Overview: Yes—short-term rentals are currently allowed in Five Points (South) because it is within Birmingham’s city limits. Birmingham has one of Alabama’s more permissive STR frameworks today: operators mainly need a standard business license and must comply with state, county, and city lodging taxes. A comprehensive STR ordinance is in development and, if adopted, would add an STR permit and other operational requirements in 2025. There are no separate Five Points–specific regulations beyond Birmingham’s rules. [Source: local.theoffersheet.com/legal/birmingham-al/; Source: wbrc.com/2024/07/18/city-council-considering-changes-proposed-short-term-rental-regulations-birmingham/]

How to Start a Short-Term Rental Business in Five Points

This roadmap reflects Birmingham’s current (2024–2025) regulatory environment and the expected direction of new rules:

1. Confirm Location and Property Suitability

• Verify the property is inside Birmingham city limits; different rules apply in neighboring municipalities (Mountain Brook prohibits rentals <30 days; Homewood restricts rentals <90 days in many residential areas). [Source: local.theoffersheet.com/legal/birmingham-al/]
• For Five Points, consider proximity to restaurants, nightlife, and UAB; proximity to Five Points South and downtown typically commands higher weekend rates. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Confirm there are no deed, HOA, or lease prohibitions on short-term rentals. Many apartment complexes prohibit STRs in lease agreements. [Source: local.theoffersheet.com/legal/birmingham-al/]

2. Legal and Tax Registration (Current Requirements)

• Obtain a Birmingham Business License (annual renewal by Jan 1). Application fee ~$150; renewal ~$100 (delinquent Feb 15). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Register for lodging taxes and obtain tax account numbers:
  • Alabama Lodging Tax (state): 5% (Jefferson County rate), on stays <180 days. Register with Alabama Department of Revenue. [Source: local.theoffersheet.com/legal/birmingham-al/]
  • Jefferson County Lodging Tax: 2%. Register with Jefferson County Revenue Commissioner. [Source: local.theoffersheet.com/legal/birmingham-al/]
  • City of Birmingham Lodging Tax: 6.5% plus $3 per room per night. Register with the city. [Source: local.theoffersheet.com/legal/birmingham-al/]
• File lodging tax returns monthly in most cases (quarterly may be available for smaller operators). Airbnb collects the state portion; you must collect/remit county and city portions. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Obtain an EIN for tax reporting. [Source: local.theoffersheet.com/legal/birmingham-al/]

3. Property Setup and Safety

• Install smoke detectors in all bedrooms and common areas, CO detectors near gas appliances/attached garages, fire extinguishers (one per level), and post emergency contact info and evacuation routes. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Provide adequate exterior lighting and basic first aid supplies. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Ensure parking meets neighborhood expectations; parking issues drive nuisance complaints. [Source: local.theoffersheet.com/legal/birmingham-al/]

4. Insurance

• Carry general liability (at least $1M recommended), property coverage, and loss-of-income coverage. STR-specific policies are advisable. [Source: local.theoffersheet.com/legal/birmingham-al/]

5. Marketing and Operations

• List on major platforms (Airbnb, VRBO, Booking.com). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Establish professional cleaning and maintenance protocols; craft clear house rules for guests and document neighbor relations. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Track guest data and transactions for tax reporting. [Source: local.theoffersheet.com/legal/birmingham-al/]

6. Monitor Proposed STR Ordinance (2025)

• Draft rules under discussion include: a separate STR permit; permit-number display in listings; a 30-day maximum consecutive stay limit; inspection rights with 24-hour notice; and requirements to avoid changing neighborhood character. [Source: local.theoffersheet.com/legal/birmingham-al/; Source: wbrc.com/2024/07/18/city-council-considering-changes-proposed-short-term-rental-regulations-birmingham/]
• Implementation is pending but could occur in 2025; track City Council proceedings. [Source: local.theoffersheet.com/legal/birmingham-al/; Source: wbrc.com/2024/07/18/city-council-considering-changes-proposed-short-term-rental-regulations-birmingham/]

Required Documents, Permits, Licenses, and Guidelines

Current requirements (as of 2024–2025):

• Birmingham Business License (business tax certificate; annual renewal). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Application for Tax Certificate (ATC) submitted with the business license. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Alabama Lodging Tax Registration (state lodging tax account). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Jefferson County Lodging Tax Registration (county lodging tax account). [Source: local.theoffersheet.com/legal/birmingham-al/]
• City of Birmingham Lodging Tax Registration (city lodging tax account). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Federal EIN (for tax reporting). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Liability insurance and property safety records (smoke/CO detectors, fire extinguishers, posted emergency info). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Guest registration/tax tracking system for filing obligations. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Local emergency contact information for issues resolution. [Source: local.theoffersheet.com/legal/birmingham-al/]

Potential new requirements under the draft ordinance:

