Chattanooga, TN Short-Term Rental Investor Guide

Executive Overview

Short-term rentals ARE allowed in Chattanooga, TN, but the city has implemented comprehensive regulations that distinguish between different types of operations. Chattanooga operates a two-tiered system that differentiates between "homestays" (owner-occupied properties) and "absentee" rentals (non-owner-occupied properties). The city allows both types in specific zones, with more restrictive regulations for residential areas and expanded opportunities in commercial districts where hotels are permitted.

The regulatory framework underwent significant reform in recent years, with the city council approving new legislation that streamlines compliance while toughening enforcement. These reforms were designed to protect neighborhood character while recognizing the economic benefits of short-term rental operations.

Starting a Short-Term Rental Business in Chattanooga

Step 1: Determine Your Eligibility and Zone Classification

For Homestays (Owner-Occupied):

• Must be your primary residence (at least 183 days per year)
• Allowed in commercial zones that permit hotels AND within the existing STVR overlay
• The STVR overlay encompasses much of downtown and surrounding neighborhoods

For Absentee Rentals:

• Allowed ONLY in commercial zones that permit hotels
• NOT permitted in residential zones (unless grandfathered in)
• 18-month cooling-off period required for any property rezoned from residential to commercial before applying for an absentee STVR permit

Permitted Commercial Zones for Absentee STVRs:

• C-2, C-3, C-4, C-5, UGC, CC
• IX, RF, RV, CX, SH

Step 2: Obtain Required Documentation

For ALL New STVR Applications:

• Valid State ID for the Applicant
• Valid State ID for Agent (if applicable)
• Proof of Ownership (warranty deed or tax assessor card screenshot)
• Proof of Insurance (declaration page)
• City of Chattanooga Business License
• Site/Floor Plan showing smoke/CO detector locations, layout, exits, and parking
• Emergency Escape Plan showing egress routes in RED from each room/floor
• Photo of posted EEP on each floor (8x11 format, mounted)

Additional for Homestay Applications:

• Secondary Proof of Primary Residence: W-2, W-9, 1099, 1065, or Voter's Registration Card

Additional for Company Ownership:

• Articles of Organization/Company Charter (if LLC or other company structure)

Step 3: Complete the Application Process

1. Access the Open Gov Portal: Apply online at https://chattanoogatn.viewpointcloud.com/categories/1101/record-types/6504
2. Create an account if you don't have one (free)
3. Submit application and attach all required documents
4. Processing time: Typically 30 days
5. Incomplete applications are not processed and have a 60-day lifetime

Step 4: Meet Safety and Compliance Requirements

Building Safety Standards (Hamilton County Checklist):

• Address identification: 4-inch Arabic numbers or letters visible from street
• Smoke alarms: UL 217 compliant, interconnected, installed per IFC 907.2.10
• Carbon monoxide detectors where required
• Electrical panel: All voids must have switches/plugs preventing exposed wiring
• Fire extinguisher: Minimum 2A:10BC rating on every level
• Fire separation from garage: Sheet rock on all floors/walls attached to living areas
• Sleeping room rescue windows: 5.7 sq ft opening, minimum 20" width, 24" height
• Stairs: Minimum 36" width, 7.75" maximum riser height
• Handrails: Required for 4+ risers, 34"-38" height
• Guardrails: Required when walking surface >30" above grade within 36", minimum 36" height
• Parking: On-site only, 1 space per 2 persons, no street parking
• Exterior permit: 8"x11" visible from street after approval

Required Documents, Permits, Licenses, and Guidelines

Permits and Licenses

Short-Term Vacation Rental Certificate:

• Homestay: $250 application fee, $250 annual renewal
• Absentee: $500 application fee, $500 annual renewal
• Validity: One year, must be renewed annually
• Certificates cannot be renewed if more than 30 days past expiration

City of Chattanooga Business License:

• Required for all STVR operations
• Apply through: https://chattanoogatreasurer.viewpointcloud.com/categories/1110

Hamilton County Business License:

• For unincorporated county properties
• Apply at: www.countyclerkanytime.com
• Contact: Cindy Brown at 423-209-6500

