Overview (Explicit Answer): Short-term rentals are allowed in Leavenworth, but only in very specific contexts:

• Inside the City of Leavenworth (and its Urban Growth Area), STRs are effectively prohibited in all residential zoning districts (RL6, RL10, RL12, and multifamily zones). Commercial zoning districts (Central Commercial, General Commercial, Tourist Commercial) allow STRs, but only after compliance with building and life-safety code conversions (e.g., to R‑1 occupancy), City business licensing, and, in many cases, fire sprinklers and parking improvements. An owner-occupied Bed & Breakfast (B&B) is the only residential-zone STR pathway, and it requires a Conditional Use Permit (CUP) plus licensing. In short, you can operate inside city limits if you are in a commercial zone and complete a full conversion to transient lodging standards; otherwise, city residential zones are closed to STRs.
• In unincorporated Chelan County surrounding Leavenworth, STRs are permitted through a county permit system, but current local information suggests capacity limits have been reached and no new permits are being issued in the Leavenworth area as of 2025. Investors should confirm live availability with Chelan County Community Development before pursuing any acquisition or conversion.

Investors should also be aware that Washington State regulates overnight accommodations (Department of Health), and you must meet business licensing and tax obligations at the state and local levels. Due to the city’s prohibition in residential areas and the county’s capped permit environment, new STR development within Leavenworth’s prime location is tightly constrained.

How to Start a Short-Term Rental Business in This Market

1. Determine Jurisdiction and Zoning

• City of Leavenworth:
  • Confirm the property is within commercial zoning. STRs are not permitted in RL6, RL10, RL12, or multifamily residential zones.
  • If the property is residential, the only legal STR pathway is an owner‑occupied B&B with a Conditional Use Permit.
• Unincorporated Chelan County:
  • Confirm whether the parcel is in a permitted zone for STRs and verify current permit availability in your subarea (caps apply by zip code/UGA). The Leavenworth area is reported to be at capacity and closed to new permits; verify live status with the county before proceeding.

2. Pre‑Development and Building Compliance

• City of Leavenworth (Commercial STR):
  • Expect an occupancy conversion from residential (R‑3/R‑2) to transient (R‑1) under the International Building Code (IBC) and International Existing Building Code (IEBC).
  • Typical requirements include fire sprinklers (NFPA 13R or equivalent as applicable), stair handrails and guardrails meeting IBC standards, fire alarm systems, accessibility considerations, and parking improvements.
  • Obtain a building permit for conversion. The conversion scope is project‑specific and must be designed by an architect familiar with IBC/IEBC.
• Unincorporated Chelan County (County STR):
  • Apply for the appropriate county STR permit tier (see “Specific Regulations” section below).
  • Complete a fire and life safety inspection with the Chelan County Fire Marshal and address all required corrections.

3. Licensing and Permitting

• City of Leavenworth:
  • City business license prior to operation.
  • For a B&B (residential), a Conditional Use Permit plus City licensing. For a commercial‑zoned STR, City licensing plus all building code conversion permits.
  • Washington State Department of Health lodging license (overnight accommodations).
• Unincorporated Chelan County:
  • County STR permit (Tier 1, 2, or 3) and annual renewal.
  • Washington State business license and registration with the Department of Revenue.
  • Liability insurance (county minimums apply), parking plan, occupancy verification, and 24/7 local contact.

4. Post‑Permit Operations

• Taxes: Register with the Washington Department of Revenue; collect and remit state sales tax, state lodging tax, and any local lodging taxes. Many booking platforms collect and remit lodging taxes, but you must still register and file returns.
• Safety and Guest Policies: Post emergency evacuation plans, maintain safety equipment, enforce occupancy limits (2 persons per bedroom), and deliver the city noise ordinance to guests at check‑in (city STRs).
• Renewals: Keep all permits current (e.g., annual county renewals; city business license annually).

Investor Note: Given capacity constraints, many investors are evaluating alternatives in other Chelan County subareas with open permit availability. Perform strict due diligence on permit status and zone allowances before purchasing.

