Dallas Short-Term Rental Crackdown: How to Convert to a Long-Term Rental

Dallas has shaken up its short-term rental (STR) scene with a sweeping set of rules introduced in 2023. These ordinances aim to drastically limit STRs, especially in single-family neighborhoods, tightening everything from occupancy limits to parking requirements. The city’s goal was clear: curb the growth of STRs that many residents felt were disrupting neighborhood life.

However, these new Dallas short-term rental regulations have sparked intense legal battles. A court injunction currently blocks the city from enforcing the outright ban, leaving property owners and investors in a state of uncertainty. If you own or manage STRs in Dallas, understanding this evolving landscape is crucial — especially if you’re considering a shift to long-term rentals to protect your investment.

How Dallas Got Here: The 2023 STR Ordinances and “Virtual Ban”

In 2023, Dallas redefined how short-term rentals fit into the city’s zoning framework. The city created a new “short-term rental lodging” land-use category and amended key sections of the Dallas City Code, specifically Chapters 51 and 51A. These changes effectively prohibited STRs in single-family zoning districts, which make up a large portion of Dallas’s residential areas.

Experts estimated that these zoning amendments would eliminate about 95% of the city’s existing STR inventory. By excluding STRs from most residential neighborhoods, the city aimed to address complaints about noise, parking congestion, and neighborhood character changes. This “virtual ban” was one of the strictest moves by a major Texas city to regulate STRs.

Operational Limits: Occupancy, Parking, and Conduct

The new Dallas short-term rental regulations didn’t just restrict where STRs could operate — they also imposed tight operational limits. Maximum occupancy was capped at 12 people per rental, with no more than three occupants allowed per bedroom. This was designed to prevent overcrowding and reduce disturbances.

Parking requirements were also heightened, mandating at least one off-street parking space per bedroom. This aimed to ease neighborhood parking pressures often linked to STR guests. Additionally, the city ramped up enforcement around nuisance issues, targeting “party houses” with stricter noise, trash, and conduct rules. Repeat offenders faced heavier penalties.

The Current Legal Status — Injunctions, Appeals, and Uncertainty

Despite the city’s aggressive stance, a Dallas County judge issued a temporary injunction in December 2023. This injunction prevents the city from enforcing the new STR ban and related restrictions, citing potential “irreparable harm” to property owners’ vested rights. Essentially, the court recognized that the ban could unfairly strip owners of their property’s value without due process.

As a result, Dallas cannot currently enforce the 2023 STR ordinances. Instead, the city relies on older codes that address minimum property standards, noise disturbances, and private nuisances. This creates a patchwork of enforcement where STR owners must navigate general rules rather than explicit bans.

Appeals Court Rulings and Ongoing Litigation

The legal battle is far from over. The Fifth District Court of Appeals has upheld the injunction twice, rejecting the city’s attempts to enforce the ban. These rulings suggest that STR owners have a strong constitutional case against the restrictions, particularly regarding property rights.

Dallas has petitioned higher courts, including the Texas Supreme Court, and sought emergency relief ahead of major events like the FIFA World Cup. Yet, the litigation remains unresolved, leaving investors in limbo. Without a clear legal outcome, the future of STRs in Dallas hangs in the balance.

Registration, Zoning Limits, and Risk Factors Investors Must Understand

Investors need to be aware of the zoning landscape that underpins the Dallas short-term rental regulations. The 2023 ordinances targeted primarily single-family residential zones for STR prohibition. Meanwhile, commercial and mixed-use districts still allow some STR activity, though often under tighter controls.

Mapping existing and planned STR properties against zoning designations is critical. If the ban is ultimately upheld, properties in single-family zones face the highest risk of losing STR eligibility. This zoning risk should factor heavily into investment decisions and portfolio planning.

Registration and Inspection Requirements (Including Single-Family Rentals)

Starting Oct. 1, 2025, Dallas implemented a Single-Family Rental Registration and Inspection Program. This program requires annual registration, fees, and periodic inspections for rental homes, duplexes, and condos. While not specific to STRs, it adds a layer of compliance for investors converting STRs into long-term rentals.

Methodology — How This Blog Evaluates Dallas STR Risk and Strategy

This analysis draws from multiple sources. Official Dallas guidance on short-term rentals and code compliance provides the regulatory baseline. Court decisions and legal summaries offer insight into the ongoing injunction and appeals process. Industry and host-focused explainers help clarify practical implications for property owners.

By synthesizing these perspectives, the evaluation aims to offer a comprehensive view of the risks and opportunities facing Dallas STR investors in 2026.

Why Many Dallas Investors Are Pivoting from STR to Mid-Term and Long-Term Rentals

While STRs can command high nightly rates, the volatility of regulations and fluctuating demand makes them risky. In contrast, 6- to 24-month leases offer steadier, more predictable cash flow. Long-term rentals are not subject to the “STR lodging” zoning category, allowing them to operate under Dallas’s existing rental framework with less legal uncertainty.

This stability is particularly appealing in a market where Dallas short-term rental regulations could tighten further or be reinstated after litigation concludes.

How to Convert Dallas Short-Term Rentals into Long-Term Rentals

Step 1 — Financial and Market Feasibility Analysis

Before converting an STR into a long-term rental, it’s essential to analyze local rental market conditions. Review comparable rents in the neighborhood, estimate operating expenses like maintenance and property management fees, and stress-test cash flow under conservative rent assumptions.

Step 2 — Property Positioning and Renovation Adjustments

STR properties often feature themed decor and furnishings suited for short stays. Transitioning the properties to long-term rentals may require removing these elements in favor of neutral, durable finishes that appeal to tenants.

How Property Managers Like Evernest Help Dallas Investors Navigate the STR Crackdown

Evernest’s Dallas team offers tailored guidance to owners caught in the shifting STR regulatory environment. They evaluate each property’s zoning status, HOA rules, and long-term rental potential, recommending repositioning strategies aligned with local tenant demand.

With experience spanning single-family homes, condos, and small multifamily units, Evernest helps investors scope renovations and structure leases for maximum appeal and compliance.

Partner with Evernest to Convert Your Dallas STR into a High-Performing Long-Term Rental

The evolving Dallas short-term rental regulations, ongoing injunctions, and legal battles create significant risk for short-term rental strategies. Yet, these challenges also open a clear path to stable, long-term rental income.

Are you an investor with existing STRs? Connect with Evernest’s local Dallas property management team today to assess the outlook for your STR properties. Together, we can build customized plans to convert your high-risk STRs into mid-term or long-term rentals.