Tax Requirements

Hamilton County Occupancy Tax:

• 5% tax on all rental stays under 30 days
• Monthly filing required with Tennessee Department of Revenue
• Registration with state tax system required
• Form available: Hamilton County Occupancy Tax Form

Documentation Guidelines

Emergency Escape Plans (EEP):

• Must clearly show egress routes in RED from each room/floor
• Must be posted on each floor in 8x11 format, mounted permanently
• Photos required showing placement and format compliance

Property Plans:

• Site plans must include parking locations
• Floor plans must show all room layouts, exits, and detector locations
• Plans must be legible and drawn to scale

Specific Regulations - City, County, and State Level

City of Chattanooga Regulations

Zoning Restrictions:

• Homestays allowed in commercial zones AND within STVR overlay
• Absentee rentals ONLY in commercial zones that allow hotels
• 25% saturation limit for multi-family residential buildings
• Property transfers allowed (certificate cannot move between properties)

Operational Requirements:

• Local contact available 24/7 by phone
• Contact must be able to arrive within 2 hours for safety/noise issues
• No neighbor notification or public hearing requirement for applications
• Grandfathering: All currently permitted STVRs may be renewed annually

Rezoning Policy:

• 18-month waiting period for properties rezoned from residential to commercial
• Designed to prevent circumvention of new regulations

Hamilton County Requirements (Unincorporated Areas)

Building Standards:

• International Fire Code (IFC) compliance required
• 2018 IFC standards for safety features
• Residential building codes apply in addition to STVR requirements
• Building inspections required before certificate issuance

Operational Requirements:

• Exterior permit posting mandatory
• Point of contact must reach property within 2 hours
• Permit revocation authority for non-compliance

State of Tennessee Requirements

Business Registration:

• Tennessee Department of Revenue registration required
• Sales tax collection and remittance for transient accommodations
• State business license compliance

Property Rights:

• Right to operate subject to local zoning laws
• Appeal rights through Board of Zoning Appeals and Chancery Court
• 60-day appeal window from denial or revocation

Enforcement and Penalties

Administrative Hearing Officer:

• Mike Mallen appointed as city administrative hearing officer
• Authority to levy fines up to $500 per day for violations
• Streamlined enforcement process vs. previous city court system

Common Violations:

• Operating without proper permits
• Safety standard non-compliance
• Parking violations
• Noise ordinance violations
• Failure to maintain exterior posting

Enforcement Process:

• Three dedicated STVR inspectors monitor compliance
• Violations go directly to administrative hearing officer
• Immediate fine structure replaces previous cost-of-business approach

Contact Information for Local Authority

City of Chattanooga - Zoning Division

Address: 1250 Market Street, Suite 3046, Chattanooga, TN 37402 Phone: (423) 643-5891 Email: stvr@chattanooga.gov Website: https://chattanooga.gov/pay-and-apply/permits-applications/short-term-rental

Application Portal: https://chattanoogatn.viewpointcloud.com/categories/1101/record-types/6504

Hamilton County Development Services

Address: 1250 Market Street, Suite 3046, Chattanooga, TN 37402 Phone: (423) 209-7970 Email: developmentservices@hamiltontn.gov

Hamilton County Clerk's Office (Business Licenses)

Address: 625 Georgia Avenue, Room 111, Chattanooga, TN 37402 Phone: (423) 209-6500 Contact: Cindy Brown

City Services

311 Help & Info: For reporting violations and general assistance Administrative Hearing Officer: Mike Mallen (for enforcement matters)

Additional Resources and Links

Official Sources:

• Chattanooga Short-Term Vacation Rental Code Compliance Information Guide
• How To Check For Short-Term Rental Availability
• Chattanooga Zoning Maps

News and Analysis:

• Chattanooga Chamber - STVR Reform Article
• Chattamatters - What's New with STVRs

Business License Applications:

• City of Chattanooga Business License
• Hamilton County Business License

This comprehensive regulatory framework represents Chattanooga's balanced approach to managing short-term rentals while protecting neighborhood character and housing availability. Investors should carefully review zone classifications and compliance requirements before acquiring properties for STR operations.