• STR-specific permit (in addition to business license). [Source: local.theoffersheet.com/legal/birmingham-al/]
• Permit number displayed in advertising. [Source: local.theoffersheet.com/legal/birmingham-al/]
• 30-day maximum consecutive stay limit. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Property inspection rights with 24-hour notice. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Requirements to not change neighborhood character. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Future documents may include inspection certificates, neighbor notification receipts, parking compliance documentation, and management agreements (if using third-party management). [Source: local.theoffersheet.com/legal/birmingham-al/]

Specific Regulations for Short-Term Rentals: City, County, and State

City of Birmingham (Five Points is within city limits)

• Allowed: Yes, subject to standard business licensing and lodging tax compliance. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Tax obligations:
  • City lodging tax: 6.5% + $3 per room per night. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Zoning: Currently no STR-specific zoning prohibitions within Birmingham city limits; ensure there are no HOA/private restrictions. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Draft STR ordinance (under consideration in 2025): requires an STR permit; permit-number display in listings; 30-day maximum consecutive stay; inspection rights; and neighborhood character protection. [Source: local.theoffersheet.com/legal/birmingham-al/; Source: wbrc.com/2024/07/18/city-council-considering-changes-proposed-short-term-rental-regulations-birmingham/]
• Enforcement: Complaint-driven; focus on business licensing, lodging tax compliance, nuisance complaints (noise, trash, parking), and general code enforcement. Violations can lead to business license suspension/revocation, tax fines, and code citations. [Source: local.theoffersheet.com/legal/birmingham-al/]

Jefferson County

• Lodging tax: 2% on gross rental receipts. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Registration with the Jefferson County Revenue Commissioner is required for collection and remittance. [Source: local.theoffersheet.com/legal/birmingham-al/]

State of Alabama

• Alabama Lodging Tax: 5% in Jefferson County; applies to stays under 180 consecutive days; collected on total listing price including cleaning fees. [Source: local.theoffersheet.com/legal/birmingham-al/]
• Register with the Alabama Department of Revenue for the state lodging tax account. Airbnb collects state lodging tax; other jurisdictions must be collected and remitted by the host. [Source: local.theoffersheet.com/legal/birmingham-al/]

Note: Surrounding municipalities have stricter rules. Mountain Brook prohibits rentals <30 days; Homewood often restricts rentals <90 days in residential areas. Investors often consider unincorporated Jefferson County areas because they have fewer city-level rules, though county and state obligations still apply. [Source: local.theoffersheet.com/legal/birmingham-al/]

Contact Information for Local Authorities

City of Birmingham – Tax and License Division (business licensing, city lodging tax)

• Phone: (205) 254-2198
• Fax: (205) 254-2963
• Address: City Hall, First Floor (TL-100), 710 North 20th Street, Birmingham, AL 35203
• Hours: Monday–Friday, 8:00 AM – 4:45 PM
• Website: birminghamal.gov [Source: local.theoffersheet.com/legal/birmingham-al/]

Alabama Department of Revenue – Lodging Tax Registration (state)

• Phone: (334) 242-1170
• Website: revenue.alabama.gov
• Online Registration: Alabama Business Tax Online Registration System [Source: local.theoffersheet.com/legal/birmingham-al/]

Jefferson County Revenue Commissioner – County Lodging Tax

• Phone: (205) 325-5311
• Website: jccal.org [Source: local.theoffersheet.com/legal/birmingham-al/]

Birmingham Planning, Engineering & Permits (PEP) Department (zoning and permits)

• Phone: (205) 254-2333
• Address: City Hall, Room 210, Birmingham, AL 35203
• Website: birminghamal.gov/government/city-departments/pep [Source: local.theoffersheet.com/legal/birmingham-al/]

Birmingham City Council (for proposed STR ordinance updates and public process)

• Website: birminghamalcitycouncil.org [Source: local.theoffersheet.com/legal/birmingham-al/]

Links to Source Pages

• local.theoffersheet.com/legal/birmingham-al/
• wbrc.com/2024/07/18/city-council-considering-changes-proposed-short-term-rental-regulations-birmingham/
• reddit.com/r/Birmingham/comments/1i21ip2/hello_lets_talk_about_shortterm_rentals/ (community discussion; not official)
• al.com/news/huntsville/2023/08/huntsville-going-after-airbnbs-and-other-short-term-rentals-operating-illegally-within-city-limits.html (not specific to Birmingham; not used for primary rules) [Source: local.theoffersheet.com/legal/birmingham-al/; Source: wbrc.com/2024/07/18/city-council-considering-changes-proposed-short-term-rental-regulations-birmingham/]

Important Note: The City Council continues to refine the STR ordinance; details could change before adoption. Five Points has no separate city regulations beyond Birmingham’s framework. Always verify current rules directly with the city before investing. [Source: local.theoffersheet.com/legal/birmingham-al/; Source: wbrc.com/2024/07/18/city-council-considering-changes-proposed-short-term-rental-regulations-birmingham/]