Overview: Are Short-Term Rentals Allowed in Cleveland, TN?

Yes, short-term rentals are explicitly allowed in Cleveland, Tennessee. The city has enacted a regulatory framework that permits short-term rental operations while imposing requirements to ensure responsible hosting. Cleveland defines short-term rentals as residential properties partially rented for less than 30 continuous days, including units listed on vacation platforms like Airbnb and Vrbo.

The city has taken a measured approach to STR regulation, focusing on operational standards rather than geographic restrictions. According to Cleveland's Planning Director Robert Varnell, the ordinance "does not regulate where the short-term rentals operate but how they operate." This means investors can operate STRs in most residential zones, provided they meet the city's operational requirements, safety standards, and tax obligations.

The Cleveland City Council passed this regulatory framework on October 23, 2023, with the city planning to contact approximately 80-90 existing STR operators within city limits to ensure compliance.

How to Start a Short-Term Rental Business in Cleveland, TN

Launching a compliant short-term rental business in Cleveland requires following both state and local requirements. Here's the step-by-step process:

Step 1: Business License Acquisition

Before applying for any STR-specific permits, you'll need to obtain:

• Bradley County business license
• City of Cleveland business license

These foundational licenses are mandatory prerequisites for all commercial operations in Tennessee.

Step 2: Property Eligibility Assessment

Verify your property's compliance with:

• Zoning requirements (most residential zones allow STRs)
• Building code standards
• Safety requirements (smoke detectors, carbon monoxide alarms, fire extinguishers)

Step 3: Insurance Coverage

Secure liability insurance with minimum coverage of $500,000 unless your listing platform provides equivalent coverage. This is both a state requirement and essential protection for your investment.

Step 4: City STR Permit Application

Submit a formal application to the City of Cleveland for an operating permit. The city will conduct a life-safety inspection as part of this process.

Step 5: Tax Registration

Register for and begin collecting:

• Cleveland hotel/motel tax (4%)
• Bradley County lodging tax (7%)
• State and local sales tax

Step 6: Operational Setup

Establish systems for:

• Guest screening and management
• Noise and nuisance prevention
• Emergency response procedures
• Local contact information posting

Required Documents, Permits, Licenses, and Guidelines

Licenses and Permits

State Requirements:

• Tennessee does not issue statewide STR permits, but you must comply with the Tennessee Short-Term Rental Unit Act (SB1086)

Local Requirements:

• Bradley County Business License
• City of Cleveland Business License
• Cleveland STR Operating Permit ($300 fee)
• Annual renewal required for all licenses and permits

Required Documentation

Typical application requirements include:

• Personal identification (two forms showing proof of residence)
• Federal EIN and Social Security Number or ITIN
• Proof of ownership or lease agreement
• Proof of residency (for owner-occupied properties)
• Site plans and floor plans showing all rooms, doors, windows, and safety equipment locations
• Insurance certificates evidencing minimum $500,000 liability coverage
• Detailed ownership and contact information
• Notarized affidavits confirming information accuracy

Safety and Compliance Requirements

Mandatory Safety Equipment:

• Fire sprinklers (state requirement)
• Smoke alarms in all sleeping areas
• Carbon monoxide detectors on every habitable floor
• Fire extinguishers (minimum 5-pound capacity)

Building and Safety Compliance:

• Life-safety inspection by city officials
• Compliance with local building and fire codes
• Compliance with health and safety regulations

Specific Regulations for Short-Term Rentals

City-Level Regulations (Cleveland)

• Permit Fee: $300 for STR operating permit
• Permit Duration: Annual (365 days from issuance)
• Inspection Requirement: Life-safety inspection mandatory
• Nuisance Prevention: Must ensure no negative impacts on surrounding properties
• Local Contact: Must post name and phone number of responsible local party

County-Level Regulations (Bradley County)

• Business License: Required for all commercial operations
• Lodging Tax: 7% on all short-term rentals
• Zoning Compliance: Must comply with county zoning ordinances

State-Level Regulations (Tennessee)

Under the Tennessee Short-Term Rental Unit Act (SB1086):

• Insurance Requirement: Minimum $500,000 liability coverage
• Safety Equipment: Fire sprinklers, smoke alarms, carbon monoxide alarms
• Definition: Residential dwelling rented for less than 30 continuous days
• Business License: Required from county and city
• Tax Obligations: State and local sales tax, hotel/motel tax

Occupancy Limits:

• Maximum Occupancy: Generally limited to 2 guests per bedroom + 4 additional guests (maximum 12 total)
• Age Requirements: Principal renters must be 21+ years of age
• Rental Restrictions: Cannot rent to more than one party at a time

Operational Requirements:

• Noise Compliance: Must abide by applicable noise restrictions
• Waste Management: Must comply with waste management provisions
• Parking: Must provide appropriate parking spaces
• RV/Trailer Restrictions: No recreational vehicles, buses, or trailers visible on street or property

Tax Obligations

Cleveland Hotel/Motel Tax: 4% (approved May 2023, expected to generate ~$460,000 annually) Bradley County Lodging Tax: 7% Combined Lodging Tax: 11% total State and Local Sales Tax: Approximately 9.25%-9.75% Income Tax: Federal and state income tax applies to rental income

Contact Information for Local Authority

City of Cleveland - Planning Department

• Director: Robert Varnell
• Phone: 423-472-5041 (Cleveland Daily Banner contact)
• Website: clevelandtn.gov
• Address: 2075 N. Ocoee St., STE B, Cleveland, TN 37311

Bradley County Government

• Phone: 423-728-7100
• Website: bradleycountytn.gov

Tennessee Department of Revenue

• Website: tn.gov/revenue
• STR Information: tn.gov/revenue/for-businesses/for-hospitality-industry/short-term-rental-units.html

Source Pages and References

1. Cleveland Daily Banner - STR Tax Article: Short-term rentals in Cleveland subject to hotel/motel tax

2. StaySTRa Market Analysis: Cleveland, Tennessee Short-Term Rental Market Overview

3. Tennessee State Legislation: Tennessee Short-Term Rental Unit Act (SB1086)

4. iGMS State Regulations: Airbnb Regulations by State

5. SummerOS State Guide: Tennessee Short Term Rental Laws

Important Notes for Investors:

• Regulations can change; always verify current requirements with city officials
• Consider consulting with local legal counsel specializing in STR regulations
• Factor the 11% combined lodging tax into your financial projections
• Ensure your property insurance covers commercial short-term rental operations
• Consider hiring a local property manager familiar with Cleveland regulations

This guide provides a comprehensive foundation for navigating Cleveland's STR regulatory environment. Success in this market requires thorough compliance with all applicable regulations while maintaining professional guest relations and community standards.