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Short-term rental rules · Traverse City, Michigan

Short-term rentals in Traverse City, explained properly.

In the City of Traverse City, unhosted vacation home rentals (stays under 30 days) are not allowed in residential districts. They're permitted with a city Vacation Home Rental License in the Hotel Resort, commercial, development and industrial districts. In C-1, C-2, D-2 and Industrial, a rental must be on a parcel with two or more dwellings, and no more than 25% of the parcel's dwellings (minimum one) can be rentals; in C-4 they're not allowed on the first floor. In residential neighborhoods the option is a licensed Tourist Home, where the owner lives on site and rents two or three rooms. A proposal to add district-wide caps was sent to the City Commission in 2025 and was still under discussion in mid-2026. Surrounding townships in Grand Traverse County have their own rules.

4 rule fields16 cited sources

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At a glance

What you need to know before you buy or list

QuestionAnswer
Allowed only in resort, commercial, development and industrial districtsVacation home rentals — a dwelling rented for less than 30 consecutive days — are an allowed use, with a city Vacation Home Rental License, in the Hotel Resort (HR), C-1, C-2, C-3, C-4 (not on the first floor), D-1, D-2, D-3 and Industrial (I) districts. They are not an allowed use in the residential districts. In the Industrial district they come in through C-2 district uses, and in the Airport Industrial Park and Traversefield Enterprise Place those uses are limited to existing buildings more than 5 years old [1] [2] [3] [4] [5] [6] [7]
25%-per-parcel limit in some districts; district caps proposedIn the C-1, C-2, D-2 and Industrial districts, a vacation home rental must be on a parcel with two or more dwellings, and the number of rentals on that parcel can't exceed the greater of 1 or 25% of its dwellings. The HR, C-3, C-4 (above the first floor), D-1 and D-3 districts have no such limit. This is a per-parcel limit, not a district-wide cap. A proposal to add district-wide caps was still before the City Commission as of mid-2026 (see Changes). There were 539 active licenses at the end of 2024 [2] [8] [5] [9]
Owner-hosted Tourist Homes in single-family districtsA Tourist Home must be the owner's primary residence, with the owner hosting in residence, and needs a city tourist home license. Tourist homes are an allowed use in the R-1a and R-1b districts, and in R-2 (which allows R-1 uses) and R-3. Low-intensity homes may rent up to 2 rooms and 84 guest nights a year; high-intensity homes up to 3 rooms and 85+ nights and must be at least 1,000 feet from another licensed high-intensity tourist home (or one licensed before January 22, 2019). Both are limited to 2 adults per room and stays of no more than 14 consecutive days. Guest rooms must be in the main house, the exterior must keep its single-family character, there's no separate guest kitchen, one off-street parking space is required per guest bedroom, a site plan must be approved, and an accessory dwelling unit isn't allowed on a parcel with a licensed tourist home [10] [11] [12] [7]
$200 license, renewed each yearThe Vacation Home Rental License costs $200 for a new application or a renewal. Licenses expire December 31, and renewals can only be processed between 90 and 30 days before expiration. Licenses are issued by the City Clerk under Code Chapter 870 [13]

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Detailed rules

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Changes

Recent and pending changes

We checked the City Clerk's Vacation Home Rental License page, zoning ordinance amendments 1107 and 1207, the Planning Department's 2024 annual report, and news through July 2026. The Planning Commission recommended new district caps in May 2025; in June 2026 the City Commission agreed to revisit that proposal, and we found no record of adoption. The zoning chapters on Municode (current through Ordinance 1236, April 2026) were read in a browser. At the state level, no statewide STR law has been enacted as far as we found: HB 4722 (2021, limiting local zoning of STRs) and the HB 5437–5446 package (2024) both stalled. Townships around the city (Garfield, Peninsula, East Bay, Elmwood, Acme) are separate jurisdictions.

May 6, 2025
Proposed new vacation rental caps by zoning districtProposed [14] [15] [16]

After a review that began in December 2024, the Planning Commission recommended cutting vacation rental caps from 100% to 0% in the Industrial district, to 25% in D-1, D-3 and C-4c, to 50% in C-4a and C-4b, and to 35% in C-3. C-1, C-2 and D-2 would stay at 25% and HR at 100%. Existing licenses would not be affected. In June 2026 the City Commission agreed to revisit the proposal; no City Commission vote found as of October 2026.

Sources

Every rule above links to one of these

  1. Traverse City Zoning Code 1338.01 HR uses allowed (vacation home rentals)
    City of Traverse City (Municode) · page updated July 1, 2026
  2. Traverse City Zoning Code 1340.01 C-1 uses allowed (vacation home rental parcel limit)
    City of Traverse City (Municode) · page updated July 1, 2026
  3. Traverse City Zoning Code 1344.01 C-3 uses allowed
    City of Traverse City (Municode) · page updated July 1, 2026
  4. Traverse City Zoning Code 1346.01 C-4 uses allowed
    City of Traverse City (Municode) · page updated July 1, 2026
  5. Traverse City Zoning Code 1347.01 Development districts uses allowed
    City of Traverse City (Municode) · page updated July 1, 2026
  6. Traverse City Zoning Code 1354.01 Industrial uses allowed
    City of Traverse City (Municode) · page updated July 1, 2026
  7. Ordinance Amendment No. 1107 (Sec. 1320.07 definitions)
    City of Traverse City (Municode) · page updated November 14, 2019
  8. Traverse City Zoning Code 1342.01 C-2 uses allowed
    City of Traverse City (Municode) · page updated July 1, 2026
  9. City Commission Explores Short-Term Rental Options
    The Ticker · page updated April 16, 2025
  10. Traverse City Zoning Code 1332.01 R-1a/R-1b uses allowed (tourist homes)
    City of Traverse City (Municode) · page updated July 1, 2026
  11. Traverse City Zoning Code 1334.01 R-2 uses allowed
    City of Traverse City (Municode) · page updated July 1, 2026
  12. Traverse City Zoning Code 1336.01 R-3 uses allowed (tourist homes)
    City of Traverse City (Municode) · page updated July 1, 2026
  13. City Commission to Consider Short-Term Rental Caps
    The Ticker · page updated June 4, 2026
  14. City Planning Commission Eyes Vacation Rental Changes
    The Ticker · page updated December 27, 2024

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This page is general information compiled from public sources, not legal or tax advice. HOA rules, deed restrictions and zoning for a specific property can be stricter. Confirm with the local permitting office and a qualified professional before buying or listing a property.