Executive Summary
Fullerton, California, has frozen all new short-term rental permits until 2027, halting any new investments in the market. Rhode Island just imposed a new 5% tax on whole-home rentals effective January 1, 2026, pushing total tax burdens to around 20% and directly impacting margins. Lake Geneva, Wisconsin, nearly doubled its annual license fee from $683 to $1,300, while Fort Myers Beach, Florida, is hunting down 500+ unregistered properties with new software and threatening $500 fines for non-compliance. On the positive side, Arizona's Court of Appeals reinforced statewide protections that prevent cities like Sedona from banning short-term rentals, limiting local regulatory power. West Maui property owners are fighting Bill 9 in court, which would phase out roughly 7,000 grandfathered short-term rental units in apartment zones—if the lawsuit fails, those properties convert to long-term rentals. Ocean City, Maryland, is weighing caps, phaseouts, or permanent license freezes that could shut out new investors entirely. And Victoria, British Columbia's principal residence rule survived an appeal, forcing operators to either live on-site or pivot to mid-term and long-term rentals.
New Regulations
Fullerton, California
Published: December 29, 2025
Regulation Category: Licensing, Enforcement
Summary: Fullerton enacted a moratorium on new short-term rental permits in July 2025, lasting until 2027, in response to a grand jury report highlighting enforcement challenges and community complaints about noise and parking. The ban aims to curb disruptions but acknowledges limited evidence linking short-term rentals to housing shortages, potentially halting new investments while existing permits remain valid.
Source: Fullerton Implements Moratorium on Short-Term Rentals until 2027
Rhode Island
Published: December 29, 2025
Regulation Category: Tax
Summary: Rhode Island is increasing the local hotel tax on all short-term rentals from 1% to 2% and imposing a new 5% tax on whole-home short-term rentals of entire residential dwellings, effective January 1, 2026. These changes could raise the total tax burden to around 20% for whole-home rentals (including existing 8% sales and 5% hotel taxes), significantly impacting investor margins and requiring updates to pricing and compliance strategies.
Source: Minimum wage hike, short-term rental tax among new laws going into effect Jan. 1
Victoria, British Columbia, Canada
Published: January 6, 2026
Regulation Category: Occupancy, Zoning
Summary: The B.C. Court of Appeal dismissed a challenge to the Short-Term Rental Accommodations Act, which restricts short-term rentals to principal residences to preserve long-term housing stock, with the ruling deeming the case premature due to lack of proven damages. This upholds the May 2024 law, which has increased Victoria's rental vacancy rate, potentially forcing investors to shift to mid-term or long-term rentals and reducing short-term profitability.
Source: B.C. Appeal Court dismisses short-term rental owners' appeal
Fort Myers Beach, Florida
Published: January 1, 2026
Regulation Category: Licensing, Enforcement
Summary: Fort Myers Beach is using new software to identify over 500 unregistered short-term rentals on platforms like Airbnb and Vrbo, sending warnings with a 15-day compliance deadline before imposing up to $500 fines. Registration involves a $300 fee and mandatory fire safety inspections, emphasizing safety compliance that could increase operational costs for non-compliant investors.
Source: Fort Myers Beach cracks down on illegal short-term rentals
Lake Geneva, Wisconsin
Published: December 31, 2025
Regulation Category: Licensing
Summary: Lake Geneva approved a significant increase in short-term rental license fees from $683 to $1,300 per year, effective for the 2025-2026 renewal period, to fund a new enforcement officer and monitoring software. This hike could raise annual costs for investors, potentially affecting profitability in a market with growing regulatory oversight.
Source: Lake Geneva increases short-term rental license fee
Smithville, Texas
Published: December 31, 2025
Regulation Category: Tax, Zoning, Enforcement
Summary: Smithville City Council approved zoning amendments requiring short-term rental operators to stay current on property taxes and hotel occupancy tax payments, addressing non-compliance among about 69% of operators. The new rules allow the city to contact platforms like Vrbo and Airbnb to delist violators, potentially disrupting revenue for non-compliant investors while emphasizing safety and neighborhood concerns.
Source: Smithville takes aim at short-term rentals
Arizona
Published: December 29, 2025
Regulation Category: Zoning
Summary: An Arizona Court of Appeals upheld a 2017 state law preempting local bans or broad restrictions on short-term rentals, rejecting Sedona's attempt to limit conversions in a mobile home park. This reinforces state-level protections for short-term rentals amid rising housing costs, potentially benefiting investors by limiting municipal regulatory power.
Source: Arizona Court Rejects Local Control Over Short-Term Rentals
Steamboat Springs, Colorado
Published: January 6, 2026
Regulation Category: Licensing, Zoning
Summary: Steamboat Springs is hosting an informational session on existing short-term rental regulations, covering licensing, application processes, operational standards, and renewals within local code and zoning districts. The event includes a Q&A but focuses on clarifying current rules rather than proposing new policies or debating changes, which may help investors understand compliance requirements.
Source: City launches Civic Connections series with short-term rental discussion
Developing Regulations
Ocean City, Maryland
Published: January 6, 2026
Regulation Category: Licensing, Zoning
Summary: Ocean City's council is considering three options for short-term rental licenses in residential and mobile home areas: capping and phasing out all licenses, allowing licenses to expire on sale or non-renewal, or implementing a permanent freeze with a waiting list for new applicants. These proposals could limit new entries and affect transferability, potentially reducing investment opportunities in affected districts if adopted.
Source: Council reviews cap, phasing out, and freeze for short-term rental licenses
West Maui, Hawaii
Published: January 2, 2026
Regulation Category: Zoning
Summary: West Maui property owners have filed a lawsuit challenging Bill 9, which phases out short-term rentals in apartment-zoned districts, arguing it violates vested rights and constitutes a taking without compensation for about 7,000 grandfathered units. If successful, the suit could preserve short-term rental operations in these areas; otherwise, investors face conversion to long-term rentals or property sales.
Source: As expected, Bill 9 challenged in court; lawsuits seek to block short-term rental phaseout
Decatur, Alabama
Published: January 3, 2026
Regulation Category: Licensing, Occupancy
Summary: Decatur City Council members are divided on a proposed short-term rental ordinance, with no specific details on changes to licensing, fees, or restrictions disclosed yet. A public hearing is set for February 2, 2026, where investors can monitor potential new rules that could affect operations and compliance costs.
Source: Council members disagree on short-term rental regulations
Mt. Crested Butte, Colorado
Published: December 30, 2025
Regulation Category: Licensing
Summary: Mt. Crested Butte council is considering requiring all short-term rentals to use licensed local property management companies, eliminating the current option for out-of-state owners to designate a local representative within 45 minutes. This potential change targets problematic self-managed properties and could raise management fees for investors relying on remote operations.
Source: Mt. CB council ponders short-term rental license updates