Austin allows long-term rental of ADUs without owner occupancy after the HOME Initiative. Short-term rental of an ADU is restricted under LDC 25-2-788 and 25-2-789: ADUs built after October 1, 2015 may operate as a short-term rental for no more than 30 days per calendar year. Type 2 short-term rental licenses (non-owner-occupied) remain phased out under Ordinance 20160223-A.1. Type 1 (owner-occupied) licenses are available but only for the principal dwelling, not the ADU.
Austin's STR framework splits licenses into Type 1 (owner-occupied), Type 2 (non-owner-occupied), and Type 3 (multifamily). The 2016 ordinance phased out Type 2 licenses in residential zones, and the Texas Supreme Court partially upheld the phase-out (Zaatari v. Austin, 2019). For ADUs specifically, LDC 25-2-789 caps STR use of any ADU built after October 1, 2015 at 30 days per calendar year. Long-term rentals (30+ day leases) are unrestricted and not subject to a city rental license. ADUs built before October 1, 2015 may have grandfathered Type 2 STR licenses but must keep them in continuous renewal. The Texas Legislature's HB 2127 (2023) attempted to preempt local STR rules but did not eliminate Austin's. As of 2025-2026, Austin Code continues to enforce the 30-day ADU cap. STRs require a city license with annual fees around $735, occupancy tax collection, and inspection.
Operating an unlicensed STR is a Class C misdemeanor under LDC 25-2-791 with fines up to $2,000 per day. Exceeding the 30-day ADU cap triggers a Notice of Violation and license revocation. Austin Code uses platform-data subpoenas (Airbnb, Vrbo) to identify violations. Repeat offenders face permanent license denial.
Austin, TX
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See how Austin's adu rental restrictions rules stack up against other locations.
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