What to Know About Acquiring a Short-Term Rental Permit in New Orleans

Photo by Kool C on Unsplash 

Over the last few years, vacation rentals have become a more popular choice for travelers in New Orleans. This doesn’t come as a surprise since they provide more space, flexibility, and better value for money, which hotels in Crescent City can’t match up to.

With the growing demand, interest in acquiring a short-term rental permit in New Orleans has also increased. However, there are many rules for owning and managing a vacation rental in the city, and if you’ve never done it before, it’s easy to get overwhelmed in the process. 

To make your life easier, we’ve gathered the most important information about acquiring a residential (or “non-commercial,” as they’re now known) short-term rental permit in New Orleans. Let’s dive in!

Short-Term Rental Laws in New Orleans

To obtain a non-commercial short-term rental (NSTR) permit in New Orleans, you must navigate through a detailed application process regulated by the city’s Short Term Rental Administration. While the process has never been easy, it has become even more challenging in the last two years, mainly due to growing concerns about the impact of vacation rentals on local communities and neighborhoods, recent changes in the application process, and how permits are issued.

 However, that doesn’t mean acquiring a non-commercial short-term rental permit is impossible! You just have to know which steps to take.

According to New Orleans’ laws, short-term rentals are considered to be properties rented out for a period of less than thirty consecutive days. If the rental is given out for more days, it’s considered long-term and doesn’t require a permit related to STRs.

So, what should you know about getting a rental permit?

Pay Attention to the Number of Rentals in an Area

In March 2023, the City Council of New Orleans announced that a new regulation would limit the number of short-term rentals per square block. This means there can only be up to three short term rental properties per square (made up of four streets). 

Determining who can receive the permit to operate the short-term rental is a complex process. One of the three permits is chosen through a lottery, the additional two must go through a complicated special exemption process.

When searching for NSTR-eligible properties in New Orleans, this is something you should pay attention to, as the new law may restrict your options in certain areas.

Know That Only One Permit per Owner Is Allowed

It may be tempting to purchase several real estate properties with the goal of renting them out, but right now, that’s unfortunately not an option in New Orleans. According to the new regulations, one non-commercial short term rental permit is allowed per owner/operator. Consequently, people who already own multiple investment properties will need to choose which of them to offer as a short term rental. 

Keep in Mind You or Your Operator Have to Live on the Property

One of the biggest changes introduced last year was the introduction of the homestead exemption, which required the rental owner to live inside the space they were renting out. However, the rules are a bit different now. Owners have the flexibility to either prove the property is their primary residence or appoint an on-site operator who can verify it as their primary residence.

Keep up to Date With Changes in the Market

The regulations we’ve described before are a relatively new addition to New Orleans’ real estate market and have come under quite a bit of legal scrutiny. For this reason, a federal judge temporarily halted the enforcement of new regulations until a final ruling was made. 

Recently, it was decided that the rules were allowed to remain intact. That is, pending an appeal by the plaintiffs. 

As of now, it’s unclear whether the appeal will be successful in challenging the regulations. However, experts believe that if the federal judge rules against the initial ordinance, the council members’ response might be even more drastic, potentially eliminating NSTRs altogether.

Either way – if you’re serious about getting into the rental business, make sure to stay up-to-date with the latest information because things may change quickly.

Get Professional Help

If you’re new to the market, navigating the current circumstances can be quite a headache. Figuring out all the dos and don’ts takes a lot of time and effort, so it’s best to get a professional’s help. At Book NOLA, we’ve partnered up with an STR expert at the largest local brokerage. We are here to guide you through the entire process while helping you find a property with the biggest potential. Have a look at the available listings here.

Ending Notes

The short term rental market in New Orleans is undergoing many changes. But regardless of what regulations will be approved, it’s clear the demand for vacation rentals in Crescent City is not disappearing anytime soon.

If you’re considering renting out your property, we’ll help you do it stress-free while maximizing your income! Learn more about our vacation rental management services here, and don’t hesitate to reach out with any questions!

FAQ

1. What are the specific criteria or requirements for a property to qualify for a short-term rental permit in New Orleans?

For a property to qualify for a short-term rental permit in New Orleans, it generally needs to meet several criteria focused on safety, legal compliance, and neighborhood compatibility. 

These requirements might include passing a safety inspection to ensure the property meets health and fire codes, adhering to zoning laws, and sometimes even obtaining proof of insurance. The full list can be found here.

2. How does the lottery system for short-term rental permits work in New Orleans?

Resuming on July 1, 2024, the lottery is held quarterly and broadcast in real-time on YouTube. To guarantee fairness, a bingo machine is employed. You can read more about the process here.

3. What are the consequences for operating a short-term rental without a permit in New Orleans?

Operating a short-term rental without a valid permit in New Orleans can result in significant penalties, including fines, legal action, and the possibility of being banned from obtaining a permit in the future. Fines may range from $500/day up to $15,000, and code enforcement can also shut off utilities on the property for continued non-compliance.