New Orleans freezes more short-term rental permits
- Feb 14, 2023 | Jennifer Sokolowsky
The New Orleans City Council has paused new short-term permits in some District B mixed-use zones in the Lower Garden District, Central City, and Irish Channel. The freeze will not affect permits that have already been issued or pending applications.
The move comes in reaction to the news that land at the site of the former Brown’s Dairy in Central City was sold to short-term rental operators by developers who had originally said they would build affordable housing. Short-term rentals have long been controversial in New Orleans amid concerns about gentrification and a lack of affordable housing.
While the new rules took effect immediately, the council must vote to codify them. At that time, the freeze on new permits will apply for up to a year.
Late last year, the New Orleans City Council placed a moratorium on issuing new short-term rental permits in residential areas until at least March of 2023, extending a temporary hold on new short-term rental applications that went into effect in September.
That moratorium does offer an exception for vacation rental operators who had valid permits before August 29, 2022. More than 200 permits meeting the exception requirements have been issued since the ban began.
The city has been criticized in the past for not enforcing its short-term rental laws, but it’s starting to see more progress on this front. In September, officials increased the number of inspectors nearly threefold and began using short-term rental tracking software. Since then, the city has identified more than 2,500 noncompliant listings and has a backlog of hundreds of open investigations into short-term rentals.
Meanwhile, the city is revamping its short-term rental law in response to a federal appeals court decision that invalidated key parts of the ordinance. The city has been given until March 31 to create a new ordinance.
The current law, which went into effect in 2019, requires vacation rental hosts in residential neighborhoods to have a “homestead exemption,” meaning they live there and claim the property as their primary residence. The federal judge’s ruling in August 2022 found that the law discriminated against out-of-state property owners.
Under the current ordinance, short-term rentals are banned in residential areas of the Garden District as well as in most of the French Quarter, and they may take up no more than 25% of commercial or mixed-use property. The City Council has also outlawed vacation rentals in fourplexes.
New Orleans vacation rentals are also subject to lodging taxes that include Louisiana state sales tax and several city taxes, including sales tax, a short-term rental occupancy fee, occupancy privilege tax, and a short-term rental equalization occupancy tax. Short-term rental operators in New Orleans are required to register and file lodging tax returns with city and state tax authorities.
Airbnb collects both city and state taxes on behalf of its hosts. Vrbo also collects city taxes for hosts in New Orleans, but does not collect Louisiana state taxes. Hosts are required to collect and pay taxes that are not collected by their platform, and they must register and file lodging tax returns even if taxes are being collected on their behalf.
MyLodgeTax can help short-term rental hosts in New Orleans simplify and automate lodging tax compliance. See our Louisiana Vacation Rental Tax Guide for more on short-term rental taxes in the state. If you have tax questions related to properties in New Orleans, drop us a line and we’ll get back to you with answers.