Many cities in Texas have adopted—or are seeking to adopt—ordinances requiring property owners to pay an annual fee to register all rental properties with the city or ordinances banning short-term rentals altogether.

The cities argue that rental-registration ordinances give them tools to address code violations and contact property owners.

However, cities across Texas already have code-enforcement divisions whose sole purpose is to identify, deter, and remedy code violations on properties. Additionally, property owners are readily identifiable and accessible through existing government records.

What does this mean for the real estate industry?
Many property owners choose not to rent their homes because of rental-registration ordinances.

In addition, property owners who choose to rent their homes are forced to increase monthly rental rates to pay for additional regulation from city governments. This increased cost is passed on to the tenant, which adds to affordability and availability issues at a time when many real estate markets across Texas are experiencing high prices and lack of rental inventory.

The Texas REALTOR® position
Texas REALTORS® support legislation declaring that a municipality may not adopt or enforce a local law that expressly or effectively prohibits the use of a property as a short-term rental.

Texas REALTORS® believe cities should use the tools already at their disposal to combat nuisance properties and bad actors and protect the health and safety of tenants, property owners, and community members.

These ordinances infringe on a property owner’s ability to conduct business without government intrusion. In addition, they are often duplicative, ineffective, and intrusive to owners and tenants of rental properties.

Legislative outlook
Some legislators have expressed interest in protecting a property owner’s ability to rent out a property without unnecessary government intrusion.

We expect to see legislation proposed that would prevent a local entity from prohibiting short-term rentals.

Historical perspective

In 2017, lawmakers proposed legislation that attempted to regulate short-term rentals at the state level; however, none of these bills were ultimately passed.

As of November 2018, more than 20 Texas cities, including most major metropolitan areas, have enacted a wide variety of rental registration ordinances.