Required Documents, Permits, Licenses, and Guidelines

City of Leavenworth (Commercial STR)

• Building conversion permit for occupancy change to R‑1 (IBC/IEBC).
• City business license (renew annually).
• Conditional Use Permit (if seeking B&B in residential zones; owner‑occupied only).
• Washington State Department of Health lodging license.
• Compliance with Title 15 (building codes) and Title 18 (zoning) of Leavenworth Municipal Code.
• Liability insurance; evidence of adequate parking; adherence to the Old World Bavarian Theme standards where applicable.

Unincorporated Chelan County (County STR)

• County STR permit (Tier 1, 2, or 3).
• Fire and life safety inspection with the Chelan County Fire Marshal.
• Washington State business license and Department of Revenue registration.
• Liability insurance (see county requirements for minimums).
• Parking plan and occupancy documentation (e.g., 2 persons per bedroom verification).
• 24/7 local contact information for emergencies.
• Annual renewal and fee schedule as established by the county.

State‑Level (All STR Operators)

• Washington State Department of Revenue: unified business identifier (UBI) and state business license.
• Washington State Department of Health: lodging establishment license.
• Washington State taxes: sales tax (6.5% statewide) and lodging tax; B&O tax where applicable.
• ADA accessibility: properties must meet applicable accessibility standards for transient lodging (confirm with the project architect and building officials).

Documentation and Compliance Standards

• Emergency evacuation plans posted in each unit.
• Smoke and CO detectors, fire extinguishers, and adequate exterior lighting.
• Accurate advertising of maximum occupancy, parking, and quiet hours.
• Guest check‑in materials should include local rules and emergency contacts.

Investor Checklist

• Jurisdiction and zoning verification.
• Building code conversion plan (if city commercial STR).
• County permit tier determination (if outside city).
• Licensing at City, County, and State levels.
• Insurance coverage meeting or exceeding minimums.
• Safety equipment and inspection readiness.
• Tax registration and recordkeeping processes.

Specific Regulations for Short‑Term Rentals (City, County, and State)

City of Leavenworth (Inside City Limits)

• Allowed Locations:
  • Commercial zoning districts (Central Commercial, General Commercial, Tourist Commercial) may allow STRs following building code conversion and City licensing.
  • Residential zoning districts (RL6, RL10, RL12, multifamily) prohibit STRs.
• Owner‑Occupied Bed & Breakfast (B&B):
  • Permitted in residential zones with a Conditional Use Permit (CUP), owner occupancy, and City licensing.
  • R‑3 classification under the International Residential Code (IRC) for B&B occupancy. B&Bs with three or more guest rooms must install fire sprinkler systems and meet associated safety standards.
• Transient STRs (Non‑Owner‑Occupied in Commercial Zones):
  • Classified as R‑1 under the IBC and must meet the more stringent transient lodging standards (sprinklers, alarms, handrails/guardrails, ADA considerations).
  • A change of use building permit is required; conversions are reviewed under the IBC/IEBC.
• Business License and Health Permits:
  • City business license required for any commercial operation.
  • Washington State Department of Health regulates overnight rentals and requires a lodging license.
• Noise Ordinance and Community Standards:
  • Quiet hours after 10:00 PM. Provide guests with the noise ordinance upon check‑in.
• Other:
  • Design Review and sign permits are required where applicable but do not authorize a change of use; only a building permit can authorize a use change.
  • Existing STRs operating without required permits must undergo review by the Building Official and Community Development Director to determine necessary corrections and may face penalties.

Unincorporated Chelan County (Outside City Limits)

• Permit System and Tiering:
  • Tier 1: Owner‑occupied STRs; owners must be present on‑site or within a defined proximity during guest stays. Occupancy caps and operational standards apply.
  • Tier 2: Non‑owner‑occupied STRs; permitted in specified zones and subject to lot size, distance, and density restrictions. Occupancy caps apply (e.g., 2 persons per bedroom).
  • Tier 3: Large‑capacity STRs (9+ guests); require a Conditional Use Permit and must meet stricter standards.
• Density Caps:
  • New Tier 2 and Tier 3 STRs are prohibited in areas where STRs exceed 6% of housing stock (9% in the Manson UGA).
  • The Leavenworth subarea is reported to be at capacity and closed to new Tier 2/3 permits.
• Operational Standards:
  • Annual fire and life safety inspection; parking plans; local contact; occupancy limits; noise and solid waste controls.
• Existing Non‑Conforming STRs:
  • Legacy operations established prior to the moratorium (August 25, 2020) may continue if they meet criteria and obtain permits; operations established during or after the moratorium without permits are subject to enforcement.

