Rehoboth Beach, DE: Short-Term Rental (STR) Investor Guide

Overview: Are Short-Term Rentals Allowed in Rehoboth Beach?

Yes—short-term rentals are allowed in the City of Rehoboth Beach provided you obtain and maintain a Residential Rental License for each rental property and comply with all applicable city and state requirements. Rehoboth’s framework distinguishes residential rentals (including short‑term rentals) from traditional lodging such as hotels, motels, inns, tourist homes, rooming houses, boardinghouses, cabins, and cottages, which fall under different regulatory regimes.

Key implications for investors:

• You must obtain an annual Residential Rental License ($150 fee) from the Building & Licensing Department.
• All rentals must pass an initial inspection and submit an annual self‑inspection.
• A local contact available 24/7 is mandatory.
• Overnight occupancy is limited to two persons per bedroom plus an additional two persons; children six years of age or younger are not counted.
• Compliance with state and local lodging taxes is required.

City reference: Residential Rentals ordinance and Residential Rental License procedures (see sources).

How to Start a Short-Term Rental Business in Rehoboth Beach

A practical, compliance-focused workflow:

1. Confirm eligibility and zoning

• Verify the property is zoned for residential rentals (most single‑ and multi‑family units qualify). If in doubt, consult the Building & Licensing Department and the Residential Rentals code.
• Confirm property taxes are current to avoid license delays.

2. Prepare required documentation

• Proof of ownership (e.g., deed).
• Government-issued ID (owner or authorized representative).
• Proof of up‑to‑date property taxes.
• Completed Residential Rental License Application.
• Written designation of a local contact reachable 24/7.

3. Apply for the Residential Rental License

• Submit the application by:
  • Email to businessandlicensing@rehobothbeachde.gov, or
  • In person at Building & Licensing, second floor of City Hall.
• Pay the $150 license fee (check, credit card, or in person).

4. Schedule and pass the initial inspection

• Call 302‑227‑6181, ext. 222 to schedule.
• Prepare the property to city standards (see inspection checklist below).

5. Register for and collect lodging taxes

• State: 4.5% lodging tax (effective Jan 1, 2025).
• Local (City): 7% lodging tax.
• County (Sussex): up to 3%.
• Register with the Delaware Division of Revenue and with the City as required.

6. Prepare the unit for guests and posting requirements

• Display the license and local contact information conspicuously inside the rental.
• Provide city “Good Neighbor” guidance to tenants and educate them on occupancy and community expectations.

7. Operate, maintain, and renew annually

• Maintain safety and code compliance year‑round.
• Submit the annual self‑inspection at renewal.
• Renew the license annually and remit lodging taxes on time.

Required Documents, Permits, Licenses, and Guidelines

• Residential Rental License (annual; $150 fee)
  • Application: Residential Rental License Application (PDF)
  • Submission: email to businessandlicensing@rehobothbeachde.gov or in person at Building & Licensing
  • Renewal: annual; city sends notification; renewals accepted up to 60 days before expiration
• Initial inspection
  • Schedule with Building & Licensing (302‑227‑6181, ext. 222)
• Annual self‑inspection and certification
  • Rental Property Self‑Certification Checklist (PDF)
• Proof of ownership and valid ID
• Property tax status verification (up‑to‑date)
• Local contact designation (available 24/7)
• Posting requirements: license, local contact information, and city ordinance requirements must be displayed in a conspicuous place in the rental
• Safety and code compliance
  • Life safety, maintenance, and code standards per city ordinance and inspection checklist
• Tax registrations
  • Delaware state lodging tax (4.5%), City lodging tax (7%), and Sussex County lodging tax (up to 3%)

Specific Regulations: City, County, and State

City of Rehoboth Beach (municipal rules)

