Alabama Short-term Rental Laws
- Gregory Stanley
- 2 days ago
- 3 min read
Alabama is a great place to find a short-term rental when you are visiting and touristing around Alabama, and it is also a great place for investing in short-term rentals. But investors should be careful and make sure they do not buy in an area that does not allow short-term rentals including VRBO or AirBnB.
Not just the Gulf Coast, US Space and Rocket Center, and Montgomery and Selma’s historic landmarks, the medical facilities and events in greater Birmingham have created a desire for even more short-term rentals and this is great for these neighborhoods.
AirBNB Decreases Crime
While the public lore is that AirBnB rentals increase crime, that is actually opposite of the truth according to a recent 5-year 100-city study: “Airbnb usage is associated with no significant crime increase but rather significant decreases in crimes of private conflict that persist in direction, significance, and magnitude over time.”[1]
Tax Revenue
As for the State of Alabama’s position, there are no state-level licensing requirements or restrictions on short-term rentals, but there is a state-level tax collected by AirBnB and VRBO. County and city lodging taxes are collected as well adding to the host city’s ability to provide for the permanent citizens.
However, some municipalities, owner associations, (and even neighborhood associations) have enacted their own laws, so it's important to be aware of the specific regulations in the location you are considering. For example, in Alabaster and Gulf Shores an investor must have a business license, and in many condominiums in Vestavia Hills there are absolute minimum stay requirements. It is lawful in Alabama for owners associations to enforce a minimum stay requirement after a vote of the members.
Some Neighborhoods Restrict Rentals
There are also certain neighborhoods in Huntsville and Birmingham Alabama that absolutely forbid “AirBNB” rentals even though the property is not within an owner’s association. Irondale Alabama’s draconian anti tourism laws depress property values across the city and caused a loss of discretionary income for some local property owners. In response to laws such as these, some short-term rentals have stopped using AirBnB and VRBO to book their visitors so taxes that were collected by the big companies are no longer remitted to the state and municipalities.
Like most things, moderation is the key for legislating short-term rentals, and for investors, forewarned is forearmed. Orange Beach has a simple hotel-style tax for short-term rentals (defined as less than 180 days), but Elberta Alabama simply enjoys the financial benefit to its citizens and businesses.
Birmingham and Mentone
Birmingham Alabama’s laws are about taxing and not restricting short-term rentals, so it benefits from lodging short-term guests.[2] However, Birmingham is not without its own short-term rental controversy. In one case, a property owner began harassing Air BnBers who were staying in her neighborhood while the Air BnBers' child received cancer treatments; that neighbor’s behavior resulted in her being visited by the police and landed her in court defending counts ranging from menacing to intentional interference with a contract.
Mentone Alabama (population 326[3]) has become an unlikely mecca for short-term rentals with one magnificent lodge[4] and numerous cottages. It seems the raw natural setting is what people are looking for and Mentone’s businesses, including all three full-time dining locations[5] (if you count the café), receive the financial largess of AirBnB capitalism.
Summary
In summary, short-term rentals are vibrant and growing across Alabama and cities from the largest to the smallest a reaping the benefits of these investments by real estate investors. Ensure you check for city licensing and restrictions, as well as neighborhood and association restrictions before you invest.
