Reveal your property’s rental profitability

Buy this property and list it on Airbnb.

Birmingham Short Term Rental Regulation: A Guide For Airbnb Hosts

Birmingham, Alabama

Starting a Short Term Rental Business in Birmingham

The City of Birmingham, Alabama currently has minimal regulations specifically targeting short-term rentals (STRs) like Airbnb and VRBO. The city's focus has primarily been on taxation rather than restrictive ordinances24.

However, in response to some issues at problem STR properties, city leaders are now considering enacting some regulations in 202418. Potential new rules could include a permitting process to track STR locations and numbers, and using zoning to restrict STRs to certain property types2. But an outright ban is unlikely, as officials believe such bans would be overturned if legally challenged2.

Despite the lack of strict rules, STR operators in Birmingham must still comply with general city ordinances regarding noise, nuisances, property maintenance, and safety standards that apply to all properties78. Hosts should conduct regular maintenance and fire risk assessments to ensure properties are safe and fit for occupancy7.

Overall, Birmingham remains a relatively STR-friendly market compared to some neighboring suburbs that have heavily restricted or banned short-term rentals2410. But hosts should stay informed about potential regulatory changes on the horizon18.

Short Term Rental Licensing Requirement in Birmingham

As of early 2024, operating a short-term rental in Birmingham does not require any special license or permit beyond a standard business license46. STR hosts simply need to register their rental property and obtain a regular business license from the City of Birmingham2.

This makes starting an STR business fairly straightforward compared to cities with stringent licensing requirements. However, hosts must still comply with the city's general business regulations and ensure their property meets all building and safety codes.

Some key requirements for the business license application include620:

  • Detailed business information
  • Owner identification details
  • Property location and owner authorization
  • Signed application by owner and STR operator
  • Payment of business license fee

The lack of STR-specific licensing helps keep barriers to entry relatively low for new hosts in Birmingham. But the city council's ongoing discussions about potential regulations mean requirements could change in the future12. STR operators should regularly check for updates to stay compliant.

Required Documents for Birmingham Short Term Rentals

Since Birmingham does not currently have STR-specific regulations, there are no additional documents required beyond those needed for a standard business license application46.

This typically includes20:

  • Completed and signed business license application
  • Proof of property ownership or authorization from owner
  • Detailed business plan
  • Floor plans of rental property
  • Any other documents required for general business licensing

However, hosts should be prepared to provide more documentation if the city enacts new STR ordinances. Potential requirements could include28:

  • Proof of STR-specific liability insurance
  • Property safety inspection reports
  • Signed acknowledgement of STR rules and regulations
  • Neighbor notification of STR status
  • Parking plan for guests

Hosts should also maintain records of all short-term rental transactions, as this information may be required for tax purposes or in the event of an audit613. Thorough recordkeeping is essential to ensure full compliance with all applicable rules.

Birmingham Short Term Rental Taxes

Short-term rental operators in Birmingham are required to collect and remit the following lodging taxes2461617:

  • 4% to 5% to the State of Alabama (5% in the northern counties, 4% elsewhere)
  • 1% to 6% to Jefferson County
  • 6.5% to the City of Birmingham, plus a per-room fee of $3 per night

These taxes apply to the listing price including any cleaning fees for reservations of 179 nights or less1617. STR hosts are responsible for collecting these combined taxes, which can total 14% or more, from guests and filing regular tax returns to remit the amounts to the proper authorities.

Failure to comply with tax obligations can result in fines, penalties and legal issues13. Hosts must register with the Alabama Department of Revenue and other applicable tax agencies to obtain the required tax accounts1316.

Tax filing frequency depends on the host's annual STR revenue16:

  • Monthly: $200+ in average monthly tax
  • Quarterly: $600+ in annual tax
  • Semiannually: $1200+ in annual tax
  • Annually: Less than $600 in annual tax

Hosts should consult a tax professional to ensure they fully understand their tax responsibilities and take advantage of all available deductions to reduce their tax burden and improve profitability13. Proper tax planning is essential to running a successful STR business.

Birmingham-wide Short Term Rental Rules

While Birmingham has not enacted comprehensive STR regulations, short-term rentals are still subject to various citywide rules and ordinances78:

  • Properties must be safe, habitable and code-compliant, with working smoke detectors, fire extinguishers, and no hazardous conditions
  • Occupancy limits and parking restrictions may apply based on property type and zoning
  • Noise ordinances prohibit "excessive, unnecessary or unusually loud noise" and any noise audible beyond property boundaries after 10pm on weeknights or midnight on weekends
  • "Nuisance party" ordinances hold hosts responsible for repeated unruly gatherings that disturb neighbors
  • Trash must be properly stored and set out for collection in compliance with waste regulations

STR operators are ultimately responsible for ensuring their guests abide by these rules8. Violations can result in fines, citations, and other penalties - including potential revocation of business licenses for repeated issues2.

