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

Short-term rentals (STRs) are not explicitly prohibited in the Mount Sterling zoning ordinance reviewed. However, whether an STR is permissible depends on how it is classified under the city’s zoning system and the district in which the property sits:

• In residential zoning districts, lodging uses (e.g., tourist homes, boarding houses, transient sleeping rooms) are generally not permitted. The ordinance’s definitions and use categories show lodging and “sleeping rooms” as consumer services, and “dwelling units” are meant for longer-term housekeeping rentals (weekly, monthly, or longer). Many boarding-house or transient-lodging activities would not be compatible uses in residential zones.
• In commercial zoning districts (e.g., B‑1, B‑2, B‑4) or in professionally compatible zones (e.g., P‑1), lodging or hospitality uses may be permissible subject to the district’s permitted or conditional uses, signage, parking, and related regulations.
• Converting an existing home to a lodging use requires building permits, plans, and a Certificate of Occupancy before any use or occupancy, as explicitly stated in the ordinance.

In short: STRs are not banned by name in Mount Sterling, but they must comply with zoning district rules, building codes, and occupancy requirements. Residential zones typically disallow transient lodging, while commercial districts may allow it as a permitted or conditional use.

How to Start a Short-Term Rental Business in This Market

1. Confirm Zoning and Allowed Uses

• Determine your property’s zoning district (e.g., R‑1 to R‑4 residential; B‑1, B‑2, B‑3, B‑4 commercial; P‑1 professional office; I‑1/I‑2 industrial). Review the Mount Sterling Zoning Ordinance to confirm whether lodging/tourism uses are permitted or conditional in that district. If you are in a residential district, expect that lodging uses (tourist homes, boarding houses, transient sleeping rooms) are not permitted without a rezoning or variance, and such relief is unlikely for a transient lodging use in a residential zone.

2. Secure Building Permits and Certificate of Occupancy

• Building permits are required for any erection, moving, addition, or structural alteration. Submit plans in duplicate (drawn to scale) showing lot dimensions, existing and proposed buildings, and uses. Fees are calculated per the Kentucky Department of Housing fee schedule, and plans must be approved before work begins.
• A Certificate of Occupancy (CO) is required before using or occupying a building that is newly built, altered, or changed in use. The CO confirms conformance with zoning, building, and housing regulations and costs $20 per certificate.
• Obtain any other required permits (e.g., sign permit for exterior signage, grading permit if applicable) from the Administrative Official/Zoning Administrator.

3. Apply for Board of Adjustment Approvals If Necessary

• If lodging uses are conditional in your district or require deviations (e.g., dimensional variances), apply for a Conditional Use Permit or variance. The Board can impose conditions, time limits, and conduct annual reviews. Conditional Use Permits must be filed with the County Court Clerk at the applicant’s expense.

4. Plan for Compliance with Development and Safety Standards

• Parking: Off-street parking must meet the ordinance’s specified ratios and design standards. For example, one- and two-family dwellings require two parking spaces per unit; multiple-family dwellings require two spaces per dwelling unit; tourist homes/motels require one space per guest bedroom. Parking spaces are 160 sq ft each, and maneuvering aisles must avoid public right-of-way backing or maneuvering. When within 200 feet of a residence district, parking areas should have dustproof treatment; lighting must reflect away from residential areas.
• Landscaping: Vehicular use areas over 6,000 sq ft or with 20+ spaces require interior landscaping. Perimeter buffer easements apply to certain land use adjacencies (see landscaping matrix).
• Water/Sewer: Construction or occupancy requires approved water supply and sewage disposal. If public mains are accessible, connection is required; otherwise, individual systems must meet the ordinance and County Health Officer requirements. For single-family residences with septic, the minimum lot size is 32,670 sq ft (with or without public water), with a minimum 100-foot width where public water is accessible.
• Fire/Life Safety: All construction and occupancy must comply with the Kentucky Building Code. Confirm smoke alarms, carbon monoxide alarms, and any additional life safety features required by state code for lodging uses.

