Regulations >
Kentucky >
Lexington

Want to see how Lexington compares to other top cities in Kentucky?  Explore all city regulations in Kentucky. →

C

Lexington, KY

Challenging To Investors

Local STR Agent

Local STR Agent

Lexington STR Expert
Lexington, Kentucky skyline

STR Regulations for Lexington, Kentucky

Overview: Are Short-Term Rentals Allowed in Lexington, KY?

Yes, short-term rentals (STRs) are explicitly allowed in Lexington, Kentucky under specific regulatory frameworks established by the Lexington-Fayette Urban County Council. STRs are defined as "the commercial use of a dwelling unit rented in whole or part for temporary occupancy by transient guests for a tenancy of less than 30 consecutive days, where no meals are served." The city has implemented a comprehensive regulatory system that distinguishes between "Hosted STRs" (where the owner lives on the property) and "Un-Hosted STRs" (where the owner does not occupy the property), with different requirements for each category.

Recent regulatory updates took effect December 12, 2024, implementing density restrictions and reducing occupancy limits to address community concerns about STR clustering in residential neighborhoods.

What do Airbnb hosts actually earn in Lexington?

Lexington hosts earn a median $31,431/year with $178 ADR and 61% occupancy.

Top performers pull in $46,594+ per year.

See the full Lexington market breakdown

How to Start a Short-Term Rental Business in Lexington

Starting an STR business in Lexington requires navigating a multi-step regulatory process:

Step 1: Initial Zoning Verification

  • Complete the short-term rental zoning verification form through the Division of Planning
  • Submit only one form per property
  • Receive email confirmation from Planning staff

Step 2: Obtain Required Permits and Licenses

  • Zoning Compliance Permit through the Division of Planning
  • Business License through the Division of Revenue (if not already held)
  • Special Fees License through the Division of Revenue (annual renewal required)

Step 3: Application Submission

  • Create account at str.lexingtonky.gov
  • Upload all required documentation
  • Pay applicable fees
  • Await Division of Revenue review and contact for additional details

Step 4: Operational Compliance

  • Display Local Registration Number in all advertisements
  • Maintain compliance with safety requirements
  • Submit annual reports to Division of Revenue

Required Documents, Permits, Licenses, and Guidelines

Mandatory Permits and Licenses

1. Zoning Compliance Permit

  • Issued by Division of Planning
  • Required for each property being licensed
  • Contact: Stephanie Cunningham at scunning@lexingtonky.gov or (859) 258-3885

2. Business License

3. Special Fees License

  • Issued by Division of Revenue
  • Annual renewal required
  • Fees: $200 for first unit, $100 per additional unit
  • Application portal: str.lexingtonky.gov

Required Documentation

For All STRs:

  • Current Occupational Business License
  • Sworn Affidavit signed by Applicant attesting compliance with safety requirements
  • Sworn Affidavit signed by Owner (if applicant is not the owner)
  • Zoning Compliance Permit
  • Site plan and floor plan depicting property and parking capacity
  • Certificate of insurance or proof of general liability insurance ($1,000,000 minimum)
  • For septic tank properties: Evidence of adequate septic system capacity
  • Documentation of Local Registration Number for advertisement inclusion

Additional for Hosted STRs:

  • Two forms of documentation showing permanent residence:
    • Motor vehicle registration
    • Unexpired Driver's License
    • Voter registration
    • Tax documents indicating dwelling as residence
    • Utility bill

Safety and Operational Requirements

  • Smoke and carbon monoxide detectors in all sleeping areas and adjacent hallways
  • Compliance with building codes, fire codes, and all applicable regulations
  • Maximum occupancy limits (currently 10 guests as of December 2024)
  • Prohibition on events exceeding general occupation limits

Specific Regulations for Short-Term Rentals

Legal Definitions

  • Short-Term Rental (STR): Commercial use of dwelling unit for temporary occupancy under 30 consecutive days, no meals served
  • Hosted STR: Primary residence where owner occupies property during guest stays
  • Un-Hosted STR: Property not occupied by primary resident during guest stays

Density and Zoning Restrictions (Effective December 12, 2024)

For Un-Hosted STRs in Residential Neighborhoods:

  • Conditional Use Permit required through Board of Adjustment
  • Permit denial if existing STR within 600 feet
  • Permit denial if 2% or more of homes within 1,000 feet are STRs
  • Limited to 10 applications per Board of Adjustment meeting
  • Maximum 10 guests per STR (reduced from 12)

Exceptions to Density Restrictions:

  • Property adjacent to nonresidential zones allowing STRs
  • Significant environmental feature or minor arterial/higher classification road separating properties

