NEW ORLEANS – The Fifth Circuit Court of Appeals largely upheld New Orleans’ short-term rental (STR) regulations on Oct. 7 but struck down the city’s ban on corporate ownership of residential STRs. The decision reshapes who can legally operate rentals in a market already struggling with housing affordability and enforcement challenges.
The Oct. 7 decision allows companies as well as individuals to hold STR licenses, somewhat weakening the city’s rule limiting one rental per owner since individuals could now create separate LLCs for each property. Housing advocates warn the change could open new loopholes, while operators say it adds needed flexibility.
The court found that prohibiting business entities from holding STR permits was discriminatory, but it reaffirmed that the city has the right to regulate STRs overall. It upheld provisions requiring owners or operators to be present during guest stays and maintained most advertising requirements, except for a rule limiting listings to a single STR.
At the same time, despite disagreeing with the allowance for corporate ownership, city leaders said the decision keeps core restrictions intact and supports broader efforts to curb STR proliferation and protect housing affordability.
“This week we’re starting the week with some really good news,” said Councilmember JP Morrell in a social media post.
Industry Reaction
“I think this is a win for the city and for responsible operators,” said David K. Holtman, founder of Big Easy Management, a New Orleans–based property management and real estate investment firm. “There’s absolutely a place for short-term rentals in New Orleans, like in any major city, it’s part of what travelers expect now. We’re happy the city feels good about where things landed, and we believe this structure will be good for the market overall.”
The Fight Behind the Ruling
The ruling follows years of litigation over the city’s evolving STR framework. After earlier court challenges, the City Council rewrote its regulations in 2023 to restrict STRs to one per square block and created a lottery system for permits, while later removing a clause that allowed extra exceptions. The goal of the rewrite was to curb over-concentration of STRs in residential neighborhoods and preserve long-term housing stock.
In Feb., Airbnb and a group of local short-term rental owners filed a federal lawsuit against the City of New Orleans challenging the 2023 regulations. The plaintiffs claimed that the ordinance violated homeowners’ constitutional rights, improperly forced private platforms to enforce city rules, and required data disclosures that infringed on user privacy. Airbnb specifically objected to the mandate that listing platforms verify city permits before allowing bookings, arguing that such enforcement should be the city’s responsibility.
“They basically filed this massive lawsuit trying to stop platform accountability and stop us from enforcing the law,” said Morrell.
The city moved to have the case dismissed, and in Sept. 2025 a federal judge largely ruled in its favor, rejecting most of Airbnb’s claims. The court upheld the city’s authority to require platforms to confirm permit validity before processing short-term rental reservations, a key provision Airbnb had sought to overturn.
Councilmember JP Morrell had previously warned that allowing corporate ownership could make STRs difficult to control, but his office now says the regulatory environment has changed. A recent law requires STR platforms to verify city permits before collecting fees, which officials say strengthens enforcement.
“The federal courts ruled in favor of the 12(b)(6) motion and not only through out the suit, but they dismissed it with prejudice,” said Morrell. A 12(b)(6) motion is a request to dismiss a case on the grounds that the complaint fails to state a valid legal claim, even if all the alleged facts are true.
City Response and Next Steps
“The court further stated, Airbnb remains free without penalty to allow as many unlawful STR listings on its website as it chooses to. The 2024 ordinance simply precludes Airbnb from collecting a fee – in other words, profiting – from booking an STR that includes a non-permitted STR,” said Morrell. “So, basically what the court said is ‘Hey, you’re free to list all the illegal STRs you want, but you can’t make any money off it.’”
City attorneys said they are reviewing the ruling to determine next steps.