5. Register and Collect Taxes

• Sales and Use Tax: Kentucky’s state sales and use tax is 6% on accommodations (as of the latest statutory framework). You must register with the Kentucky Department of Revenue to collect and remit sales tax on STR bookings.
• Transient Room Tax (if enacted locally): Kentucky Revised Statutes (e.g., KRS 91A.350) authorize cities to levy a transient room tax (generally up to 3%). Verify with the City of Mount Sterling whether a local transient room tax applies; if so, register and remit as required.

6. Develop Operational Policies

• Draft house rules for occupancy, noise, parking, and trash management. Consider professional hosting management to handle turnover, guest communications, and compliance monitoring.
• Maintain records: building permits, CO, conditional use/variance documentation (if applicable), tax registrations, insurance, and inspection history.

Required Documents, Permits, Licenses, and Guidelines

• Building Permit Application with duplicate, scaled plans showing lot dimensions, existing and proposed buildings, use types, and the number of dwelling/guest units.
• Certificate of Occupancy before use/occupancy; $20 fee.
• Zoning Compliance/Certificates (if applicable) confirming the use is permitted or conditionally approved.
• Conditional Use Permit (if required by district) including Board of Adjustment conditions and conditions monitoring. Annual review required; permits may be revoked for non-compliance.
• Sign Permit (if exterior signage is used) issued by the Zoning Administrator; signage must meet district rules for size, height, and placement.
• Grading Permit (if applicable) for grading, excavation, filling, or stockpiling.
• State Sales Tax Registration (Kentucky Department of Revenue) for collecting/remitting sales tax on accommodation charges.
• Local Transient Room Tax Registration (if adopted locally by Mount Sterling).
• Insurance: Verify liability and property coverage appropriate for lodging operations.
• Fire/Life Safety Compliance: Kentucky Building Code–required smoke/CO alarms and any additional systems for lodging uses.

Specific Regulations for Short-Term Rentals (City/County/State)

City of Mount Sterling – Zoning and Development

• Zoning Districts and Uses:
  • Residential districts (R‑1 to R‑4): Lodging uses (tourist homes, boarding houses, transient sleeping rooms) are typically incompatible. Short-term rental activity resembling lodging in these districts would generally not be permitted.
  • Commercial districts (B‑1, B‑2, B‑4, etc.): Lodging uses may be permitted or conditional subject to district regulations, signage controls, parking, and other standards.
  • Professional Office (P‑1): Certain lodging/hospitality uses may be allowed if compatible with professional office purposes and permitted/conditional in that zone.
  • Industrial districts (I‑1/I‑2): Lodging uses are not typical; verify specific provisions if considering mixed-use or ancillary lodging.
• Permits and Procedures:
  • Building permits are required for any construction, alteration, or structural change; plans must be approved before issuance.
  • Certificate of Occupancy ($20) is required before use/occupancy of any newly created, altered, enlarged, or changed building/use.
  • Conditional Use Permits and variances are processed by the Board of Adjustment; public notice and fees apply. The Board can impose conditions, conduct annual reviews, and revoke permits for non-compliance.
• Parking Requirements:
  • One-family and two-family dwellings: 2 spaces per dwelling unit.
  • Multiple-family dwellings: 2 spaces per dwelling unit.
  • Tourist homes/motels: 1 space per guest bedroom.
  • Parking space standard: 160 sq ft per space exclusive of aisles/drives; aisles must allow safe maneuvering without public right-of-way backing.
  • Lighting must be arranged to reflect away from residential districts; screening required for larger lots adjacent to residential/institutional uses.
• Landscaping:
  • Interior landscaping required for vehicular use areas exceeding 6,000 sq ft or 20+ spaces (minimum 5 sq ft of landscaped area per 100 sq ft of vehicular use area).
  • Perimeter buffer easements between incompatible land uses (see ordinance matrix) with minimum widths and planting requirements.
• Water and Sewer:
  • Water supply and sewage disposal must be approved by the Water and Sewer Commission and County Health Officer.
  • If public water/sewer is accessible, connection is mandatory.
  • For single-family residences using septic, minimum lot size is 32,670 sq ft; minimum frontage is 100 feet where public water is accessible.
• Prohibited/Controlled Signs:
  • On-premise and off-premise sign regulations limit size, height, placement, and proximity to residential districts, schools, parks, and other signs; certain signs (flashing, moving, over public right-of-way) are prohibited.
• Nonconforming Uses:
  • Existing nonconforming lodging uses may continue but cannot be expanded or substantially remodeled without Board approval. Nonconforming use cannot be resumed after one year of discontinuance.
• Enforcement and Penalties:
  • Violations are misdemeanors, punishable by fines up to $100 and/or up to 30 days imprisonment; each day of violation constitutes a separate offense. The city may take other lawful action to remedy violations.
  • The Board of Adjustment hears appeals; appeals of Board decisions go to Montgomery County Circuit Court within 30 days.

