Ann Arbor, Michigan Short Term Rental Regulations Guide for Airbnb hosts

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.

What do Airbnb hosts actually earn in Ann Arbor?

Ann Arbor hosts earn a median $34,540/year with $217 ADR and 59% occupancy.

Top performers pull in $48,818+ per year.

See the full Ann Arbor market breakdown

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:

Informational Resources:

Additional Reference Materials:

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.

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Ask the AI Advisor about Ann Arbor

Ann Arbor is a vibrant city in southeastern Michigan and serves as the seat of Washtenaw County. Home to roughly 125,000 residents, it is best known as the home of the University of Michigan, one of the country's most prestigious public research universities. The city's character is shaped heavily by the university, giving it a youthful, intellectual energy combined with the amenities of a small, walkable Midwest city. It is a gateway to the broader Detroit metropolitan area, sitting about 45 miles west of downtown Detroit and roughly 60 miles southeast of Lansing, the state capital. Its tree-lined streets, independent bookstores, farm-to-table restaurants, and a lively arts scene have earned Ann Arbor a reputation as one of the most cultured small cities in the Midwest.

A natural starting point for any visitor is the University of Michigan campus, where landmarks like the Michigan Stadium — one of the largest college football stadiums in the country — and the central Diag anchor thousands of events throughout the year. The campus also hosts the University of Michigan Museum of Art, a free public art museum with a notable collection spanning centuries, located within walking distance of the downtown core. Just east of central campus, the historic Kerrytown district offers a farmers' market, independent shops, and locally loved eateries, making it a favorite weekend stop for both residents and visitors.

For those seeking green space, the Matthaei Botanical Gardens and the adjacent Nichols Arboretum provide miles of walking trails and curated gardens just minutes from downtown. The arboretum, often called "the Arb," features a restored prairie, peony gardens, and the famous Huron River waterfall, and is a particular draw in spring when its magnolias and cherry blossoms bloom. A short drive west of the city, the Waterloo and Pinckney state recreation areas offer hiking, swimming, and paddling on glacial lakes, making Ann Arbor a convenient base for outdoor recreation as well as urban exploration.

About 45 minutes east, Detroit offers an easy day trip for guests interested in the city's revitalized riverfront, the Detroit Institute of Arts, and the Motown Museum. Closer in, the Ann Arbor Hands-On Museum on the edge of downtown draws families with its interactive science and technology exhibits, anchoring a steady stream of family-oriented travel throughout the year.

Ann Arbor makes a compelling base for short-term rentals because it consistently draws a diverse mix of visitors: prospective students and families touring the university, fans converging for football and basketball weekends, professionals traveling to hospital and tech employers, and conference attendees filling hotels during the academic calendar. Its walkable downtown, strong dining and arts scene, and proximity to both natural areas and Detroit give property owners a year-round audience, with peak demand coinciding with fall football Saturdays, spring graduation, and the vibrant summer festival season along Main Street.