What are the short-term rental laws on the Monterey Peninsula, you ask? That’s a complicated question! In some jurisdictions the laws don’t exist; in others STRs are banned. And where they are legal, the laws vary with each city and often change.
First, let’s define short-term rental (STR) versus a home-sharing rental.
- An STR is defined as a rental of a vacant residential unit for fewer than 30 days.
- Home-sharing rental is defined as the rental of part of a residence, when the owner of the unit also lives on-site.
Let’s start with the current legal situation for the unincorporated areas of Monterey County. (Note: We’ve linked our sources throughout this post; please click on them for details.)
Unincorporated inland (non-coastal zone) areas of Monterey County:
- Owner must pay an permit application fee of approximately $8000, and permits are not guaranteed. (Be advised that if your application is denied you will lose your $8000 permit fees)
- Once permit is obtained, rental periods must be 7 days or more, so technically at least 6 nights.
- TOT tax is 10.5% that is to be paid every month.
Coastal zone of Monterey County
- STRs are prohibited but “bed and breakfast” use permits are theoretically available at $14,000. As of September, 2022, not a single such permit has been issued in the county. It’s our understanding that many people have applied but have been turned down (fees lost if permit denied.) If you are operating an unpermitted STR, you are subject to citation and fines. Unincorporated areas include Carmel Highland, anything outside the 1 SQ mile of Carmel by the Sea, Pebble Beach, Carmel Valley, Big Sur, 68 corridor, and north county.
Currently the county is drafting one new short-term rental ordinance that will govern both Coastal & non-coastal permits. They’ve been “working” on it since 2013, so who knows if, or when, they will finish it. Below are some highlights of the latest proposed ordinances:
- You must obtain a vacation rental permit or Coastal zone bed and breakfast permit.
- Payment of 10.5% transient occupancy tax must be paid monthly.
- Occupancy – no more than 2 persons per bedroom, with a maximum occupancy of 10 people.
- Day use can be increased by 50%
- Accessory Dwelling Units (ADUs) may not be used as STRs
For more information, please visit this link.
Each city on the Monterey Peninsula has a different set of STR regulations:
- STRs are allowed in coastal and commercial zones where the subject property is not within 55 feet of another short term rental and does not create more than 15% density of STRs on the block.
- Current TOT (transient occupancy tax) is 12% and must be paid monthly.
- You must pay a non-refundable fee of $413 to apply for a short-term rental license or home-sharing license. Another payment of $680 is required each year for the permit, and a home inspection is required every two years.
- There is a cap of 250 short-term rental licenses in Pacific Grove. As of April 1 of 2023 only 77 are being used.
There is no cap on the number of home-sharing licenses.
Click here for further detail.
- No new short-term rentals in the commercial or residential districts are allowed. Those currently licensed in the commercial district may continue.
- Those currently licensed must pay TOT tax monthly.
City of Monterey
- Short-term rentals are illegal as is advertising of short-term rentals. The city of Monterey has a code enforcement officer that checks all short term rental platforms for violators.
Del Rey Oaks
- Short term rentals are allowed and there are no caps on the number of STRs.
- TOT tax monthly is 10%
For more info, click on this link.
- Only home-sharing rentals are allowed, meaning the owner must live in the unit and rent only part of it. The homeowner may rent the entire property when he is on vacation, if it is his primary residence.
- Short-term rentals are illegal.
- If you can show proof that the STR was in operation prior to April 2018 you can continue to operate.
- As of March 2023 there is now a cap of 90 STR that are authorized.
- All new non-hosted STR will be subject to a 55 ft of exclusion. Meaning if a STR already exists you will not be eligible to host one within 55 ft of the other.
For more details, please click here.
- As of Spring 2023 Sand City has adopted a short term rental ordinance.
- The cap is 90 total.
- There is a permit application fee.
- TOT tax is 12%
As you can see, short-term rental laws are complicated, and constantly evolving. It is our job at Truszkowski Freedman & Associates to stay current on this topic so we can guide you to ensure you make the best decisions as an owner or buyer of a residence in our lovely area. We strive to be your go-to advisors for all things real estate! Please contact us below if you have any further questions: 831-250-3560, firstname.lastname@example.org