🏠 What’s happening:
The Princeton Council voted unanimously this week to impose sweeping new regulations on short-term rentals, restricting them to owner-occupied properties, creating a mandatory permit and inspection system, extending the local occupancy tax, and giving existing non–non-owner-occupied rentals three years to phase out.

Why it matters:
Officials say the overhaul is designed to address pressure on Princeton’s housing market, preserve neighborhood stability, and curb the use of Airbnb and Vrbo residential properties as de facto hotels, while still allowing residents to generate income from their homes.

How it works:
Beginning soon, only properties that serve as the owner’s or a long-term tenant’s principal residence may operate as short-term rentals. Rentals of fewer than 30 days will require a permit, inspection, proof of residency, and compliance with strict operating rules.

The timeline:
Existing short-term rentals that are not owner-occupied may continue for up to 36 months, but only if they were active within the past 180 days and the operator applies for a permit within 30 days of the law’s effective date.

The Princeton Council voted unanimously this week to adopt sweeping new regulations on short-term rentals, imposing strict limits on where they can operate, creating a mandatory permit system and occupancy tax, and giving existing non–non-owner-occupied rentals three years to wind down.

The ordinance, more than a year in development, aims to address concerns about housing affordability, neighborhood disruption, and speculative investment in residential properties used as de facto hotels. Council members described the measure as a necessary step to protect long-term housing supply while still allowing residents to earn income from short-term rentals under clearer, enforceable rules.

The law requires that, going forward, a short-term rental can operate only if the property is the principal residence of the owner or a long-term lessee. The ordinance defines a short-term rental as any rental term of fewer than 30 days.

A 36-month phase-out period is included for short-term rentals that are not the operator’s principal residence and are currently active.

A balancing act

During the meeting, Councilman David Cohen said the working group spent extensive time reviewing options and comparing how other New Jersey municipalities regulate short-term rentals. He said the goal was to “balance the need to preserve traditional rental housing for long-term residents, as well as the convenience and need for alternative kinds of short-term rentals that aren’t provided by our hotels.”

Officials said the ordinance is meant to protect the long-term residential housing stock while allowing homeowners some flexibility. They also noted that Princeton remains a destination with constant visitor demand but limited hotel capacity.

Councilman Leighton Newlin emphasized that the measure is aimed at protecting residents rather than targeting responsible operators. “There are some things here that may not be as good as we would like them,” he said, “but at the end of the day, this is not… an attack on great and good operators. This is a support of quality of life so that people can live here, raise families here.” Every short-term rental, he said, represents “an opportunity for someone to come here for a minute or two and leave, but not for someone to live, raise a family, age in place, send their kids to school.”

Newlin added that research indicating that much of Princeton’s short-term rental traffic is connected directly or indirectly to Princeton University should prompt the university to explore additional lodging solutions. “Maybe it’s time for the university to take a look at providing more alternative accommodations,” he said.

Key provisions of the new law

Under the ordinance:

Short-term rentals must be at an operator’s principal residence.
Single-family and attached homes may be used as short-term rentals only if the operator lives there. In two-family and multifamily buildings, up to two units may be used as short-term rentals if the operator occupies one of them as a principal residence. Accessory dwelling units may also be used if the primary home is the operator’s principal residence.
A permit is required before any advertisement or rental.
Applicants must submit documentation proving principal residency, including a New Jersey driver’s license or state ID, a redacted federal tax return, and recent bank statements showing the address. A floor plan, parking information, a $200 application fee, an inspection, and liability insurance of at least $500,000 are also required.
Renewals must be filed annually.
Renewal requires a self-inspection, a $100 fee, and documentation that the property has not had certain municipal violations in the prior year.
A 3 percent occupancy tax applies.
The municipal occupancy tax, previously applied only to hotels, will now also apply to certain short-term rentals classified as “transient accommodations” under state law.
Operators must follow strict operating rules.
They must keep a two-year ledger of guests, respond to complaints within two hours, follow zoning and noise ordinances, and post a placard inside the front door listing emergency contacts, occupancy limits, trash rules, and parking restrictions.
Fines of up to $1,250.
Violations can also lead to permit revocation, community service, or imprisonment.

A three-year phase-out

A key provision of the ordinance allows existing short-term rentals that are not an owner’s or lessee’s principal residence to continue operating for 36 months, provided they have been in use within the past 180 days and the operator applies for a permit within 30 days of the ordinance’s effective date. After the 36-month period, non–principal residence short-term rentals must cease.

The memo to council states this 36-month transition period is intended to “support the ordinance’s goals of preserving residential character” while giving current operators time to “convert the property to a long-term rental or establish it as their principal residence.”

A few operators told the council that the phase-out would have major financial consequences for their families.

Calls for a data-driven review

James Mogilever, who operates 14 Airbnbs in Princeton with his fiancée, Nicole, urged the council to do more research before adopting an ordinance on the issue. He said the council should revisit the non–principal residence ban after two years of implementation.

“There has been no actual data from Princeton-specific regulation or tax collection to base a final decision on,” he said. “For many of us, this decision will shape our futures, which is why having the ability to revisit it with real data feels so important.”

He requested a clause allowing the council to reconsider the restriction after two years. “If the data suggests that tweaks can be made, then the flexibility created by this clause will have done exactly what it was meant to do,” he said.

Cohen replied that the council always retains the ability to amend the ordinance but prefers not to include a sunset clause that would require a renewal vote. The council, he said, can reconsider the prohibition if operators present evidence that “things are working out well.”

Officials said the ordinance may need refinement once Princeton begins collecting data and enforcing the new rules. Cohen said the council “will follow the data that we gather” and can amend the ordinance if needed.

Residents raise enforcement and affordability concerns

Some residents argued the ordinance does not go far enough.

Chip Crider, a longtime Bank Street resident, questioned how the town would prove a violation when online short-term rental listings do not show property addresses. “None of the advertisements I’ve seen online give the address,” he said. “So if somebody gets charged with a violation, you go to court, and their lawyer says, well, how do you prove it?”

Municipal staff said that principal residency must be demonstrated through a driver’s license or voter registration, and that digital monitoring software will identify unpermitted listings.

He also described the conversion of two low-income apartments on his street into a short-term rental that now brings in hundreds of dollars per night. “Those low-income apartments are gone,” he said. “It destroys neighborhoods.”

Another resident, Tina Clement, raised questions about rooming houses, subleases, and how the town verifies that an operator actually lives at the property. She asked how the ordinance would address homeowners renting multiple rooms under various arrangements. “What controls are there in place to not say that’s not a rooming house?” she asked.

Officials said the ordinance does not apply to rooming houses. Clement asked more questions about regulations related to room rentals. She said more details still need to be worked out before an ordinance is adopted. “There are still a lot of hidden branches under the ordinance that need to be flushed out, because I do know people that do rent rooms and may not live in that property,” she said.

Ordinance takes effect soon; tax takes effect later

The ordinance takes effect upon publication, and the occupancy tax extension will take effect 90 days after the municipality formally notifies the State Treasurer. Existing non-principal residence operators have 36 months to comply.

As the meeting ended, James Mogilever asked whether operators can rely on the full three-year transition period. Cohen responded that he saw no reason the timeline would change.

Princeton to phase out non-owner Airbnbs over three years under new rental ordinance