Operational Limitations

  • STRs cannot host events exceeding occupancy limits
  • Conditional Use Permits are non-transferable to new owners
  • Properties must maintain compliance with residential zoning requirements

Tax Obligations

  • Local transient room tax: 8.5% (collected by platforms like Airbnb/Vrbo)
  • State transient room tax: 1% (collected by platforms when applicable)
  • Sales tax: 6% (may be passed to customers)
  • Annual licensing fees: $200 first unit, $100 each additional unit

Non-Compliance Penalties

  • Fines up to $500 per day for operating without license
  • Citations for safety violations, occupancy violations, and zoning violations
  • Appeal process through Board of Adjustment

Contact Information for Local Authority

Division of Revenue (Primary STR Authority)

  • Address: 218 E. Main St., Lexington, KY 40507
  • Phone: (859) 280-8300
  • Fax: (859) 258-3309
  • Email: revenue@lexingtonky.gov
  • Hours: Monday – Friday: 8 a.m. – 5 p.m.
  • STR Portal: str.lexingtonky.gov

Division of Planning

Board of Adjustment

  • Handles Conditional Use Permit applications for unhosted STRs
  • Appeals process for citations and violations
  • Limited to 10 STR applications per meeting

General Government Contact

  • Address: 200 E. Main St., Lexington, KY 40507
  • Phone: (859) 425-2255

Source Pages and Important Links

Primary Regulatory Sources

Regulatory Documents

Additional Resources

News and Regulatory Updates

This comprehensive regulatory framework requires careful adherence to all requirements, with particular attention to recent density restrictions and reduced occupancy limits. Investors should regularly monitor updates through Engage Lexington and maintain compliance with all safety and operational standards to avoid penalties and ensure continued operation of their STR business in Lexington.

Next step

Found a property in Lexington?

Paste any address and get estimated revenue, cash-on-cash return, and comparable STR performance in under 5 minutes. 3 free analyses per day.

Ask the AI Advisor about Lexington

Free brief

Get the free Lexington STR Investment Brief

Revenue data, top neighborhoods, seasonal trends, and the key regulations for Lexington, Kentucky in one email.

Lexington

Market Saturation Score

036912
Mild Saturation
4/ 12
months with declining YoY revenue
2–4 declining months: early saturation pressure - watch for trend persistence.
View Full Lexington Market Analysis

Photos of Lexington

Overview of Lexington

Lexington sits in the heart of Kentucky's Bluegrass region as the seat of Fayette County, with a population of roughly 320,000 residents. Known widely as the "Horse Capital of the World," the city is the cultural and economic anchor of the surrounding rolling horse-country landscape and serves as a natural gateway to central Kentucky's bourbon distilleries, historic estates, and natural areas. It lies about 80 miles east of Louisville and roughly 80 miles south of Cincinnati, both of which are easily reached by interstate.

Just minutes north of downtown, the Kentucky Horse Park spreads across more than 1,200 acres and functions as both a working horse farm and an educational park. Visitors can watch daily parade-of-breeds shows, tour the International Museum of the Horse, and attend major equestrian events, all within a short drive of most Lexington addresses.

Also nearby, Keeneland is one of the most prestigious thoroughbred racecourses and sales venues in North America. Its spring and fall race meets draw large crowds, and its year-round horse sales are central to the global thoroughbred industry. The track's grandstand and surrounding grounds offer visitors an intimate, traditional racing experience set squarely in the middle of the Bluegrass.

About 30 miles southwest of Lexington, Shaker Village of Pleasant Hill preserves one of the country's best examples of a restored Shaker religious community. The roughly 3,000-acre site features original 19th-century buildings, craft demonstrations, and miles of walking trails, making it a popular day trip for guests interested in Kentucky's rural and religious history.

For those drawn to the outdoors, the Red River Gorge lies roughly 60 miles east of Lexington within the Daniel Boone National Forest. The area is known for its sandstone arches, rock-climbing cliffs, and forested gorges, and includes the famous Natural Bridge, drawing hikers, climbers, and casual sightseers throughout the year.

Lexington's appeal as a short-term rental base comes from the way it blends a compact, walkable downtown and a celebrated food and bourbon scene with easy day-trip access to horse country, historic communities, and some of Kentucky's most striking natural landscapes. The University of Kentucky's sports and academic calendar, the busy Keeneland racing seasons, and steady bourbon-tourism traffic give the market a year-round rhythm that supports a wide range of guest stays.

Want to know if a property in Lexington is a good investment?

Enter an address to get instant revenue potential and comps.