Ninety Percent Unpermitted: Memphis Is Coming for Short-Term Rentals, and the Long-Term Lease Is Looking Better
On March 3, 2026, presenters told the Memphis City Council that roughly nine out of ten short-term rentals in the city have no permit. The council's answer was a resolution asking the administration to bring in outside monitoring and report back within 90 days. If you own a furnished rental anywhere in Shelby County, Tennessee, the risk side of that business just changed — and the twelve-month lease you have been putting off deserves a fresh look.
What happened this spring
The trigger was a run of violence at party rentals: a fatal shooting at an East Memphis rental in December 2025, an incident in High Point Terrace in January that wounded four people, and a deadly Valentine's Day shooting in Sherwood Forest. Councilman Philip Spinosa told colleagues he had counted seven shootings and two deaths tied to short-term rentals in a matter of months, four of them in neighborhoods he represents.
The resolution he sponsored does not rewrite the ordinance. It asks the Mayor's administration to engage an outside organization — a compliance-monitoring service, a research institution or a neighborhood coalition — to strengthen monitoring, deter repeat offenders, and recommend "any legislative or regulatory amendments necessary," with a report due within 90 days. Per Action News 5's account of the March 3 committee meeting, the city is already working with the crime-prevention nonprofit SafeWays to track flagged addresses, and a group inside city government is using AI to match listings against the permit roll.
Read that last sentence as an operator. The enforcement bottleneck in Memphis was never the rule; it was finding the properties. Software that scrapes listings and matches them to parcels removes the bottleneck.
Ninety percent unpermitted is not a statistic about other people's rentals. In a city that is now matching listings to addresses by machine, it is the size of the enforcement queue.
The permit you were supposed to have
Inside the city limits, Chapter 5-44 of the Memphis Code of Ordinances has required a permit from the Division of Public Works since July 1, 2023 for any dwelling rented to transient guests for fewer than 30 consecutive days. The application fee is $300, renewal is $150 a year, and the conditions are not trivial: proof of at least $1 million in liability coverage, a responsible agent who lives within 50 miles, the permit number printed on every listing, and collection of the city occupancy privilege tax plus a $2 per bedroom per night assessment. Airbnb remits the city taxes for its listings; other platforms may not, and the host is liable for whatever is not collected.
Unincorporated Shelby County runs its own permit through the County Clerk. The county application charges $100 for an original permit and $50 to renew, expires 365 days after issue, and requires the renewal request at least 30 days before expiry. Conditions include a responsible party answering calls 24 hours a day, $1 million liability coverage, a final inspection by Memphis and Shelby County Code Enforcement, no unpaid court fines on the property, and — read this one twice — being current on property taxes for every property you own in Shelby County.
The suburbs are a different story. In August 2019 the Collierville, TN Board of Mayor and Aldermen approved an ordinance prohibiting short-term rental properties outright, with a bed-and-breakfast exception; the same report noted that Germantown, TN already prohibited them. If you hold a furnished unit in either town, the lawful path to income is a stay of 30 days or longer — the mid-term rental structure we covered earlier this year.
One state-law wrinkle cuts the other way. Tennessee's Short-Term Rental Unit Act of 2018 contains a legacy clause: a unit that was lawfully operating before a local rule took effect keeps the old rules until it is sold, transferred, idle for 30 continuous months, or cited three or more times. Legacy status does not survive a sale — so a buyer inherits none of it — and the same Act expressly lets an HOA or a restrictive covenant ban short-term use regardless of what the city allows.
Investors were already leaving
The national mood had turned before Memphis moved. In the BiggerPockets Pulse survey for Q3 2026, a national poll of retail investors, only 3% named short-term rentals as the most successful strategy for the next twelve months. 55% chose long-term rentals. Roughly a quarter of respondents said rising expenses — insurance and property taxes chief among them — are their biggest current problem. Those are national numbers, not Shelby County numbers, but the logic travels: when the cost side is squeezing you, the last thing you want is a business model whose legal footing is being re-examined by the city council.
What actually changes when you convert
Moving a furnished unit in Shelby County to a twelve-month lease is an operating change, not a paperwork change. Four things move.
