Will amendment to code affect STR operators in Austin, Texas?

[Jarrod Covey]

Austin Business Journal released an article this morning titled "Austin City Council moves to tighten reins on short-term rentals"

Political Significance: City council voted to approve an amendment to be drafted to City Code that governs STRs. More specifically, sections 25-2-788 through 25-2-799 & 25-2-950 of City Code govern all things Short-Term Rentals. In this Dec 8th meeting, city council voted 10-1 approving an amendment to the Code to be drafted and shared with the council no later than March 2023. 

Operator Significance: Based on pace of city, this won't affect operators for at least a year, more than likely a year +. The article notes "This action indicates City Hall is returning to a subject that made waves in 2016 but became tangled up in state court". Nearly 8 years later something is about to be proposed, not passed, by city council.   

In an article posted Sept 9th of this year, Austin Business Journal noted that "City officials suspect about 8 out of 10 rental skirt rules and taxes."  That same article outlined how the city was policing these non-permitted houses and the methods were very manual and time consuming. If the amendment doesn't define a more sophisticated method in finding non-permitted houses, this will have little affect on the STR market in Austin. 

[Ryan Kelly]

@Jarrod Covey I think this will impact STR operators over the coming years. The city is going to focus more on enforcement than they have in the past. In addition, there has been a rush of investors and owners converting their homes and rentals into STRs, so there is bound to be an oversupply at some point. I've got people calling me weekly asking about STR potential in Austin. Many are going to switch to the mid-term rental strategy to try and avoid the regulations, but that could potentially cause an oversupply in that category as well. I think the best operators will survive and thrive, but a lot of other owners will have to make some tough decisions.