Ocean City, Maryland, repeals moratorium on new short-term rentals

Ocean City, Maryland, has canceled its moratorium on new short-term rental (STR) permits in Residential 1 (R1) and Mobile Home (MH) districts. STR operators are now allowed to apply for STR permits in those districts.

The move was prompted by a petition that sought to repeal the moratorium via a referendum. Petitioners needed at least 990 valid signatures and obtained 1,159 — enough to put the issue on the ballot. The City Council decided to repeal the moratorium immediately instead, rescinding an ordinance it passed in December 2025 that extended the moratorium through January 3, 2027. The moratorium, passed in February 2025, was originally set to expire in January 2026.

Last year, Ocean City voters rejected a new STR law affecting the R1 and MH housing districts. The ordinance required five-night minimum stays for single-family homes in those districts, increasing to minimum stays of 31 nights in 2027. The referendum asked residents to vote for or against the STR ordinance, and the repeal passed by a narrow margin, with 834 votes against the law and 800 in favor.

While the town rescinded the moratorium on new STRs, it didn’t alter any other STR regulations. Ocean City defines STRs as accommodations rented for 30 consecutive days or less, excluding hotels, motels, apartments, dormitories, and employee housing. STR operators are required to obtain an annual rental license and noise permit, as well as a supplemental annual STR license.

Applicants must provide the town with contact details for a person who is legally authorized to accept legal notices, address property issues, handle code violations, and is able to respond to property issues within 60 minutes. Property owners must consent to inspections and observe occupancy and safety regulations. The town may suspend or revoke rental licenses for violations of the law.

STR platforms such as Airbnb or Vrbo that facilitate booking transactions for rentals in Ocean City must verify their listings have valid licenses.

STRs in Ocean City are required to register with the Comptroller of Maryland and collect, report, and pay state sales tax. In Maryland, STR operators are considered “accommodations providers” that offer rights to transient guests to occupy a room or lodgings. They’re required to collect state sales tax from their guests unless guests are renting on a monthly basis or are permanent residents. In resort areas, sales tax applies to all rentals for terms of four months or less.

However, operators aren’t required to collect lodging taxes if a third party collects taxes on all STR transactions. STR marketplaces such as Airbnb and Vrbo are required to collect state sales taxes from guests when a Maryland rental is paid for.

Worcester County Room Tax also applies to STRs in Ocean City that are rented for less than four months and one day. Hosts must register with the county, file monthly reports, and pay the tax collected from guests. Airbnb and Vrbo collect room tax for listings in Worcester County.

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For more on lodging taxes in Maryland, see our state vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.