The Orlando area is one of the hottest vacation rental markets in the United States. Largely comprised of Orlando (Orange County) and Kissimmee (Osceola County), it’s a region dominated by legendary theme parks, unique attractions, and world-class golfing.

 

Despite their popularity — or maybe because of it — short-term rentals in the area have also seen their share of controversy. Local governments have struggled to find ways to balance rising demand and tourist dollars with the concerns of residents and community groups. There’s also an ongoing push and pull between state and local governments over who should determine short-term rental regulations.

Because of this flux, it’s essential that you do your own research before opening rental properties to bookings and guests. The following information highlights some of the rules and regulations you should be aware of as a new property manager or vacation rental owner.

Managing a vacation rental in Florida

When you operate a vacation rental business anywhere in Florida, there are a few things you need to do to stay in line with the law.

1. Get a lodging license

First, you may need to get multiple licenses: One from the state, one from the county, and one from the city. This depends on a number of factors, including where the unit is located and the type of property it is.

That said, most vacation rentals will need a lodging license from the Department of Business and Professional Regulation (DBPR). That license can be held by an owner or by a licensed agent, depending on the size and structure of your vacation rental business.

There are a number of licensing exceptions, including this one: If you’re renting a single room or rooms other than an entire unit (e.g. see the information below regarding shared accommodations in Orlando).

If you do need a lodging license, choose based on the type of property:

  • A condo license, which applies to “establishments comprised all or mostly of condominiums or cooperatives” or
  • A dwelling license, which applies to “establishments comprised all or mostly of houses or dwellings”

It’s $50 to file a new or “change owner” application. Licensing fees vary but a full-year license costs $150 + $10 per rental unit + a $10 annual Hospitality Education Program (HEP) fee. And you’ll need to renew your license every year.

2. Make sure you meet health and safety regulations

Once the vacation rental property is registered, there are a number of health and safety requirements your property may need to meet. For example, if your rental unit is three or more stories high with any railings, stairwells, or balconies not in common areas, you’ll need to have a balcony inspection completed by a licensed inspector — and renewed every three years to keep your DBPR license.

You may also need to ensure a number of other potential issues are looked after. For example:

  • Halls and entrances need to be clean, well-lit, and well-ventilated
  • Dishes and glassware, if provided, must be sanitized according to public food service establishment standards between guests. If that hasn’t been done, you need to post a bulletin called “Proper Sanitization of Dishware and Utensils”
  • Smoke alarms must be installed
  • There must be a fire extinguisher that’s properly charged and accessible

That said, there are some exceptions. Get more detailed information in the DBPR’s Guide to Vacation Rentals and Timeshare Projects

3. State and local taxes

Just as you may need state, county, and city licenses for your vacation rental business, you may also need to collect and remit taxes to different levels of government. Here’s a look at what those taxes could look like:

  • Florida’s general sales and use tax is 6%
  • Both Orange and Osceola counties collect a Tourist Development Tax of 6%
  • Osceola County has a Discretionary Sales Surtax of 1.5% on the listing price and cleaning fee for rentals of 182 nights or less
  • Orange County has a Discretionary Sales Surtax of 0.5% on the listing price and cleaning fee for rentals of 182 nights or less

Some listing sites, such as HomeAway and Airbnb, may collect and remit taxes for your rental. It depends on the county and any agreements the company may have in place.

And be sure to confirm whether you need a business tax receipt for your particular location: If you’re an owner who’s working with a professional property management company, their registration may be sufficient.

Here are some of the business registration links you may need:

  • Florida General Tax Registration
  • Orange County Business Tax Receipt
  • Osceola County Business Tax Receipt
  • Orlando Business Tax Receipt
  • Kissimmee Residential Rental Business Tax Receipt

What you should know about operating a vacation rental in Orlando

Traditionally, Orlando vacation rentals have been allowed only in R-3 transient rental districts — prohibited in all residential districts — with varying rules around length of stay, building requirements, and how space was used.

The city has recently changed its approach — sort of. Not much has changed if you want to rent an entire unit or property. What has changed is that the city now embraces what it calls home share rentals in most residential areas.

What does Orlando call a home share rental? Here are a few critical requirements:

  • The resident/host must be at home during any bookings. A resident doesn’t need to be the homeowner, but they do need to prove that the home is their primary residence. They also need to have notarized permission from the landlord or owner to operate as a home share rental.
  • You can only rent part of the property. You can rent up to half of the total number of bedrooms in the home and you’re limited to one booking at a time.
  • If applicable, you also need permission from the home owners association (HOA). If the property is part of a mandatory HOA, an approval letter must accompany the rental registration.

Fees for the first year are $275, with a $100 (or $125 if the property isn’t owner-occupied) annual fee after. Click here for further information...

What this means, regardless of the type of rental you have, is that the market is going to be more competitive — and it’s poised to become even more fierce. The broader region of Orange County, which currently limits vacation rentals to specific non-residential zones, is playing things by ear: The commissioners recognize that change may be needed and plan to revisit the issue in the future, once they have a chance to see how things unfold in Orlando.

What you should know about operating a vacation rental in Kissimmee

Considering it’s home to Niido, the first branded apartment complex from Airbnb, it’s little surprise that Kissimmee bills itself as “The Vacation Home Capital of the World”. While the city has in many ways embraced the industry, however, it still has its restrictions.

Since vacation rentals have been popular in Kissimmee for years, there are plenty of exceptions that may predate the latest city ordinances. Generally speaking, however, vacation rentals are only allowed in what’s called the STRO (short-term rental overlay district) which concentrate rentals in designated zones within two particular areas:

  • The Western District, which is closest to major attractions, and
  • The Eastern District, which is close to Florida’s turnpike.

If your property is not in an area zoned for short-term residential use, you may be able to get a conditional use permit from the City of Kissimmee Planning Division.

To learn more about starting a business in Kissimmee review their Comprehensive Start-up Guide for New Businesses

As the demand for short-term urban vacation rentals grows, governments are exploring different ways to meet the needs of their communities. The Orlando area is no exception. Keep an eye out for new developments that could impact your market or change the way you approach your business.

The information above is intended for informational purposes only; it is not legal advice and should not be relied upon as such. If you need legal advice, you should consult a licensed attorney in your area.