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Mobile Short Term Rental Regulation: A Guide For Airbnb Hosts

Mobile, Alabama

Starting a Short Term Rental Business in Mobile

The City of Mobile, Alabama has enacted a short-term rental ordinance that sets the legal framework for operating short-term rental businesses like Airbnb and Vrbo in the city. The ordinance, which went into effect in 2019, defines a short-term rental as the rental of any dwelling unit, including a room, building, house, or other structure or part of a structure, that can be used as a transient sleeping place for less than 180 consecutive days.

This definition encompasses a wide range of short-term rental types, from renting out a spare bedroom in a primary residence to operating a full-time vacation rental property. The ordinance applies to all short-term rentals in Mobile, regardless of whether they are advertised on online platforms like Airbnb or through other channels.

The introduction of the short-term rental ordinance in Mobile was driven by the rapid growth of the short-term rental industry in the city and across Alabama in recent years. According to data from AirDNA, a short-term rental analytics firm, Mobile saw a 58% increase in short-term rental listings between 2017 and 2019.

This growth brought both economic opportunities and challenges, such as concerns about the impact of short-term rentals on neighborhood character and housing affordability. The ordinance seeks to balance these factors by legalizing and regulating short-term rentals while establishing clear rules and enforcement mechanisms.

Short Term Rental Licensing Requirement in Mobile

One of the key requirements for legally operating a short-term rental in Mobile is obtaining a business license from the City of Mobile. All short-term rental operators, whether they are renting out a single property or managing multiple units, must apply for and maintain a valid business license.

The specific NAICS (North American Industry Classification System) code to be used for licensing of short-term residential rentals in Mobile is NAICS # 721119 - All Other Traveler Accommodation. This is a catch-all category that includes short-term rentals along with other types of non-hotel lodging such as youth hostels and guest houses.

To apply for a short-term rental business license, operators must submit a completed application form along with required documents and fees to the City of Mobile Revenue Department. The application process can be completed online, by mail, or in person.

Business licenses for short-term rentals in Mobile must be renewed annually. The license fee is based on the gross receipts of the short-term rental business, with a minimum fee of $100 per year. Late fees and penalties may apply for failure to renew a license on time.

It's important to note that obtaining a business license for a short-term rental in Mobile does not exempt operators from complying with other applicable regulations, such as zoning requirements, building and fire codes, and tax obligations. A business license is just one piece of the compliance puzzle for short-term rental businesses in the city.

Required Documents for Mobile Short Term Rentals

When applying for a short-term rental business license in Mobile, operators must submit several required documents in addition to the standard business license application form and fee.

One key document is a notarized affidavit affirming that the short-term rental property meets all applicable safety requirements. This affidavit must be signed by the property owner or authorized agent and witnessed by a licensed notary public.

The safety requirements that must be met for a short-term rental in Mobile include:

  • Compliance with all applicable building and fire codes
  • Installation of operational smoke detectors in each sleeping room and in hallways leading to sleeping areas
  • Installation of operational carbon monoxide detectors on each floor if fuel-burning appliances are present or if there is an attached garage
  • Provision of at least one fire extinguisher on each floor
  • Posting of emergency contact information and evacuation routes in a conspicuous location inside the rental unit

Proof of appropriate property and liability insurance coverage is also required as part of the short-term rental permitting process in Mobile. Operators must provide a certificate of insurance or other documentation showing that the rental property is covered under a policy that includes commercial liability coverage.

Other documents that may be required when applying for a short-term rental business license in Mobile include:

  • A copy of the operator's driver's license or other government-issued photo ID
  • A completed IRS Form W-9 (Request for Taxpayer Identification Number and Certification)
  • A floor plan of the rental property showing the location of bedrooms, smoke detectors, carbon monoxide detectors, and fire extinguishers
  • If the operator is not the property owner, a signed agreement or lease granting permission to use the property as a short-term rental

Failing to provide required documents or providing false information on a short-term rental business license application can result in denial or revocation of the license, as well as potential fines and legal penalties.

Mobile Short Term Rental Taxes

In addition to obtaining a business license, short-term rental operators in Mobile are responsible for collecting and remitting applicable lodging taxes on their rental income.At the city level, the lodging tax rate for short-term rentals in Mobile is 8% for properties located within the corporate limits and 3% for properties located within the police jurisdiction. The police jurisdiction refers to areas up to three miles outside the city limits where the city provides law enforcement services.

The city lodging tax is imposed on the total rental amount paid by guests, excluding cleaning fees and security deposits. Operators must file city lodging tax returns and remit taxes collected on a monthly basis, with returns and payments due by the 20th day of the month following the month in which the taxes were collected.

At the state level, short-term rentals in Alabama are subject to a state transient occupancy tax of 4% to 5%, depending on the location. In Mobile County, the state lodging tax rate is 5%. Like the city tax, the state tax is imposed on the total rental amount paid by guests.

