Chicago Airbnb Rules: A Complete Guide

Chicago, IL may be world-famous for jazz, jails, and great dance numbers (think Chicago, the Musical!), but unfortunately, such glamorous, lawless living doesn’t quite extend to the city’s Airbnb regulations.

Chicago Airbnb rules can seem complicated. They walk a delicate line between enabling hosts to offer great rentals, and aiming to protect the city’s housing stock from overwhelm.

Yet, it’s still very much worthwhile; the city was recently named by Airbnb itself as one of the best in the US for rentals on its platform, with the typical Airbnb host earning as much as $18,500 per year*.

That’s why in this post, we’ve outlined the need-to-know Chicago Airbnb regulations and laws, and we’ve also shared our best tips on how to protect your rentals and comply with insurance requirements, with our specially-designed risk management platform, for even easier operations and peace of mind.

So you can quickly understand the Chicago Airbnb regulations that apply to you, and learn how to start Airbnb-ing your Chicago property legally and successfully ASAP. Here’s how.

What are the registration and license requirements for Airbnb in Chicago?

Short-term rentals in Chicago (including Airbnbs) are governed by the Chicago Residential Landlord and Tenant Ordinance (RLTO). This sets out the short-term rental regulations and laws that hosts must comply with in the city.

The main part of the RLTO that applies to Airbnb is the “Shared Housing Ordinance” (see the full text and requirements here). Properties covered by this are defined as residential, in which each guest or occupant stays for 32 days or fewer.

Failure to register risks a fine of $1,500 or more.

Registration rules

This 32-day limit is very important, because it helps the City define whether your property is considered to be a short-term rental, and whether you must register as such or not.

For example:

You must register with the City of Chicago if you host guests for fewer than 32 days at a time (e.g. one guest or guest party stays for fewer than 32 days). This will apply to the majority of Airbnb hosts, (unless you only host long-term guests). In this case, you must have a short-term rental registration number in order to upload your listing to Airbnb’s platform.
If you exclusively rent your property out on Airbnb for longer than 31 days at a time, your property will come under long-term rental laws, which are different to those for short-term sites.

Licenses needed

Your property and situation dictate what kind of Chicago short-term rental license you need.

You are renting out a single property for fewer than 32 days at a time: Registration is enough; no extra license is needed.
You are renting out more than one, but fewer than 12, sleeping rooms in a single building (in a similar way to a traditional hotel), with each guest staying for fewer than 32 days, and you provide breakfast or similar: You need a Bed and Breakfast license. This license also applies to hosts who share their space with their guests, e.g. they rent out one bedroom to guests, while they are still on the premises themselves.
You are renting more than one separate Airbnb unit, with each guest staying for fewer than 32 days: You need a Shared Housing Operator License.

A full list of licenses and their criteria — as well as a quiz that can help you figure out whether your property is eligible — can be found on the Chicago government website here.

To summarize the key points, to be eligible for a license, you must ensure that your property complies with the city Airbnb regulations, criteria below.

Single-family homes

If you wish to rent out a single-family home, it must be your primary residence as the host/owner.

You must prove this when applying for your Airbnb license from the City, with a form of ID that proves the property is your main residence.

Do you have to be the owner? No, you don’t have to be the owner of the home to rent it out on Airbnb. You can be the only tenant. However, in this case, you must have permission from the property’s owner (your landlord) to rent the property out on Airbnb.

Multi-family buildings with two to four units

If the building you are renting has two to four units, you can only rent out the unit that is also your main residence (e.g. your apartment, in a block of four separate apartments).

Multi-family buildings with five or more units

If the building you are renting has five or more units (e.g. five or more separate apartments in the same building), you can rent out a unit that is not your main residence.

There are limits on how many units can be listed in a single building, to prevent short-term rentals from saturating or overwhelming the property market. The limit is:

Six units, or 25% of all available units, whichever is fewer.

This last category is the only way in which hosts can rent out multiple units without also having to live at the unit as their main residence. Technically, there is no limit to the number of units a host can rent out under this category, as long as the property has five to six units and does not exceed the 25% area cap.

Track of minor damages in your rentals, cover the costs, and earn money.

How do I apply for an Airbnb Chicago license?

If you are sure that your property is eligible to register, you will need:

Proof of residence.
Government-issued photo ID.
Proof of valid insurance that complies with requirements (see below).
Property floor plan.
Safety certification showing that your property meets requirements (e.g. fire exits, see below).
Local contact details — if someone different to yourself — in the event that guests need to contact someone in Chicago for help or an emergency.

You must apply for your license at the City of Chicago’s Business Affairs and Consumer Protection (BACP) website. It costs $125 for a single unit or a single unit within a shared unit building, or $250 for multiple units. More information is also on the Chicago Shared Housing Registration Portal here.