Some key strategies for maintaining compliance and avoiding problems include711:

  • Clearly communicating house rules and city regulations to guests before and during each stay
  • Installing noise monitoring devices to detect and address potential disturbances
  • Providing adequate trash and recycling receptacles and instructions for proper disposal
  • Responding promptly to any neighbor complaints and taking corrective action
  • Conducting regular inspections to identify and fix any safety or maintenance issues

By being proactive and attentive, hosts can provide a positive STR experience while minimizing the risk of running afoul of city ordinances. A well-run rental that consistently follows the rules is less likely to generate complaints that could invite further scrutiny.

Does Birmingham strictly enforce STR rules?

Currently, Birmingham does not have STR-specific rules to enforce. The city's lack of strict regulations makes it relatively "Airbnb-friendly" compared to neighboring areas like Mountain Brook and Homewood that heavily restrict or ban STRs2410.

Many Birmingham hosts operate without major issues under the city's existing regulatory framework410. Officials are primarily focused on ensuring STR operators have proper business licenses and pay applicable lodging taxes12.

However, the city does enforce its general nuisance, noise and property ordinances against problem STRs that generate repeated complaints18. Hosts who fail to rein in unruly guests or maintain safe and code-compliant rentals can face fines, citations and other penalties28.

Birmingham's STR landscape may change if the city enacts new regulations in response to concerns about "party houses" and other issues128. But officials have signaled an intent to strike a balance rather than banning STRs outright2.

Hosts should closely monitor any regulatory developments and be prepared to adapt as needed to stay compliant. Consulting with local legal and tax professionals can help hosts navigate the evolving STR environment.

Is Birmingham Airbnb friendly?

Yes, Birmingham is generally considered an Airbnb-friendly market due to its lack of STR-specific restrictions and enforcement2410. The city has taken a relatively hands-off approach, allowing the STR industry to grow with few regulatory barriers4.

In contrast, some Birmingham suburbs have banned or severely limited STRs21015. Mountain Brook prohibits rentals under 30 days, while Homewood restricts them to 90+ days in low-density residential areas14.

Birmingham's more permissive stance has made it an attractive destination for STR investors and operators410. The city's agreement with Airbnb to collect lodging taxes directly has further legitimized the platform4.

However, the rise of STRs has not been without controversy. Complaints about noise, parties and other issues at problem properties have prompted officials to explore potential regulations128. Some residents and neighborhood associations have pushed for stricter rules14.

But STR proponents argue that the industry boosts tourism, supports local businesses and provides income opportunities for residents12. They contend that most hosts are responsible and that isolated issues can be addressed through targeted enforcement of existing nuisance laws12.

As the debate continues, Birmingham seems likely to remain Airbnb-friendly in the near-term. But the regulatory landscape is fluid, and hosts should stay engaged to ensure their voices are heard as the city considers new rules12.

Do hosts operate in Birmingham despite the rules?

Currently, Birmingham does not have STR-specific rules for hosts to violate. The city's general business and tax regulations apply, but they do not expressly prohibit or restrict short-term rentals24.

As a result, many Birmingham hosts operate openly and lawfully, with few reports of underground or illegal STR activity410. The lack of restrictive rules means there is little incentive for hosts to attempt to skirt regulations.

However, this could change if the city enacts stricter limits on STRs in response to resident complaints and concerns128. If new rules make it harder or costlier to operate legally, some hosts may be tempted to go "off the books" to avoid compliance.But doing so would carry serious risks, including13:

  • Fines and penalties for violating city ordinances
  • Liability issues without proper insurance coverage
  • Ineligibility for tax deductions and other benefits
  • Potential criminal charges for tax evasion or fraud

The experiences of other cities suggest that underground STRs are more likely to generate the kinds of problems (noise, parties, etc.) that spur crackdowns and additional enforcement11. Hosts who flout the rules may face harsher consequences in the long run.

As Birmingham navigates the regulatory future of STRs, hosts should prioritize compliance and work with city officials to craft balanced policies that allow responsible operators to thrive above board. Playing by the rules is the best way to ensure the long-term stability and success of an STR business.

How to Start a Short Term Rental Business in Birmingham

Starting a short-term rental business in Birmingham is relatively straightforward, thanks to the city's lack of STR-specific restrictions and licensing requirements46.

Here are the key steps:

  • Research the local STR market and regulations to ensure your property is eligible and suitable for short-term rental use4.
  • Obtain necessary permissions from your mortgage lender, homeowners association, or landlord if you are not the sole owner of the property11.
  • Register your business with the Alabama Secretary of State and obtain a federal Employer Identification Number (EIN) for tax purposes13.