Short-term rental operators in Mobile must also collect and remit any applicable county lodging taxes. The Mobile County lodging tax rate is currently 2%.State, county, and city lodging taxes for short-term rentals in Mobile can be filed and remitted on a monthly, quarterly, semiannual, or annual basis, depending on the amount of taxes collected. Operators must register for state, county, and city tax accounts and file separate returns for each taxing jurisdiction.

Failing to comply with lodging tax requirements can result in significant penalties and interest charges. The Alabama Department of Revenue may also pursue legal action against operators who fail to collect and remit taxes as required by law.

It's important for short-term rental operators in Mobile to carefully track their rental income and taxes collected and to stay up-to-date on any changes to tax rates or filing requirements. Consulting with a tax professional or using a short-term rental tax compliance service can help ensure compliance with all applicable tax laws.

Mobile wide Short Term Rental Rules

In addition to business licensing and tax requirements, short-term rentals in Mobile are subject to a number of operational rules and restrictions under the city's short-term rental ordinance.

One notable aspect of Mobile's ordinance is that it allows short-term rentals in most residential zoning districts, including single-family and multi-family zones. This is more permissive than some other cities that restrict short-term rentals to certain areas or ban them altogether in residential neighborhoods.

In Mobile's Downtown Development District (DDD), short-term rentals are permitted by right, meaning no special approval is required beyond obtaining a business license. The DDD covers a large portion of downtown Mobile, including the Central Business District and several adjacent neighborhoods.

However, while short-term rentals are widely permitted in Mobile, they are subject to some key restrictions and requirements, including:

  • Maximum occupancy limits based on the number of bedrooms in the rental unit. For example, a one-bedroom unit may have a maximum occupancy of four guests, while a three-bedroom unit may allow up to eight guests.
  • Compliance with noise, parking, trash, and other "good neighbor" provisions. Short-term rental operators must ensure that their guests do not create excessive noise, park illegally, or leave trash or debris on the property or in common areas.
  • Designation of a local contact person who is available 24/7 to respond to any issues or complaints related to the rental property. The contact person's name and phone number must be provided to the city and made available to guests and neighbors.
  • Posting of a notice inside the rental unit with the contact information for the local contact person, maximum occupancy limit, trash and parking rules, and emergency evacuation routes.
  • Prohibition on using the rental property for commercial events or gatherings, such as weddings, parties, or business meetings, without a separate event permit from the city.
  • Requirement to maintain the residential character and appearance of the rental property, without any signage or other indications that it is being used as a short-term rental.

Mobile's short-term rental ordinance does not impose any caps on the total number of short-term rental permits that can be issued citywide or in any particular neighborhood. There are also no restrictions on the number of properties an individual or company can operate as short-term rentals.

However, the ordinance does include a provision allowing the City Council to establish permit caps or density limits in the future if deemed necessary to protect public health, safety, and welfare. This leaves open the possibility of additional restrictions being imposed if short-term rentals are seen as having negative impacts on neighborhoods or the housing market.

Overall, while Mobile's short-term rental rules are relatively permissive compared to some other cities, operators still need to be diligent in complying with all applicable regulations and being good neighbors. Failure to follow the rules can result in fines, permit revocation, and other penalties.

Does Mobile strictly enforce STR rules? Is Mobile Airbnb friendly?

Based on discussions in online short-term rental forums and social media groups, Mobile appears to have a relatively friendly and permissive approach to short-term rentals compared to some other cities in Alabama and across the country.

Many short-term rental operators appreciate that Mobile has embraced the industry by enacting an ordinance that legalizes and regulates short-term rentals, rather than trying to ban or severely restrict them as some cities have done. The ordinance is seen as striking a balance between allowing short-term rentals to operate while establishing clear rules and enforcement mechanisms to address potential negative impacts.

However, this doesn't mean that Mobile is a "wild west" for short-term rentals with no enforcement of the rules. The city does take enforcement action against operators who fail to comply with licensing, tax, and operational requirements.

In particular, there have been concerns raised by some City Council members and neighborhood groups about the number of short-term rental operators who are not obtaining business licenses or collecting and remitting lodging taxes as required. This has led to discussions about increasing enforcement efforts and potentially revisiting the ordinance to close any loopholes or strengthen penalties for non-compliance.

But overall, the consensus among many short-term rental operators is that Mobile is a relatively easy and welcoming place to do business compared to other markets. The lack of permit caps, zoning restrictions, and other major barriers to entry is seen as a positive for investors and hosts.

This is reflected in the growth of the short-term rental market in Mobile in recent years. According to data from AirDNA, the number of short-term rental listings in Mobile increased by 58% between 2017 and 2019, reaching over 300 active rentals. While the COVID-19 pandemic led to a temporary dip in bookings and revenue, the market has since rebounded and is expected to continue growing in the coming years.