What zoning laws do Airbnb hosts need to know about in Chicago?

There are two kinds of locations that are banned from Airbnb in Chicago.

Prohibited buildings. There are currently more than 2,300 buildings that are registered as “prohibited buildings” in Chicago. The list can be found on the City’s website here.
Restricted Residential Zones. Only long-term rentals (over 32 days) are allowed in these zones. The City keeps an updated list of these, also on its website.

Breaking these zoning laws can leave you liable to pay financial penalties.

What taxes or fees apply to Airbnb in Chicago?

The first fee you must pay as an Airbnb host is to obtain your license and register your properties (if applicable) with the City authorities.

The fee for registration is: $125 for a single unit or a single unit within a shared unit building
The fee to apply for a Shared Housing Unit Operator License is: $250 for a license lasting two years.

However, hosts are not responsible for sharing Airbnb data or income reports with the City. Airbnb does this automatically itself, to prove that hosts are complying with licensing rules.

Airbnb automatically collects the taxes required for all properties in Chicago, and they are paid by the guest as part of their rental fees.

The breakdown of fees levied on properties in Chicago is:

Chicago Hotel Accommodation Tax: 4.5% of the listing price.
Chicago Vacation Rental and Shared Housing Surcharge: 4% of the listing price.
Cook County tax: 1% of the listing price.
Domestic Violence Surcharge: 2% of the listing price. Applies to shared housing units.
Illinois Hotel Operators Occupations Tax: 5.98-6.17% of the listing price.
Other Illinois state taxes: 5.73% of the listing price for stays of 29 nights or fewer. If guests stay longer in a single booking, guests don’t have to pay these.

However, hosts must also pay fees as part of their BACP applications (and renewals) for operating short-term rentals.

For example, current fees are:

1-9 rentals: $250 per year, plus a $60.00 per unit fee
10-24 rentals: $350 per year, plus a $60.00 per unit fee
25-49 rentals: $500 per year, plus a $60.00 per unit fee
50-99 rentals: $1,000 per year, plus a $60.00 per unit fee

These fees increase as the host’s number of rental properties increases.

What are the insurance requirements for Airbnb in Chicago?

The City of Chicago requires Airbnb hosts to take out liability insurance, with a minimum coverage of €1,000,000 in commercial general liability.

Your insurance policy, which must be active, must cover both the host and the guest in the event of accidents or damage. You must show proof of a valid insurance policy to apply for a license.

It is imperative to have valid insurance, as failure to do so can incur major financial penalties.

Luckily, Truvi (formerly Superhog)’s services are specially designed for short-term rentals, to put your mind at ease, and protect your property. They also comply with Chicago’s $1,000,000 insurance minimum.

Truvi’s services include:

Short-term rental protection of up to US $5,000,000 for all verified bookings.
ID verification for guests (including ID checking and biometric screening), so you know exactly who is staying at your home.
Extra guest screening, including sex offender databases, to prevent fraud and criminal activity, and reduce your risk of hosting bad guests who will cause problems.
Damage deposit facility, to automate the collection and remittance of a guest security deposit.
Damage waiver facility, to cover small guest damages, and create a new line of revenue for you.

We offer a guide on how to navigate the STR regulations and review the most recent regulations:

Not sure whether your listing is a short term rental? Take a better look at what is considered a short-term rental in the US.

What other rules or requirements do hosts need to be aware of to operate an Airbnb in Chicago?

Minimum stays

Airbnbs rentals must be rented for at least two nights. Single-night bookings are not allowed, and the Airbnb website automatically blocks Chicago hosts from accepting them.

This rule is intended to crack down on “party rentals”, in which guests book properties for a single night to host a loud and disruptive party, and then disappear. Parties like this are banned by Airbnb itself (in all cities), but after some significant disruption, Chicago implemented this extra rule for its own properties.

Some districts or suburbs may have additional rental limits, so it is best to check with your local area authorities if any other minimum or maximum stays apply.

Standards and property information

Hosts of short-term rentals in Chicago must also:

Ensure that their properties meet health and safety standards.
Provide detailed information about their properties to the City when applying for a license and registering.
Provide a local contact who can help guests quickly in the event of a problem or emergency.
Keep accurate records of every guest, including their name, address, signature, and stay dates.

Your property will likely be inspected by a BACP inspector as part of your registration application process. You will need to comply with all standards and the inspector’s recommendations before your rental can be listed.