• License and operations
  • Annual Residential Rental License required ($150).
  • License must be displayed in the rental.
  • Local contact required (reachable 24/7 to remediate concerns).
  • Annual self‑inspection required at renewal.
  • Owner education obligation: inform tenants on being good tenants and neighbors.
• Occupancy limits
  • Overnight occupancy limit: two persons per bedroom plus an additional two persons.
  • Children six years of age or younger are not included in the occupant count.
• Inspection and safety standards
  • Initial city inspection required; reinspection may be required for certain cases.
  • Properties must meet standards for:
    • Exterior and interior maintenance
    • Address markings (visibility and size)
    • Windows and doors operating as designed and meeting egress code
    • GFCI protection in bathrooms and kitchen receptacles serving countertops within 30 inches of any sink or wet area
    • Smoke detectors installed and maintained per code
    • Emergency escape openings per the building code in effect at the time of construction
• Renewals
  • Licenses renew annually; renew up to 60 days prior to expiration.
  • Failure to renew or maintain compliance can result in penalties or legal issues.
• Zoning scope
  • Applies to residential rentals (single‑family and multi‑family units).
  • Excludes hotels, motels, inns, tourist homes, rooming houses, boardinghouses, cabins, and cottages.
• Enforcement
  • Civil assessments of $250 per day until corrected for violations of the residential rental ordinance.
  • Progressive approach includes meetings with owners on repeated violations.
  • Licenses may be revoked for “good cause” (e.g., public health/welfare impact, non‑compliance, delinquent taxes/fees).

County level (Sussex County)

• Lodging tax: up to 3% on short‑term rentals. Coordinate remittance with county requirements.

State of Delaware

• Lodging tax: 4.5% on short‑term rental accommodations (effective Jan 1, 2025). Register and remit through the Delaware Division of Revenue.

Contact Information (Local Authority in Charge of STRs)

Building & Licensing Department (City of Rehoboth Beach)

• Phone: 302‑227‑6181, ext. 222
• Email: buildingandlicensing@rehobothbeachde.gov
• Business Licensing Email: businessandlicensing@rehobothbeachde.gov
• Hours:
  • Lobby: M–F 8:30am–4:00pm
  • Office: M–F 8:30am–4:30pm
• Address: 229 Rehoboth Avenue, Rehoboth Beach, DE 19971
• Website: www.rehobothbeachde.gov

For emergencies: 911 Rehoboth Beach Police Department (non‑emergency): 302‑227‑2577

Delaware Division of Revenue (state lodging tax)

• Phone: (302) 577‑8200
• Website: revenue.delaware.gov
• Note: Register for state lodging tax collection and filing through the Division.

Links to Source Pages (IMPORTANT)

• Residential Rental License – City of Rehoboth Beach: www.rehobothbeachde.gov/business-resources/business-other-licenses/residential-rental-license/
• Residential Rentals Code (Ecode360): ecode360.com/31019992
• Residential Rental License Application (PDF): www.rehobothbeachde.gov/wp-content/uploads/2025/01/residential-rental-license-application-1.pdf
• Rental Property Self‑Certification Checklist (PDF): www.rehobothbeachde.gov/wp-content/uploads/2025/02/Rental-Property-Self-Certification-Checklist-1-2025.pdf
• Good Neighbor Guidelines for Vacation Rentals (PDF): www.rehobothbeachde.gov/wp-content/uploads/2025/02/Good-neighbor-guidelines-for-vacation-rentals-1.pdf
• Delaware Short‑Term Rental Regulations for 2025 – Checkmate Rentals: www.checkmaterentals.com/blog/delaware-short-term-rental-regulations
• Rehoboth Beach DE Short‑Term Rental Regulations – The Offer Sheet: local.theoffersheet.com/legal/rehoboth-beach-de/
• Delaware Division of Revenue (State Tax Information): revenue.delaware.gov

Practical Notes for Investors

• Time your launch: inspections and licensing can take weeks; avoid peak-season delays by applying well in advance.
• Designate a credible local contact with authority and access to the property to resolve issues promptly and avoid enforcement escalation.
• Document everything: keep records of safety equipment, inspections, tax filings, and communications for at least three years.
• Incorporate “Good Neighbor” expectations into your welcome materials and house rules to reduce neighbor complaints and enforcement risk.
• If you own multiple units, maintain a standardized compliance package (inspection checklists, postings, tax workflows) to streamline renewals and reduce administrative burden.

This guide is based solely on the provided sources and reflects city, county, and state information pertinent to Rehoboth Beach investors as of the latest available content. Always verify current requirements directly with the City of Rehoboth Beach Building & Licensing Department.