The permit stack disappears. No city or county permit, no renewal, no occupancy privilege tax, no per-bedroom assessment, no responsible-agent requirement, no listing disclosures. That is real money and real exposure off the table on day one.
The tenancy comes under URLTA. Shelby County sits above the 75,000-population threshold that triggers Tennessee's Uniform Residential Landlord and Tenant Act. That means a written lease, a security deposit accounted for separately and returned within 30 days after the tenancy ends and the tenant provides a written forwarding address, and a formal process if you ever need to recover possession. Tennessee does not cap deposit amounts. Much of rural Fayette County, Tennessee falls below that threshold, so do not assume the same provisions apply across the county line. This is general information, not legal advice.
Your insurance changes form. Carriers generally write a short-term rental on a policy built for transient occupancy and a long-term rental on a landlord dwelling policy. Call your agent before the first lease is signed, not at renewal — a claim under the wrong policy form is the expensive way to learn this.
Utilities move to the tenant. With guests, the MLGW account stays in your name. With a tenant, it should not — our MLGW post walks through why, and what the lease needs to say.
What does not change is your property tax. Tennessee assesses residential property at 25% of appraised value whether guests or tenants sleep in it, and the 2026 rates — county 2.702382, Memphis 2.58081 stacked on top, Germantown, TN 1.7825 — apply to the parcel, not to the use. County taxes are due the first Monday of October, payable through the last day of February, delinquent March 1.
On the financing side, Freddie Mac's Primary Mortgage Market Survey release dated September 3, 2026 put the 30-year fixed at 6.71%, up from 6.66% the week before and 6.50% a year earlier. That is the well-qualified owner-occupant benchmark; an investor refinancing a former short-term rental prices above it on both rate and down payment.
Disclosure: Homefront is the management company. Matt is separately a licensed REALTOR® with Reid Realtors, LLC, and if you decide the answer is to sell the property rather than re-lease it, he is paid a commission on that sale — a different transaction from any management engagement. You are never required to use both.
The decision, in order
Confirm which jurisdiction the parcel is in — Memphis, unincorporated Shelby County, or a suburb that prohibits short-term use. If you are inside Memphis without a permit, understand that the matching is now automated and the fine exposure accrues per day. Pull your last twelve months of net operating income after cleaning, platform fees, utilities, furnishings and vacancy, and set it beside what the same unit rents for unfurnished on a twelve-month lease — which we will tell you for free. Then price the conversion: the policy change, the deposit accounting, the utility transfer, and the turn. Our team runs long-term rentals across Shelby County every day. Management fees never exceed 10% of monthly rent, with a customized schedule by portfolio size and no hidden charges; tenant screening is paid by the applicant, and under our lease tenants are responsible for legal fees arising from a breach. The detail is in our fee guide. Send us the address and we will tell you what the unit earns on a lease.
Sources & further reading: Memphis City Council — Resolution addressing public safety concerns related to short-term rental properties (2026), Action News 5 — Memphis City Council pushes for stricter rules for short-term rentals after recent shootings (March 3, 2026), The Daily Memphian — City Council wants answers to short-term rental problems (March 2, 2026), Memphis Code of Ordinances, Chapter 5-44 — Short Term Rental Ordinance, Avalara MyLodgeTax — New law requires Memphis STR hosts to have permits (fees, insurance, agent and tax conditions), Shelby County, TN — Short Term Rental Property Permit Application and Rules, Collierville Herald-Independent — Town takes step to prohibit short-term rental properties (Aug. 27, 2019), University of Tennessee MTAS — Summary of the Short-Term Rental Unit Act, BiggerPockets Pulse Q3 2026 — Investors Are Resilient, But Sentiment Continues to Drop, Shelby County Trustee — Shelby County Tax Rates, Freddie Mac Primary Mortgage Market Survey, release dated September 3, 2026. Ordinance and permit provisions verified September 2026 and subject to change — the council's 90-day report may produce amendments. This article is general information about property operations and local regulation, not legal or tax advice; confirm the rules for a specific parcel with the governing jurisdiction and consult a Tennessee attorney or CPA.