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Chicago, IL

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STR Regulations for Chicago, Illinois

Overview: Are short-term rentals allowed in Chicago?

Yes. Chicago explicitly allows short‑term rentals—called “shared housing” under city law—when properties are registered with the City and hosts comply with licensing, zoning, safety, and tax obligations. The City’s Department of Business Affairs and Consumer Protection (BACP) administers the Shared Housing Registration program. Operators must meet eligibility criteria, avoid prohibited locations/buildings, and follow the city’s rules on occupancy, safety, and listings. Failure to comply can result in fines and license suspension/revocation. Sources: 1, 12.

1) How to start a short‑term rental business in Chicago

Chicago’s process is well-defined and runs through the Shared Housing Registration Portal. A practical, stepwise approach is below. Source: 1.

  • Step 1 — Confirm eligibility and zoning

    • Review common eligibility criteria (primary‑residence rules, unit type/size, and prohibited locations). 1
    • Check if your building/property is on the Prohibited Buildings List (PBL); if listed, you must follow PBL removal procedures (affidavit and review) or your unit is ineligible. 6, 7, 8
    • Verify whether your address lies in a Restricted Residential Zone; operations are not allowed in those zones. 9
    • Review HOA/condo board rules and leases—short‑term renting cannot proceed if prohibited by your governing documents or lease. 5

  • Step 2 — Create a portal account and prepare documents

    • Create a Shared Housing Registration Portal account using your legal name as it appears on your government ID. 1
    • Identity document (one, during account setup). 4
    • If the unit is your primary residence: provide two primary residency documents. 4
    • Assemble supporting materials (e.g., proof of insurance, evacuation diagram, emergency contact plan) to streamline review.

  • Step 3 — Submit your application

    • Complete the four-step application in the portal, including address, unit details, and uploads. 1
    • Application status, rejections, and next steps appear on your dashboard; you’ll also receive email notifications. 1

  • Step 4 — Respond to requests, pay, and obtain your registration number

    • If documents are rejected: correct and resubmit. If the application is denied: follow the appeal instructions in your denial letter or request a Commissioner’s Adjustment where offered. 1
    • If approved: pay the $125 annual registration fee within the portal. Upon payment, your registration number appears under “My Registration Numbers.” 1
    • Only after approval may you list the unit on approved platforms using the registration number. 1

  • Step 5 — If hosting multiple units: obtain the Shared Housing Unit Operator License (SHUOL)

    • Hosts approved for more than one registration must obtain a SHUOL (one per host; each unit requires its own separate registration). 5
    • Apply in person at City Hall or online via Chicago Business Direct (see “Links” for portal). 5
    • SHUOL is valid for two years and must be renewed biennially. 5

  • Step 6 — Launch your listing and stay compliant

    • Include your registration number in all advertisements, listings, rental agreements, and bookings. 5
    • Display a local contact and evacuation diagram near the entrance. 5
    • Meet safety requirements (smoke/CO alarms, fire extinguisher) and keep guest registration records for three years. 5

  • Step 7 — Renewals and ongoing responsibilities

    • Renew annually; eligibility opens two months before expiration, and BACP will notify hosts when renewal applications open. 1
    • Comply with monthly reporting to BACP (starting under Chicago’s new law; see “Regulations & Compliance”). 13, 14

2) Required documents, permits, licenses, and guidelines

The checklist below summarizes Chicago’s documentary requirements. Source(s): 1, 4, 5.

  • Identity and residency
    • Government-issued ID for portal account creation. 4
    • If listing your primary residence: two primary residency documents. 4
  • Registration & licensing
    • Shared Housing Registration Number (annual; required for each unit). 1
    • Shared Housing Unit Operator License (SHUOL) for hosts with more than one registration (valid two years; apply via City Hall or Chicago Business Direct). 5
  • Safety and listing requirements
    • Property insurance (hosts commonly carry $1,000,000 commercial general liability coverage; verify current requirements with BACP). 5
    • Smoke alarms and carbon monoxide detectors installed; accessible, serviced fire extinguisher. 5
    • Evacuation diagram displayed near entrance; local contact information posted. 5
    • Include registration number in all listings, agreements, and bookings. 5
    • Guest registration records retained for three years (name, contact info, dates, signature). 5
  • Non‑negotiable prerequisites
    • Not in a Restricted Residential Zone; not on Prohibited Buildings, Scofflaw, or Problem Landlord Lists; HOA/lease must not prohibit short‑term rentals. 5

For a complete view of accepted ID and residency documents, consult BACP’s acceptable documents guidance. 4

3) City, county, and state regulations specific to Chicago STRs

Chicago’s framework covers registration/licensing, zoning, safety, taxes, platform obligations, and reporting. State rules add lodging taxes and reporting. Sources: 1, 2, 3, 5, 9, 12, 13, 14, 15, 16, 18, 20.

