Short-term rentals becoming popular in small cities as Austin grows

City of Kyle watertower. (KXAN File Photo)
City of Kyle watertower. (KXAN File Photo)

KYLE, Texas (KXAN) – As cities like Austin and San Marcos continue to grow, the smaller cities caught in the middle are beginning to experience new problems they hadn’t in the past. In Kyle, city leaders are beginning to hear complaints of people renting out a room in their home on sites like Airbnb as a short-term rental.

Currently, Kyle doesn’t have a short-term rental ordinance. Without an ordinance, it means no one living in a single-family home or in an area zoned as residential can rent out a room or separate building on their property.

“We shouldn’t have them in our subdivisions,” said city of Kyle director of planning Howard Koontz. “As we grow and create our own identity, we are certainly going to have to deal with these challenges the more we mature and the closer we get to our sister cities.”

Koontz says one reason short-term rentals are becoming more common in Kyle is due to large events in surrounding areas.

“A lot of people will go to Circuit of the Americas for the larger races that they have out there, there are a number of festivals in the region. This is somewhat of a gateway into the hill country,” said Koontz.

To control noise and parking, city leaders only allow short-term rentals in commercially zoned areas. Even so, KXAN found dozens of places available for rent in subdivisions on Airbnb.

“Property owners come in and buy a home with an expectation with how that home will perform, how the neighborhood will operate. And typically folks that use their home for rental purposes, their guests treat it like a rental property, they don’t have ownership, they don’t have stewardship and they’ll tend to treat it accordingly and it often does become a code compliance for our permanent residents in the neighborhood,” said Koontz.

If you are caught and cited for operating a short-term rental in Kyle, the fine amount is up to the municipal court judge.

The city of Austin is fighting to keeps its permitting process for short-term rentals. In June of 2016, the Texas Public Policy Foundation sued, saying the ordinance violates owners’ constitutional rights. A local judge upheld the ordinance, but TPPF appealed. The case is on its way to the Third Court of Appeals. Oral arguments are expected to begin sometime this summer. provides commenting to allow for constructive discussion on the stories we cover. In order to comment here, you acknowledge you have read and agreed to our Terms of Service. Users who violate these terms, including use of vulgar language or racial slurs, will be banned. If you see an inappropriate comment, please flag it for our moderators to review.

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