If you are buying a short-term rental in Fredericksburg, the city's rules matter as much as the house. I have helped dozens of buyers and sellers with STR properties, and I grew up handling reservations for my family's B&B reservation service. Here is a plain-language look at how the City of Fredericksburg regulates short-term rentals and what that means when you buy.
Please note: This is general information, not legal advice. Rules change. Always confirm the current ordinance and the status of any specific property with the City of Fredericksburg before you buy.
Who Needs a Permit
According to the city, any dwelling unit rented for compensation for less than 30 days within the City Limits needs a Short-Term Rental Permit. The city's current ordinance took effect on January 1, 2024.
Properties in Fredericksburg's extraterritorial jurisdiction (the ETJ, just outside the City Limits) do not currently need a city STR permit. But that does not mean there are no rules. Lodging providers in the ETJ must still collect and remit hotel occupancy tax, and deed restrictions or HOA rules may limit rentals. More on that below.
The Five Types of STR Permits
The city recognizes five categories of short-term rentals:
- Accessory: An owner-occupied primary residence with a legal accessory dwelling unit, like a guest house.
- B&B: Guest lodging within rooms of the owner's principal residence.
- Facility: Multiple units on a single property in commercial zones.
- Unoccupied: A single-family home, townhouse or duplex where the owner does not live.
- Nonconforming: Units that were permitted before April 1, 2022.
For most investors, the key question is whether a property can legally operate as an unoccupied STR, meaning a whole-home rental where you do not live on site.
Zoning Is Everything
The city states that eligibility to operate an STR depends on the property's zoning. Here is how it breaks down based on the city's published information:
- Commercial zones (C1, C1.5, C2 and CBD): STRs are allowed by right, except STR condos, which need a Conditional Use Permit.
- R1 and R2 residential zones: The city's summary of the 2024 ordinance says no new unoccupied STRs and no new facilities.
- R3 zones: All STR types are prohibited.
- STR condos: No new STR condominiums are permitted.
This is why I always check zoning and permit status before a buyer gets attached to a house. Two homes on the same street can have very different rental potential.
Grandfathered (Nonconforming) Permits
Under the city's summary, nonconforming or grandfathered permits may continue to operate and may transfer. They must come into compliance with the newer requirements at renewal, except for parking and occupancy. If you are buying a property with a grandfathered permit, that permit can be a big part of the property's value, so we need to protect it during the transfer.
Permit Transfers When You Buy
Per the city's summary, a permit can be transferred within 90 days of the sale of the property. An inspection is also required on transfer. Mark that 90-day window on your calendar the day you close. Missing it is a risk you do not want to take.
Occupancy, Parking and Inspections
- Occupancy: Maximum occupancy is 12, and all persons count toward occupancy.
- Parking: One space is required per bedroom. Tandem parking is allowed. On-street parking does not count toward the minimum.
- Inspections: The city requires inspections for new permits, ownership transfers, complaints, structural changes and annual renewals.
- Local contact: Properties must have a 24-hour contact.
At a city meeting for STR owners in 2024, staff noted common inspection issues including hot tubs, fire extinguishers, outdoor lighting, fire pits and host rules. Those are good things to look at during your option period.
Violations and Suspensions
The city's summary says three minor violations count as one major violation. Three major violations within 12 months require City Council review, and a permit may be suspended for up to 90 days. Not paying hotel occupancy tax results in an automatic 90-day suspension.
Hotel Occupancy Tax
The city lists a 7% local hotel occupancy tax, filed quarterly, and a 6% state hotel occupancy tax, for a combined 13% charged to guests. This applies to lodging providers in the City Limits and the ETJ.
My STR Buyer Checklist
- Confirm the zoning and the permit type.
- Verify the permit number and status with the city.
- Ask for inspection history and any violations.
- Count bedrooms and on-site parking spaces.
- Review hotel tax filings with the seller's records.
- Read the deed restrictions and any HOA rules.
- Plan for the 90-day transfer window and inspection.
Questions? You can reach Fredericksburg City Hall at 830-997-7521, and I am always glad to help you sort through a specific property.
Shopping for a permitted STR? Contact me and I will help you check the details before you buy.