Apply for a general business license from the City of Birmingham, providing all required information and documentation26.

Set up state and local tax accounts to collect and remit lodging taxes as required1316.

Ensure your property is safe, code-compliant, and properly equipped for rental use, including smoke detectors, fire extinguishers, and adequate parking711.

Obtain appropriate insurance coverage for your STR business, including liability protection and any additional riders required by your chosen rental platform11.

Create a detailed listing with high-quality photos, an accurate description, and clear house rules on popular STR platforms like Airbnb and VRBO1214.

Develop a system for screening guests, handling bookings and payments, and providing check-in instructions and support throughout each stay12.

Establish a cleaning and maintenance routine to keep your property in top condition and ready for the next guests12.

By following these steps and staying informed about any regulatory changes, hosts can launch a successful STR business in Birmingham. Consulting with experienced local professionals, such as real estate agents, attorneys, and accountants, can provide valuable guidance and support throughout the startup process.

Who to contact in Birmingham about Short Term Rental Regulations and Zoning?

For the most current information on short-term rental regulations and zoning in Birmingham, hosts and residents can contact the following city departments and officials:

  • Birmingham Department of Planning, Engineering and Permits: (205) 254-2211 / https://www.birminghamal.gov/about/contact-us/
  • Issues business licenses and enforces zoning regulations
  • Can provide guidance on permitting requirements and property compliance
  • Birmingham Revenue Department: (205) 254-2198 / https://www.birminghamal.gov/contact-revenue/
  • Handles tax registration, collection and auditing
  • Can assist with setting up lodging tax accounts and filing requirements
  • Birmingham City Council: (205) 254-2294 / citycouncil@birminghamal.gov
  • Considering potential STR ordinances and regulations
  • Can provide updates on the status of any proposed rules or zoning changes
  • Birmingham Office of the City Attorney: (205) 254-2369 / https://www.birminghamal.gov/contact-city-attorneys-office/
  • Provides legal guidance and enforcement related to city codes and ordinances
  • Can clarify the applicability of existing rules to STRs and address violations

Hosts should also consult with their own legal and financial advisors to ensure compliance with all applicable laws and regulations.

What do Airbnb hosts in Birmingham on Reddit and Bigger Pockets think about local regulations?

On the BiggerPockets forums, several hosts discuss the relatively lax short-term rental regulations in Birmingham compared to other cities. One host notes that "Birmingham is generally considered an Airbnb-friendly market due to its lack of STR-specific restrictions and enforcement."5

They mention that neighboring suburbs like Mountain Brook and Homewood have implemented bans or severe restrictions on STRs under 30-90 days, making Birmingham more attractive for STR investing by comparison.5

Another BiggerPockets member shares their experience with STR arbitrage in Birmingham, stating they have 4 units generating $12,000-$25,000 in monthly profit.5 They created a lease addendum with the property managers of a luxury apartment complex to allow the STRs. The host recommends that others ignore anti-STR sentiments and pursue STR arbitrage as long as they have proper legal agreements in place with the landlord or property manager.5

However, some BiggerPockets users express hesitation about STR arbitrage. One landlord bluntly states "No thanks" to the idea of allowing a tenant to sublease their property on Airbnb.5 There are also general concerns that "arbitrage hosts are known as the low life of Airbnb" and reputable operators don't want to be associated with them.5

On Reddit, there are fewer discussions specifically about Birmingham's STR regulations. One Reddit thread from r/AirBnB asks if the Original Poster (OP) is "crazy for thinking the host is being crazy" after a Birmingham host called them the "worst guest ever" for minor issues like leaving out clean dishes and not taking out the trash despite paying a cleaning fee.7

Most commenters agree the host overreacted and the OP did nothing wrong, but the post reveals the sometimes tense relationships between hosts and guests.7

Another Reddit post on r/TravelHacks asks "How dirty, really, are cheap motel rooms in America?" for a planned Gulf Coast road trip.9 While not STR specific, the comments highlight the general concerns about cleanliness, safety and quality at the lowest-tier of the hospitality sector. Commenters recommend that the OP avoid sketchy budget motels like Motel 6 in "crime-ridden areas" and stay at slightly pricier but more consistent chains like Hampton Inn or Holiday Inn Express.9

Overall, the Reddit and BiggerPockets discussions paint a mixed picture of the STR landscape in Birmingham. Hosts seem to appreciate the lack of strict regulations compared to other cities, which provides opportunities for STR arbitrage and investment.

However, there are still challenges around guest relations, quality control, and the stigma associated with certain business models. As one host put it, STR operators should focus on "providing a positive experience while minimizing the risk of running afoul of city ordinances" by properly screening guests, maintaining the property, and being responsive to issues.6

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.