Local governments turn to technology to help enforce STR laws

As the popularity of short-term rentals (STRs) has skyrocketed over the past several years, local governments have responded by creating laws to address concerns such as neighborhood disruption and serious safety issues.

For example, Houston passed an STR law in April 2025 to address concerns including disruptive parties and crime. Since the law went into effect January 1, 2026, several people have been shot at parties at STRs and hundreds of formal complaints about STRs have been filed with the city.

Key takeaways

• STR enforcement is going digital. Cities are increasingly using technology to identify and monitor short-term rentals.
• Compliance tools drive results. Governments are finding illegal rentals and recovering millions in fines and unpaid lodging taxes.
• It’s getting harder to fly under the radar. Data-driven enforcement is making it easier to detect unregistered rentals and tax noncompliance.

It’s one thing to make laws and another thing for them to be effective. In many cases, STR regulations have had little enforcement to back them up, resulting in an explosion of illegal vacation rentals, especially in popular tourist destinations.

A 2026 analysis by Better Neighbors LA, using city monitoring data, found that more than half of Los Angeles STR listings were operating in violation of city rules.

Governments are also turning to technological solutions for STR compliance, not only to promote order and safety, but to ensure STR businesses are submitting their share of lodging taxes.

In the past, it’s often been difficult for governments to find unregistered STRs that are operating in their jurisdictions, as most online listings don’t include exact addresses or host information. Companies providing specialized STR software help solve this problem by scraping data from online platforms such as Airbnb and Vrbo to identify listings in a particular area, then comparing that with government information to pinpoint properties that are missing the right permissions.

Cities and counties where STRs have created controversy for years are increasingly partnering with these companies to help manage compliance. These include Hilton Head Island, South Carolina; Austin, Texas; Fayetteville, Arkansas; Dana Point, California; and many more.

Many of the companies offering identification software also provide services related to tax and enforcement administration, including license application and processing as well as STR hotlines. Indian Rocks Beach, Florida, and Houston, Texas, for example, use third-party specialty vendors to manage hotlines citizens can use to register complaints about vacation rental properties.

Governments using data to help with STR enforcement have seen positive results.

• Fort Myers Beach, Florida, used software to entify more than 500 active rental listings breaking the rules, including registration requirements. The town sent STR operators in violation warning letters that gave them 15 days to register or face fines of up to $500. 
• Richmond, Virginia, collected $5.6 million in delinquent taxes, penalties, and interest from STR operators in 2026. The amounts dated back to 2023, when the city extended transit occupancy taxes to STRs.
• Berkeley, California, credits its STR monitoring and tax compliance software for bringing in approximately $1.4 million per year in lodging taxes.

 As governments recognize the impact of the STR industry on their communities, both positive and negative, they’re getting more serious about enforcing the rules and progressively using technological tools. Short-term rental hosts can no longer count on being able to fly under the radar when it comes to compliance with STR regulations and tax compliance.

Get help with lodging taxes

Avalara automation helps simplify tax and compliance for STR operators. With Avalara MyLodgeTax, STR owners and property managers can register with tax authorities, calculate lodging taxes, prepare and file returns, and remit payment. Avalara is trusted by 200,000+ direct and indirect customers in 75+ countries. For more on lodging taxes, see our state vacation rental tax guides. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.

FAQ

How do cities find illegal short-term rentals?

Many cities use software to scan rental platforms and compare listings against local permit and tax records.

Why are cities increasing STR enforcement?

Cities are enforcing STR rules to address safety concerns, neighborhood impacts, and tax compliance.

What happens if my STR isn’t compliant?

You may face fines, penalties, back taxes, or other enforcement actions, depending on local laws.