Washington State Requirements (Applicable Everywhere)

• Department of Health lodging license for overnight accommodations.
• Washington State Department of Revenue registration and business license; collection and remittance of sales and lodging taxes.
• Building and fire safety codes administered at the local level (City or County) must be satisfied for any STR use.

Contact Information (Phone, Email, Website)

City of Leavenworth

• Community Development (General STR Questions, Zoning/Building Interpretation)
  • Phone: 509‑548‑5275
  • Address: 700 Hwy 2, Leavenworth, WA 98826 (also mailing: P.O. Box 287, Leavenworth, WA 98826)
  • Website: cityofleavenworth.com
• Business Licensing (City)
  • See City of Leavenworth website/business license pages for current contact and application details.
• STR Complaint Hotline
  • Phone: 509‑436‑7360
• Washington State Department of Health (Lodging)
  • Website: doh.wa.gov

Chelan County (Unincorporated Areas)

• Chelan County Community Development (STR Permits)
  • Phone: 509‑667‑6225
  • Address: 316 Washington Street, Suite 301, Wenatchee, WA 98801
  • Website: co.chelan.wa.us/community-development
• Chelan County Fire Marshal (Fire & Life Safety Inspections)
  • Coordinate inspections through Chelan County Community Development

Washington State Department of Revenue (Business Licensing)

• Phone: 360‑705‑6741
• Website: dor.wa.gov

Note: For Department of Revenue local lodging tax and registration specifics, use the state portal. For City business license and endorsements within Leavenworth, consult the City’s business license information and the Washington State Department of Revenue City License Endorsements portal.

Links to Source Pages

• City of Leavenworth – Vacation Rental Rules Overview: iciclecreekrealestate.com/leavenworth-vacation-rental-rules/
• City of Leavenworth – Business Licensing (How do I… Start a Business): cityofleavenworth.com/how-do-i/start-a-business/
• City of Leavenworth Administrative Interpretation AI 2023‑01 (STRs and Building Codes): cityofleavenworth.com/wp-content/uploads/2022/12/Admin-Interp-2023-01-STR-FINAL.pdf
• Airbnb/VRBO Laws and Rules Summary for Leavenworth: stayflourish.com/post/airbnb-rules-and-laws-in-leavenworth-washington
• Leavenworth WA Short‑Term Rental Regulations: Essential Owner’s Guide: local.theoffersheet.com/legal/leavenworth-wa/
• Chelan County Short‑Term Rental Code (BOCC Hearing Draft, July 2021): co.chelan.wa.us/files/community-development/documents/STR/FINAL_STR_Code_adopted_07272021_Attachment_A.pdf
• Airbnb Community Discussion (Leavenworth STR policy context): community.withairbnb.com/t5/Ask-about-your-listing/Leavenworth-in-WA-state-has-no-short-term-rental-policy/td-p/2053991

Final Guidance for Investors

Leavenworth remains one of Washington’s most attractive tourism markets, but its regulatory environment is intentionally restrictive. Inside city limits, residential zones are closed to STRs, leaving only commercial‑zoned properties viable—these require significant code upgrades and licensing. In the surrounding county, a tiered permit system exists but is constrained by density caps, and current reporting indicates the Leavenworth subarea is at capacity. Given these constraints, successful STR investing in and around Leavenworth requires: (1) precise jurisdictional and zoning analysis; (2) early engagement with building officials and county planners; (3) realistic budgeting for conversions and inspections; and (4) disciplined compliance to protect the permit (or commercial‑zoned asset) as a scarce, long‑term value. Always verify the latest municipal and county code updates and current permit availability before making any acquisition or development decisions.