Overview: Are Short-Term Rentals Allowed in Ann Arbor, MI?

YES — Short-term rentals are permitted in Ann Arbor, MI, but they are subject to some of the most stringent regulations in Michigan. The city has implemented a comprehensive licensing system that requires strict compliance with zoning, safety, and operational requirements. As of 2025, investors can legally operate short-term rentals in Ann Arbor, but must navigate a complex regulatory framework that prioritizes community standards and neighborhood preservation.

The city defines a short-term rental (STR) as any dwelling unit rented for 30 consecutive days or less to persons other than the owner who claims principal residence. The regulatory approach distinguishes between owner-occupied and non-owner-occupied properties, with significantly more restrictions on commercial operations in residential neighborhoods.

How to Start a Short-Term Rental Business in Ann Arbor

Starting an STR business in Ann Arbor requires careful planning and compliance with multiple regulatory requirements. The process begins with confirming that your property is located in an appropriate zoning district for your intended operation type.

Step 1: Determine Property Eligibility and STR Type

The city recognizes three types of short-term rentals:

• Non-Principal Residence STR: Commercial rental where the owner/host does not reside (requires Certificate of Compliance, subject to inspection, generally prohibited in residential districts)
• Principal Residence Homestay STR: Owner/tenant lives on-site throughout guests' stay (bed and breakfast style)
• Principal Residence Whole House STR: Owner/tenant does not occupy the dwelling while rented (traditional Airbnb/VRBO style)

Step 2: Verify Zoning Compliance

Before proceeding, confirm your property's zoning allows for your intended STR type. Residential zones (those starting with "R") only permit Principal Residence properties to apply. Non-owner-occupied properties have very limited options in residential areas.

Step 3: Obtain Required Certifications

For non-owner-occupied properties, you must obtain a Certificate of Compliance before applying for an STR license. This involves passing housing code inspections and meeting safety standards.

Step 4: Submit Application and Payment

Apply online through the STREAM system under the license tab. Applications must be paid in advance before review begins, with no refunds for denied applications.

Required Documents, Permits, Licenses, and Guidelines

Core Licensing Requirements

• STR License: Required for all units, $500 per unit per year
• Principal Residence Documentation: Sworn Statement of Principal Residency Form must be uploaded
• Certificate of Compliance: Required for non-owner-occupied properties in permitted zones

Documentation Checklist

• Completed STR license application
• Proof of property ownership or authorization
• Floor plans and site plans
• Parking information and compliance verification
• Certificate of occupancy
• Fire safety inspection certificate
• Liability insurance documentation (minimum $1 million coverage recommended)
• Principal residence verification (varies by STR type)

Safety and Compliance Requirements

• Smoke detectors in all sleeping areas
• Carbon monoxide detectors on each finished floor
• Fire extinguisher in conspicuous location
• Emergency contact information posted
• Maximum occupancy limits based on Housing Code standards
• Clear evacuation routes maintained

Advertising Requirements

• STR license number must be displayed in all advertisements
• Maximum occupancy must be clearly stated
• All listings must comply with city advertising standards

Specific Regulations: City, County, and State Level

City of Ann Arbor Regulations

Zoning Restrictions:

• Accessory Dwelling Units (ADUs) are prohibited from STR use
• Non-principal residence STRs are generally prohibited in residential districts
• Principal residence STRs permitted in residential and mixed-use zones
• Historic districts face additional preservation guidelines

Occupancy Limits:

• Maximum 4 persons plus offspring (descendants, adopted, foster children) in all zoning districts
• Maximum 6 persons as single unit in multiple-family and mixed-use districts
• Occupancy based on Housing Code standards for square footage, lighting, ventilation, and exits

Operational Requirements:

• Maximum stay of 30 consecutive days
• No hosting in non-habitable areas under Housing Code
• 24-hour response capability for guest issues
• Host responsible for all nuisance and enforcement complaints

State of Michigan Requirements

• 6% state sales tax on short-term rental transactions
• Property tax implications based on principal residence exemption
• State building and housing code compliance requirements

Local Tax Obligations

• 5% Ann Arbor city accommodations tax
• Monthly tax remittance requirements for gross rental revenue
• Separate registration required with Michigan Department of Treasury

Enforcement and Penalties

• Daily fines for operating without valid license
• License revocation possible for repeated violations
• Community Standards handles parking, trash, and vegetation complaints
• Ann Arbor Police Department handles noise complaints (must be reported while occurring)

Contact Information for Local STR Authorities

City of Ann Arbor Planning Department

• Phone: 734.794.6268
• Email: ShortTermRentals@a2gov.org
• Address: 301 E. Huron Street, First Floor, Ann Arbor, MI 48104
• Website: www.a2gov.org/planning/short-term-rentals/

Rental Housing Services

• Phone: 734.794.6264, Option 1
• Email: rentalhousing@a2gov.org

STREAM Online Application System

• Website: stream.a2gov.org/

Source Links and Additional Resources

Primary Government Sources:

• City of Ann Arbor Short-Term Rentals Page
• Chapter 97 - Short-Term Rentals Ordinance
• Unified Development Code
• STR Permitted Use Table
• Sworn Statement of Principal Residency Form

Informational Resources:

• STR Guide
• STR Complaint Fillable Form
• Comprehensive Land Use Plan

Additional Reference Materials:

• Chapter 105 - Housing Code
• City Contact Information

Important Notes for Investors:

• The regulatory landscape continues to evolve, with proposed state legislation potentially affecting local ordinances
• House Bill 4722 has been discussed at state level but has not been enacted as of 2025
• City regulations are strictly enforced with limited tolerance for non-compliance
• Principal residency verification is rigorously scrutinized through multiple documentation requirements
• The application process takes up to 21 business days, requiring advance planning for seasonal operations

This comprehensive regulatory framework reflects Ann Arbor's commitment to balancing economic opportunities with neighborhood preservation and community standards. Success in this market requires thorough understanding of these requirements and ongoing compliance monitoring.