  • Eligibility and zoning
    • Units must have six or fewer sleeping rooms; cannot operate in Restricted Residential Zones; cannot be on the Prohibited Buildings List, Scofflaw List, or Problem Landlord List; HOA/lease must allow short‑term renting. 5, 6, 7, 8, 9
  • Registration and licensing
    • Annual Shared Housing Registration required per unit; SHUOL required if hosting more than one unit (valid two years). 1, 5
    • The old “Vacation Rental” license has been replaced by the Shared Housing Registration framework. 1
  • Operational standards
    • Occupancy limits: 2 guests per sleeping room (children under 18 not counted) OR 1 person per 125 square feet OR the building‑code occupancy—whichever is lowest. 5
    • Cleanliness and sanitation: soap, clean towels/linens, sanitized dishes/utensils, and food/beverage disposal between guests. 5
    • Records: keep guest registration records for three years. 5
    • Food service: comply with Chicago Municipal Code and Department of Public Health rules if providing food. 5
  • Taxes and surcharges (stays of 31 days or fewer; taxes apply to the total listing price including cleaning fees)
    • City of Chicago Hotel Accommodation Tax: 4.5%. 20
    • Chicago Vacation Rental & Shared Housing Surcharge: 4% (see also the Shared Housing Intermediary Ordinance). 5, 3, 20
    • Domestic Violence Surcharge: 2% of gross proceeds (destination-based). 20
    • Cook County Hotel Accommodation Tax: 1%. 5, 15
    • State of Illinois Hotel Operators’ Occupation Tax (HOT): 5.98–6.17% (applies to STRs for stays < 30 consecutive days; marketplaces will collect and remit starting Jan 6, 2026; otherwise, operators must register with IDOR and file returns). 15, 16
    • State-administered local taxes in Chicago may also apply (e.g., Sports Facilities, Metropolitan Pier and Exposition Authority, and Municipal Hotel taxes). 15, 20
    • On licensed intermediary platforms (e.g., Airbnb): the platform collects/remits required taxes on the host’s behalf. 1, 2, 20
    • If NOT using an intermediary: create a tax account and remit all applicable taxes and surcharges yourself. 1, 20
  • Intermediaries and data reporting
    • Short‑Term Residential Rental Intermediaries must collect Chicago hotel accommodation tax and submit it for each transaction facilitated on their platform. 2
    • Monthly data reporting to BACP is now required under Chicago law (effective per councilmatic record). Operators must report: current phone for operator/local contact; registration numbers, addresses, and wards of units listed during the reporting period; nights rented and rent paid; nights booked for the remainder of the year; and total tax paid by the STR marketplace to the city for each unit. Every quarter, BACP must provide aldermen a ward-level STR report including citations, violations, and disciplinary actions. 13, 14
  • Penalties and enforcement
    • Violations: $2,500–$10,000 per offense. License suspension or revocation possible for a single egregious condition or multiple violations within a 12‑month period. 12, 13

4) Contact information for the local authority in charge of STRs

  • Department of Business Affairs and Consumer Protection (BACP) – Small Business Center

5) Links to official resources and guidance (source pages)

Practical compliance checklist for Chicago STR investors

  • Verify eligibility: zoning, PBL, Restricted Residential Zones, HOA/lease prohibitions. 5, 6, 7, 8, 9
  • Create a portal account and submit application with required ID and residency documents. 1, 4
  • Upon approval, pay $125 registration fee and list only after your registration number is issued. 1
  • If operating more than one unit: obtain SHUOL; renew every two years. 5
  • Include registration number in all ads/listings/agreements/bookings. 5
  • Safety: install/maintain smoke alarms, CO detectors, and fire extinguisher; post local contact and evacuation diagram. 5
  • Occupancy: enforce 2 per bedroom (children under 18 not counted) or 1 per 125 sq ft or building‑code occupancy—whichever is lowest. 5
  • Taxes: if on a licensed intermediary, the platform remits; if self‑hosted, register and remit Chicago taxes plus state
Chicago

Market Saturation Score

036912
Mild Saturation
2/ 12
months with declining YoY revenue
2–4 declining months: early saturation pressure - watch for trend persistence.
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Photos of Chicago

Overview of Chicago

Chicago, Illinois, is a major city in the United States, known for its vibrant cultural scene, iconic architecture, and robust economy. With a population of approximately 2.7 million people, it is the third-largest city in the country. Chicago is located around 180 miles north of Indianapolis and approximately 300 miles northwest of St. Louis. It is well-connected to other major cities via extensive road and rail networks, as well as O'Hare International Airport, one of the busiest airports in the world.

Chicago's appeal for short-term rentals is multifaceted. Visitors are drawn to its rich history, diverse neighborhoods, and numerous attractions. Key landmarks and attractions include:

  1. Millennium Park: Home to the famous "Cloud Gate" sculpture (commonly known as "The Bean"), Millennium Park is a central gathering place for art, music, architecture, and landscape design. (Website: Millennium Park)

  2. The Art Institute of Chicago: This renowned museum boasts an extensive collection of art spanning thousands of years, including works such as Grant Wood's "American Gothic" and Georges Seurat's "A Sunday on La Grande Jatte." (Website: The Art Institute of Chicago)

  3. Navy Pier: This iconic entertainment complex stretches over 3,000 feet along the shoreline of Lake Michigan, offering shops, restaurants, an IMAX theater, and the Centennial Wheel. (Website: Navy Pier)

  4. Willis Tower: Formerly known as the Sears Tower, it features the Skydeck with The Ledge, a glass balcony extending four feet outside the 103rd floor of the building. (Website: Willis Tower Skydeck)

  5. Chicago Riverwalk: A pedestrian path along the Chicago River, the Riverwalk is lined with bars, restaurants, and rental spots for kayaks and boats. (Website: Chicago Riverwalk)

Chicago's thriving food scene, renowned for its deep-dish pizza and Chicago-style hot dogs, further enhances the city's appeal. The city's diverse neighborhoods, each with their unique charm and attractions, make it an ideal destination for short-term stays, catering to a wide range of interests and preferences.

Given these attractions and the city's strategic location, Chicago continues to be a favorite for travelers seeking short-term rental accommodations, providing a genuine urban experience combined with the comfort and convenience of temporary lodging.

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