Memphis, TN Accessory Structures: ADU Rental Restrictions (2026)

Memphis Code Chapter 16.84 establishes the city's two-tier STR framework, adopted under authority of Tennessee Code Ann. Sec. 13-7-602 et seq. (Short-Term Rental Unit Act). Type 1 (Owner-Occupied) permits apply where the owner uses the property as their primary residence and occupies one of the units while renting the other (or rents a portion of their own dwelling) for periods under 30 days. Type 1 permits are available in most residential zones. Type 2 (Non-Owner-Occupied) permits apply where the owner does not occupy the property; these face tighter restrictions, including potential caps in residential districts and concentration limits to prevent neighborhood saturation. Required submissions for both types include: (1) STR permit application with the Office of Business Tax/Code Enforcement, (2) annual registration fee, (3) Tennessee Department of Revenue registration for sales tax and Shelby County hotel/motel tax (combined approximately 16% to 17%), (4) designation of a local contact reachable within one hour, (5) compliance with occupancy limits (typically two per bedroom plus two), (6) parking and noise standards. The Tennessee STR Act preempts cities from banning STRs that were lawfully operating before the local ordinance adoption (grandfathering existing operators), but allows registration and regulation going forward. Long-term rentals (30 days or more) of a Memphis ADU are permitted under the UDC, subject to the single-family district use limits that effectively prevent two independent non-owner-occupied units on one R-zoned lot.