requirements for short-term rentals.

Affidavit and Certification Forms: Various forms, such as the Affidavit of Owner, Certification of Short-Term Rental Agent, Certification of Responsible Party, and Notice to Transient Occupants, attest to the owner's agreement and understanding of the regulations. These are available for download on municipal websites.

Proof of No Outstanding Payments: Applicants must provide confirmation of no outstanding fines, penalties, taxes, or utility charges from the relevant municipal offices, as detailed on the city's website.

Property Inspection Documentation: Many cities require an initial fire safety and property maintenance inspection before issuing a permit. Proof of passing these inspections, conducted by local code officials, is necessary.

Floor Plan: A diagram or floor plan of the rental unit, clearly showing room dimensions, exit locations, and guest access areas may be requested.

By compiling this thorough documentation and submitting it along with their permit application and fee, prospective short-term rental hosts can demonstrate their eligibility and adherence to New Jersey's stringent regulations. The state's rigorous requirements aim to ensure responsible short-term rental operations that benefit hosts, guests, and the surrounding community alike.

New Jersey Short-Term Rental Taxes

Short-term rental operators in New Jersey are subject to several state and local taxes that can significantly impact their bottom line. It's crucial for hosts to understand these taxes and factor them into their pricing and financial planning. The primary taxes applicable to short-term rentals in New Jersey are:

New Jersey State Sales Tax: The state levies a 6.625% sales tax on all short-term rentals of less than 90 days. This tax applies to the listing price, including any cleaning fees.

New Jersey State Occupancy Fee: In addition to the sales tax, the state charges a 5% occupancy fee on short-term rentals under 90 days (1% in Atlantic City and Newark, 3.15% in the Wildwoods). Like the sales tax, this fee is based on the total listing price with cleaning fees included.

Meadowlands Regional Hotel Use Assessment: Specific to rentals in Bergen and Hudson Counties, this 3% assessment applies to stays of 89 nights or less. It is calculated on the listing price plus cleaning fees.

Municipal Occupancy Tax: Some cities in New Jersey charge an additional occupancy tax ranging from 2-6% of the listing price and cleaning fees for rentals under 90 days. For example, Jersey City and Elizabeth impose a 6% hotel occupancy tax.

In total, short-term rental hosts in New Jersey can expect to pay 11.625% to 20.625% in combined state and local taxes on their rental income, depending on their specific location. Airbnb collects and remits these taxes on behalf of hosts for bookings made through their platform.

Possible Deductions and Write-Offs

To offset some of these taxes and other expenses, short-term rental hosts may be able to claim certain deductions on their income tax returns. Allowable write-offs will depend on factors like whether the property is a full-time rental or occasionally shared space, but common deductible expenses include:

1. Mortgage interest
2. Property taxes
3. Rental commissions and host service fees
4. Cleaning and maintenance costs
5. Utility bills
6. Insurance premiums
7. Repairs and necessary improvements

Hosts should keep detailed records of all rental-related income and expenses, and consult with a qualified tax professional to ensure they are managing their tax obligations correctly. By understanding the applicable taxes and taking advantage of available deductions, New Jersey short-term rental operators can optimize their earnings in this competitive market.

Does New Jersey Strictly Enforce STR Rules?

Based on discussions among hosts on platforms like Reddit and BiggerPockets, it appears that New Jersey does indeed strictly enforce its short-term rental regulations, particularly in larger cities and popular shore towns. The general consensus is that New Jersey is not very Airbnb-friendly compared to other major markets.

One host on the New Jersey subreddit shared their experience: "I got slapped with a $2,000 fine for renting my Jersey City condo on Airbnb without the proper permit. The city is dead serious about cracking down on illegal rentals. It's just not worth the risk."1

Another investor on BiggerPockets warned, "New Jersey has some of the strictest STR laws in the country. Many towns have outright bans or super restrictive rules. Definitely do your homework before buying a property here intending to Airbnb it."

While some hosts admit to operating under the radar in more lenient townships, they do so at the risk of hefty penalties if caught. An Asbury Park host cautioned, "The city uses software to track down illegal listings. I know several people who have been fined $1000+ for each day they rented without a permit. It's just not worth it."4

Compared to cities like Las Vegas or Orlando that have embraced short-term rentals, New Jersey is far less hospitable. The state has taken a strict stance in regulating the industry, with many municipalities imposing bans, restrictive occupancy limits, and steep permitting fees.

As one North Jersey host put it, "Operating a successful Airbnb in New Jersey is doable, but you really have to dot your i's and cross your t's in terms of local compliance. The margin for error is slim to none in most cities. It's a challenging environment compared to more STR-friendly states."

So while there may be some "rogue" hosts operating illicitly, the vast majority of successful short-term rental operators in New Jersey are playing strictly by the book. With the state continuing to mull additional regulations, the barriers to entry will likely only get higher. Investors should think long and hard before trying to navigate New Jersey's increasingly complex web of short-term rental rules.

How to Start a Short-Term Rental Business in New Jersey

Starting a successful short-term rental business in New Jersey requires careful planning, due diligence, and adherence to local regulations. Here's a step-by-step guide to help you navigate the process:

Research local regulations: Before investing in a property or listing your space, thoroughly review your municipality's short-term rental laws. Understand zoning restrictions, permit requirements, occupancy limits, and any other applicable rules. Consult with local officials or a knowledgeable attorney if needed.

Choose the right property: Look for a property in a desirable location with strong rental demand. Consider factors like proximity to attractions, public transportation, and amenities. Ensure the property is in good condition and meets all safety standards. If purchasing, factor in any necessary renovations or upgrades.