To meet health and safety standards, the property must include basic requirements, including:

Smoke detector and carbon monoxide monitor
Fire extinguisher easily available in the property
Accessible fire exits

Your property must not disrupt the neighbourhood peace. If the City consistently receives noise complaints from your neighbors about your guests — including behavior such as public drunkenness, excessive noise, harassment, and/or overcrowding — your Airbnb risks being shut down.

Airbnb hosts that enable (even unintentionally) criminal activity to take place in their Chicago rental risk a fine of $2,500 to $5,000 per offense (plus any criminal investigation that may be applicable.)

Airbnb hosts must also ensure that their properties are not over-occupied. The occupancy limit must comply with the occupancy stated on the listing, and also not exceed one person per 125 feet of floor space in the rental.

This is another reason why screening guests before they stay is so important for Chicago rentals. Using systems like Truvi (formerly Superhog)’s criminal database checks and guest review screening ensures that you avoid bad guests, and can prevent disruption, over-occupancy, criminal behavior, and rule-breaking before it even starts.

Listing minimums

Airbnb listings (e.g. the rental property’s page on Airbnb) for your property in Chicago must show:

A valid license/registration number
Check-in and check-out policy
Cancellation policy
Full description of the unit, and specification of bedroom and bathroom numbers
The amenities provided
Wheelchair/accessibility details
Parking situation and/or restrictions
Details of property facilities and leisure options

Not including any of these details could be considered to be “misrepresenting material facts” about the rental, which is prohibited by the City.

Multi-unit bans

If you want to rent out your unit in a larger multi-unit building (e.g. your own apartment, which is located in a multi-apartment building) you must check that you are permitted to do so by the building’s authorities (e.g. owner, management company, Homeowner Association).

Some Homeowner Associations have banned Airbnbs from their buildings in all circumstances, even if the Chicago short-term rental laws would otherwise allow them.

Rare exemptions

The City of Chicago does sometimes allow certain exemptions for Airbnb hosts, in very rare circumstances.

For example, you may be able to obtain an exemption to certain restrictions and rent out a property on Airbnb even if:

It is a single-family property, but not your main residence.
It is a single unit (e.g. one apartment) in a building that has two to four units, but the unit is not your main residence.
You want to increase the number of short-term rental units in a property that has two to four units.

To obtain an exemption, you must fill in the Commissioner’s Adjustment Application, and you must prove that you need a waiver because of:

An “extraordinary burden”
“Unique” or “unusual” circumstances

Waivers are very rarely granted.

How to start a legal and successful Airbnb in Chicago: Step-by-step

If you want to run an Airbnb in Chicago, you can break the process down into the following five steps:

Ensure Your Property Meets Zoning and Building Requirements: Check if your building is on the City’s list of prohibited buildings or is in a restricted residential zone. For larger multi-unit buildings (five or more units), check that your property will not exceed unit listing limits (either six units or 25% of the total, whichever is fewer).
Determine Your License Requirements: Based on your situation, decide what type of license you need: If renting one property for fewer than 32 days: No additional license is needed beyond registration. If renting multiple units: Apply for a Shared Housing Operator License or Bed and Breakfast License.
Meet Insurance and Safety Standards: Obtain liability insurance with at least $1,000,000 in coverage, and implement guest screening so you avoid bad guests and breaching safety, criminal activity, noise and nuisance laws. Ensure the property has safety features like smoke detectors, carbon monoxide monitors, and fire extinguishers. Prepare to have your property inspected by a city inspector.
Gather Your Documents and Register Your Property: If you plan to rent your property for fewer than 32 days at a time, you must register with the City of Chicago. Failure to register could lead to fines of $1,500 or more.
Prepare Your Airbnb Listing: Include all the required information on your Airbnb listing, such as a valid registration/license number, check-in and check-out policies, cancellation policies, and details about amenities.

Chicago Airbnb laws: The bottom line

Once you have an understanding of the Airbnb laws in Chicago, you can easily take steps towards running a legal and successful short-term rental in the Windy City.

Plus, hosts can gain greater peace of mind by employing a dedicated short-term rental risk management platform like Truvi (formerly Superhog) to manage safety and insurance.

Because Truvi meets the $1,000,000 insurance requirement (it exceeds it, in fact) — and you can prove this when you register with the City — it makes it more likely that your Chicago short-term rental application will be successful, no matter which license you need.

Truvi helps hosts meet Chicago Airbnb requirements by offering damage coverage of $5,000,000, guest screening, and guest verification to prevent bad guests, as well as making rentals easier by offering damage waivers, damage protection services, and damage deposit processing.

So you can rent your property out in Chicago with complete peace of mind, safe in the knowledge that you’re complying with all the requirements needed (no Bob Fosse choreography, jazz moves, or Billy Flynn-type lawyers required!)

*Source: News.Airbnb.com