Vacation Home Rentals Return to South Lake Tahoe Under New Regulations
South Lake Tahoe is on the verge of a major policy shift. After several years of strict limits and legal battles, Vacation Home Rentals (VHRs) are returning to residential areas, but not without significant changes.
In March 2025, the El Dorado County Superior Court struck down Measure T, the voter-approved initiative that had banned vacation rentals in most residential neighborhoods since 2019. The court ruled that the law violated the U.S. Constitution, particularly by discriminating against out-of-state homeowners. In response, the City Council voted not to appeal the decision and began drafting new regulations to guide the reintroduction of VHRs.
The Temporary Moratorium
To ensure an orderly transition, the City of South Lake Tahoe adopted a temporary moratorium on new VHR permits in areas previously restricted under Measure T. This moratorium remains in effect through June 19, 2025. During this time, the city is finalizing an updated ordinance aimed at balancing the economic benefits of short-term rentals with the need to maintain neighborhood quality of life.
What the New Ordinance Includes
On May 6, 2025, the City Council held a reading of a comprehensive ordinance that will govern VHRs moving forward. A second reading and final adoption are expected by the end of June.
Key provisions of the updated ordinance include:
Replacing the previous 900 permit cap with a 150-foot buffer zone between VHRs.
Allowing condos to be eligible for permits if they had an active permit on or before September 1, 2016; such units are exempt from the buffer zone requirement.
Requiring either in-person or electronic face-to-face check-ins, with guests signing the rental rules via wet or electronic signature.
Mandatory 24/7 response to complaints, with indoor noise monitoring and outdoor cameras for trash and parking areas.
Animal-resistant trash carts are required where available.
Occupancy limits set at two guests per bedroom, with up to five additional children under 13 allowed. Studios are limited to two adults plus two children.
No two-year waiting period after a property sale.
Properties must meet California defensible space standards for fire safety.
Increased penalties for violations.
Permits issued by the Police Department, with a limit of 150 permits per month at staff discretion.
Permit violations: first and second violations go to a hearing officer; third violations go to the Planning Commission, which will also handle revocations.
Full cost recovery for the VHR program.
Priority permitting for previous VHR or Qualified VHR holders who were in good standing.
What This Means for Homeowners
Property owners in South Lake Tahoe who previously rented their homes short-term—or those interested in doing so—will once again be able to apply for a permit starting after June 19, 2025. However, the new system is significantly more structured and enforcement-focused. These changes reflect the city’s effort to address long-standing complaints about noise, trash, parking, and neighborhood disruption, while still allowing short-term rentals to support the local economy.
Looking Ahead
With VHRs set to return to residential areas in a more structured way, homeowners, real estate investors, and renters should all prepare for a new era of short-term rental operations in South Lake Tahoe. The new ordinance is designed to protect the interests of full-time residents while still welcoming visitors to experience the area’s natural beauty.
For those looking to re-enter the vacation rental market, now is the time to review the updated rules, assess compliance requirements, and prepare documentation for the upcoming permit application period.
If you need help understanding the new ordinance or planning your VHR strategy, stay tuned for more updates and detailed guidance as the city finalizes its implementation process.