Register your business: Once you've confirmed your property is eligible for short-term renting, register your business with the state of New Jersey. Choose a business structure (sole proprietorship, LLC, etc.), obtain an EIN from the IRS, and open a separate business bank account to keep your finances organized.

Obtain necessary permits and licenses: Apply for the required short-term rental permit with your local municipality. Submit all necessary documentation, pay the application fee, and schedule any required inspections. Obtain a certificate of occupancy specifically allowing short-term rental use.

Secure insurance: Purchase comprehensive liability insurance to protect yourself and your property. Consider additional coverage like property damage protection and income replacement insurance. Ensure your policy meets the minimum coverage requirements set by your municipality and any hosting platforms you plan to use.

Create a standout listing: Take high-quality photos of your property and write a compelling listing description highlighting its best features and amenities. Be accurate and transparent about what guests can expect. Set competitive rates based on market research and factor in all applicable taxes and fees.

Implement a robust management system: Establish clear check-in and check-out procedures, house rules, and communication protocols. Consider using a property management software or hiring a professional management company to streamline operations and provide 24/7 guest support.

Prioritize guest experience: Provide top-notch amenities, spotless cleanliness, and thoughtful touches to wow your guests. Promptly address any issues or concerns that arise during their stay. Encourage satisfied guests to leave positive reviews, which can help attract future bookings.

Stay compliant and organized: Keep accurate records of all rental income and expenses for tax purposes. Stay up to date on any changes to local regulations and renew permits as required. Regularly inspect and maintain your property to ensure it remains safe and attractive for guests.

By following these steps and prioritizing compliance and guest satisfaction, you can build a thriving short-term rental business in New Jersey. While the state's strict regulations can be challenging, diligent hosts who play by the rules can still find success in this competitive market.

Who to Contact in New Jersey about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental regulations and zoning in New Jersey, there are several key contacts and resources available:

New Jersey Division of Consumer Affairs: For general inquiries about state-level regulations and licensing requirements for short-term rentals, contact the Division of Consumer Affairs at 973-504-6200 or 800-242-5846 (toll-free within New Jersey) or visit their website at www.njconsumeraffairs.gov.

Local Zoning Office: Each municipality has its own zoning laws that dictate where short-term rentals are permitted. Contact your local zoning office to confirm your property is zoned for short-term rentals. Find your municipal zoning office contact information through the NJ Department of Community Affairs Municipal Directory: www.nj.gov/dca/divisions/dlgs/resources/muni_dir.html.

Local Building or Housing Department: Many cities require short-term rentals to obtain a permit or license. Reach out to your local building or housing department for information on the application process, fees, and inspections. For example:

1. In Jersey City, contact the Division of Housing Preservation at 201-547-4821 or strs@jcnj.org.
2. In Newark, apply for a permit through the Department of Engineering's online portal at https://newarknjstr.munirevs.com.

Municipal Tax Assessor: Short-term rentals are subject to various state and local taxes. Contact your municipal tax assessor for information on registering for and remitting applicable taxes. Find your tax assessor's contact information through the NJ Division of Taxation's Municipal Tax Assessors directory: www.state.nj.us/treasury/taxation/lpt/taxassessor.shtml.

In addition to these official contacts, there are several online communities and forums where New Jersey short-term rental hosts can connect, share experiences, and seek advice:

• The NJ Short Term Rental Alliance (NJSTRA) is a non-profit trade association representing the short-term rental industry in New Jersey. They provide educational resources, advocacy, and networking opportunities for hosts. Learn more at www.njstra.org.
• The "New Jersey Airbnb Hosts" Facebook group is a community of over 2,000 NJ hosts who discuss local regulations, marketing strategies, and best practices. Join at www.facebook.com/groups/newjerseyairbnb.
• BiggerPockets, a popular real estate investing forum, has a dedicated subforum for short-term and vacation rentals where NJ hosts can ask questions and learn from experienced investors. Check it out at www.biggerpockets.com/forums/530-short-term-vacation-rental-discussions.

By connecting with these key local officials and online host communities, New Jersey short-term rental operators can stay informed about the evolving regulatory landscape and access the support they need to run successful and compliant businesses.

What Do Airbnb Hosts in New Jersey on Reddit and Bigger Pockets Think about Local Regulations?

After searching through various online forums and communities, including Reddit, BiggerPockets, and Airbnb-specific groups, here are some relevant threads that provide insight into the experiences and opinions of New Jersey hosts regarding local short-term rental regulations:

Reddit - r/newjersey - "Airbnb Registration in Jersey City": In this 2023 thread, a host asks for advice on registering their Jersey City property as a short-term rental. One commenter shares their experience: "I went through the process last year. It's a bit of a hassle with the inspections and paperwork, but it's doable."

BiggerPockets Forum - "Short-Term Rental Regulations in NJ": A 2024 post by a prospective investor asks about navigating the regulatory landscape for STRs in New Jersey. An experienced host replies, "It varies widely by city. Some, like Jersey City and Newark, have pretty strict rules about permits, occupancy limits, and parking requirements. Others, especially down the Shore, can be more lax. But in general, NJ is getting tougher on STRs, so do your homework before buying."

Airbnb Community Center - "Fined for Unauthorized Rental in Asbury Park, NJ": In this 2023 discussion, a host shares their story of being fined $2,000 for operating an unlicensed STR in Asbury Park. They warn others, "Don't try to fly under the radar here. The city is actively monitoring listings and cracking down on those without permits. It's just not worth the risk."

These real-life experiences and anecdotes paint a picture of an increasingly regulated short-term rental market in New Jersey, with hosts having to navigate a patchwork of local rules and requirements. While some cities are more stringent than others, the general consensus is that compliance is key to avoiding fines and operating a successful STR business in the Garden State.

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 area 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.