Of course, as with any city, short-term rental operators in Mobile need to do their due diligence and carefully research the specific rules and requirements that apply to their properties. What may be allowed in one neighborhood or zoning district may not be permitted in another.

Operators should also be prepared for the possibility of changes to the short-term rental ordinance or enforcement approach in the future, particularly if the industry continues to grow and generate more community concerns. Staying engaged with local short-term rental advocacy groups and monitoring City Council agendas and actions can help hosts stay informed and adapt to any regulatory changes.

How to Start a Short Term Rental Business in Mobile

If you're interested in starting a short-term rental business in Mobile, here are the key steps you'll need to follow to ensure compliance with all applicable laws and regulations:

Research zoning requirements and other restrictions for your property. Check with the City of Mobile Build Mobile Department to confirm that short-term rentals are permitted at your property's location and to identify any specific rules or approval processes that may apply.

Prepare your property for use as a short-term rental. Ensure that the property is equipped with operational smoke and carbon monoxide detectors, fire extinguishers, and other required safety features. Make any necessary repairs or upgrades to meet building and fire codes.

Obtain appropriate insurance coverage. Contact your insurance provider to secure property and liability coverage that specifically allows for short-term rental use. Be sure to review and comply with any insurance requirements set by your chosen short-term rental platform, such as Airbnb or Vrbo.

Apply for a business license. Submit a completed business license application form, along with a notarized safety affidavit and other required documents, to the City of Mobile Revenue Department. Use the NAICS code 721119 for short-term residential rentals. Pay the applicable license fee based on your projected rental income.

Register for tax accounts. Contact the Alabama Department of Revenue to register for state, county, and city lodging tax accounts. Determine your filing frequency based on your expected tax collections and set up a system for tracking and remitting taxes on a regular basis.

Create a property listing and set up your booking system. Choose a short-term rental platform or booking system and create a listing for your property with accurate descriptions, photos, and pricing. Be sure to include all required information, such as your business license number and maximum occupancy limit.

Develop a guest communication and management plan. Establish clear check-in and check-out procedures, house rules, and emergency contact information for guests. Designate a local contact person who is available 24/7 to respond to any issues or complaints. Consider using a property management software or service to automate guest communications and streamline operations.

Launch your short-term rental business. Once your property is licensed, insured, and set up for bookings, you can start welcoming guests and generating rental income. Be sure to carefully track all income and expenses, comply with all tax and regulatory requirements, and provide a high-quality guest experience to earn positive reviews and repeat business.

Starting a short-term rental business in Mobile can be a rewarding venture, but it's important to do your homework and comply with all applicable laws and best practices. Consulting with experienced short-term rental operators, property managers, and legal and tax professionals can help you navigate the process and avoid costly mistakes.

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

If you have questions about short-term rental regulations, permitting, taxes, or zoning in Mobile, there are several key city departments and contacts you can reach out to for guidance and information.

For general questions about short-term rental licensing, taxes, and compliance, contact:

The Revenue Department is responsible for issuing business licenses for short-term rentals and collecting city lodging taxes. They can provide information on licensing requirements, tax rates and filing deadlines, and enforcement policies.

For questions about zoning, land use, and building code requirements for short-term rentals, contact:

The Build Mobile Department handles planning, zoning, permitting, and inspections for all types of development in the city, including short-term rentals. They can help you determine whether short-term rentals are allowed in your property's zoning district and what specific rules or approval processes may apply.

For questions about fire safety requirements for short-term rentals, contact:

The Bureau of Fire Prevention is responsible for enforcing fire codes and conducting fire safety inspections for short-term rentals and other buildings in Mobile. They can provide guidance on smoke detector, fire extinguisher, and other fire safety requirements for short-term rentals.

In addition to these city departments, short-term rental operators in Mobile may also need to contact county and state agencies for certain regulatory and tax matters, such as:

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

Here's a sample of discussions about short-term rental regulations in Mobile on real estate investing forums:

  • On the Bigger Pockets forum, a real estate agent and investor from San Diego mentioned having a few homes under contract in Mobile and was looking to network with other local investors5.
  • In a Reddit thread about wanting to move to Gulf Shores, a nearby coastal city, commenters discussed the availability of long-term and short-term rentals in the area17.
  • On the Mobile subreddit, there are occasional discussions about Airbnb and short-term rentals, with some hosts sharing their experiences and asking for advice18.

Overall, the sentiment among short-term rental operators in Mobile seems to be cautiously optimistic. Many appreciate the city's relatively permissive approach compared to other markets that have enacted bans or severe restrictions.

However, there is recognition of the need to comply with licensing, tax collection and other rules to avoid issues down the road. Hosts seem to keep an eye on any developments that could lead to tighter regulations.

The potential for attractive returns makes Mobile an appealing market for short-term rental investing. But as with any city, doing thorough due diligence on local regulations and market conditions is critical before purchasing a property to operate as a short-term rental.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.