Montgomery County – Health and Environment

• County Health Officer approval is required for water and sewer disposal systems where public services are not available. Subdivision and land development standards also apply when dividing property for development.

Commonwealth of Kentucky – State-Level Framework

• State Zoning Authority (KRS Chapter 100): Cities like Mount Sterling adopt zoning ordinances under state enabling law.
• Building Codes: All construction and occupancy must comply with the Kentucky Building Code.
• Taxes:
  • Sales and Use Tax: 6% state tax on accommodations; STR operators must register with the Department of Revenue and collect/remit tax.
  • Transient Room Tax: Kentucky statutes authorize cities to levy up to 3% (verify Mount Sterling’s current adoption).
• Tourism/Home Occupations:
  • KRS 219.011 defines “tourist home” and requires state-level licensing/permitting when applicable. Review any statewide health and safety requirements for tourist homes.
  • Home occupations are incidental to residential use, with restrictions on exterior evidence, traffic, odors/noise, and floor area (≤ 25% of residential floor area). Home occupations exclude retail sales; therefore, operating an STR that offers lodging is distinct from a typical home occupation and is treated as a lodging/business use.

Contact Information

• City of Mount Sterling – Administrative Official / Zoning Administrator:

  • Phone: Not specified in provided materials.
  • Email: Not specified in provided materials.
  • Website: mtsterling.ky.gov/ (see Building/Zoning Inspector pages for ordinances and applications)

• City of Mount Sterling – City Clerk (for zoning ordinance and map filing and official records):

  • Phone/Email: Not specified in provided materials.

• Board of Adjustment (Mount Sterling):

  • Public notices and hearing schedules are handled by the Board; contact the City for meeting schedules and filing procedures.

• Montgomery County Health Department:

  • Contact for approvals of water supply and sewage disposal, especially for properties not served by public water/sewer.

• Kentucky Department of Revenue (DRE):

  • For sales and transient room tax registration/guidance: revenue.ky.gov/

• Kentucky Department of Housing, Buildings and Construction:

  • Fee schedules and building code guidance: www.dhbc.ky.gov/Pages/default.aspx

Note: Where phone numbers or emails are not shown in the source, consult the City’s website for current contact details.

Source Pages

• Mount Sterling Zoning Ordinance and Subdivision Regulations (Final Draft, Revised March 12, 2001)
  • Source: mtsterling.ky.gov/Government/PublishingImages/Pages/Building-Inspector/Mt.%20Sterling%20Zoning%20Regs.pdf

Practical Takeaways for STR Investors

• Confirm zoning first. In residential zones, short-term lodging is generally not allowed; in commercial zones, it may be permissible as a permitted or conditional use.
• Prioritize compliance with building permits and the Certificate of Occupancy before listing or renting.
• Budget for parking, landscaping, and any Board of Adjustment processes (conditional use/variance), including potential annual reviews and filing fees.
• Register for Kentucky sales tax and confirm whether Mount Sterling has adopted a transient room tax; collect and remit accordingly.
• Develop a management plan to meet local code standards for life safety, trash, noise, and parking, and keep detailed records to maintain compliance.