Short-term rental rules in SLO County, town by town

The City of San Luis Obispo has the clearest rule in the county. Under municipal code section 17.86.160, short-term rental of a home the owner doesn’t live in is a prohibited use inside city limits. There’s no cap to join and no waitlist to sit on, because the use itself isn’t allowed.

What the City does permit is a homestay. That means renting rooms inside an owner-occupied primary residence, capped at four adult overnight guests, after you get a homestay permit and a business license. Operators pay transient occupancy tax at 10%. They also pay a 2% tourism business improvement district assessment and a 1% tourism marketing district assessment. Each year, they verify that the home is still their primary residence.

If you’re buying, this is the one town where the answer doesn’t depend on the parcel. If you plan to buy a house in the city and rent the whole of it out by the night, that plan doesn’t work. That’s true whatever a listing or a previous owner suggests. As of our September 2, 2026 review, the prohibition stands.

Paso Robles adopted its short-term rental ordinance, number 1082, on August 6, 2019. The numerical limits are set separately, by council resolution. Non-hosted rentals are capped at 325 citywide, with a sub-cap of 75 inside the R-1 single-family zone. Both caps have been full for years. The City reached the R-1 limit on October 9, 2019 and the citywide limit on May 24, 2021. It has run a waitlist for each since.

Homeshares aren’t capped at all. In a homeshare, the owner lives on the property and rents part of it. If you want to host, that’s the practical route into the Paso market. So in Paso Robles, “capped” describes non-hosted rentals only.

Transferability is where Paso differs from its neighbors, and it differs within the city too. Permits have moved with the property in the Town Centre zones. They haven’t in R-1, where a sale closes the permit and returns it to the pool. The City was weighing an end to those transfers when it last reported publicly. So if you hear that a permit conveys, confirm it in writing with the City before it becomes part of your offer. Waitlist positions don’t transfer to a new owner in any zone.

Atascadero is the one city in the county without a dedicated short-term rental ordinance. Hosts operate under the general home-occupation business license. Transient occupancy tax is collected through the City’s third-party administrator. The City’s vacation rental handout carries the operating standards.

That has been on the verge of changing for almost two years. The City Council directed staff to draft an ordinance on October 22, 2024. Staff took a first draft to the Planning Commission on August 19, 2025, then paused after operators objected, above all to an owner-occupancy requirement. The City ran a public workshop on February 5, 2026. Staff brought the results back on February 24, 2026. They asked the council to decide whether to continue toward a municipal code amendment, and what it should contain. The minutes record that the council provided direction to staff. No ordinance was introduced and no vote was taken. Two council members recused themselves from the discussion. As of our September 2, 2026 review, nothing has been adopted.

If you’re buying, this is the county’s largest open question. An Atascadero property bought today on the strength of today’s permissive rules could be operating under a new ordinance within a year. The debate has included an owner-occupancy requirement. For an investor, that would be the change that matters most. If you’re underwriting rental use in Atascadero, re-check the council agenda before you remove contingencies.

Morro Bay adopted its short-term rental ordinance in 2020. The California Coastal Commission certified the coastal-zone half of it on September 9, 2021. In residentially zoned areas, the City allows a maximum of 175 full-home rentals. It requires 175 feet between them, measured property line to property line. Applicants beyond the cap join a waitlist.

Two carve-outs matter. Home-share rentals in residential zones aren’t subject to the cap, and as of January 2025 the City sets no limit on them. Short-term rentals in commercial and mixed-use zones sit outside both the cap and the buffer. That’s why a downtown condominium and a house three streets inland can be under different rules.

Permits renew annually, with the renewal due 60 days before expiry. The City inspects every four years. After an audit year, the council authorized staff in January 2026 to contact five waitlisted properties identified as eligible for a full-home permit. That’s the only movement the cap has seen recently.

If you’re buying, the key fact is that a Morro Bay permit doesn’t come with the house. Verify the cap, the buffer against neighboring permits and the waitlist position with the City. Do it before you write an offer that depends on any of them.

Pismo Beach uses two separate categories, and the City’s freeze on new licenses applies to only one of them. A “short-term rental” is a rental of under 30 consecutive days, permitted primarily in residential zones. A “vacation rental” is a rental permitted in the C-1, RR and R-4 zone districts in the downtown core. It doesn’t require the owner to live there.

Under Ordinance O-2023-006, no new short-term rental licenses have been issued since November 7, 2023. Properties licensed before that date continue to operate. The City publishes its list of currently approved short-term rentals on its own website, so checking an address is unusually easy here. If an address isn’t on the City’s list, it isn’t licensed. The freeze has no published sunset.

That ordinance didn’t close the downtown vacation rental path. If you buy a property in those zones, you apply to the Planning Division for your own vacation rental permit. That’s because permits don’t transfer with the sale of a property in Pismo Beach, in either category. The seller’s license isn’t part of what you’re buying.

Arroyo Grande amended its short-term rental regulations by Ordinance 718 on October 11, 2022. The total number of approved vacation rentals in the city may not exceed 90. On its own short-term rental page, the City states that it has exceeded that cap and is granting no additional approvals at this time. That’s a de facto freeze. It’s a materially different situation from a cap with room in it.

Both categories carry the same separation standard. A vacation rental may not be established within 500 feet of an existing short-term rental or a school, and neither may a homestay. Both need a minor use permit with plot plan review under section 16.16.080, plus a business license.

One number gets misread here. The 300-foot figure in the City’s application materials is the radius for the mailing labels an applicant must supply, so neighbors receive notice. It’s a procedural requirement, not a second separation standard. It doesn’t limit where a rental may go.

Grover Beach adopted Ordinance 19-04 on June 17, 2019, codified at Development Code section 4.10.185. The City amended it on February 26, 2024 to clarify waitlist procedure and local-contact requirements, and to prohibit rentals in accessory dwelling units (ADUs). The Coastal Commission certified the coastal-zone half of that amendment on May 9, 2024. So it’s in force on both sides of the line.

The cap is split geographically, which is why summaries of this town disagree with each other. The City allows a maximum of 40 non-owner-occupied rentals on properties inside the coastal zone, generally west of North 4th Street and South 5th Street. It allows a maximum of 60 on properties outside it. Together that’s 100, the figure usually quoted. But a property’s eligibility turns on which of the two pools its side of the line belongs to. Owner-occupied permits aren’t capped at all. As of September 2026, the City says no non-owner-occupied permits are available, and it keeps a waitlist.

The operating rules are unusually specific. The limit is one permit per property, or per building where units share common walls. Rentals are prohibited in accessory and junior accessory dwelling units, deed-restricted affordable units, single room occupancy facilities, tiny homes on wheels, two-unit housing projects, urban lot splits and vehicles. A non-owner-occupied permit requires a city inspection before issuance and written notice to everyone within a 150-foot radius after approval. It also requires a minimum of twelve overnight stays a year, or the permit is revoked. Owner-occupied hosts must be in residence between 10pm and 7am. They must also prove the homeowners’ exemption on their county tax bill.

Permits run from August 1 to July 31 and renew in July. They’re issued to the owner only. They aren’t transferable, and the City asks to be notified when a home sells. A waitlist for the non-owner-occupied pools is notified in January when openings appear.

Nine of the towns on this page are unincorporated, so San Luis Obispo County regulates them rather than a city council. Whatever the community, a rental needs land-use clearance from Planning and Building, a county business license and transient occupancy tax registration. Where a community water or sewer system serves the parcel, the application must include evidence that the provider has been told about the use. The evidence must also show the provider has confirmed it has the capacity to serve it. That last requirement has teeth in places such as San Simeon, where the district has its own service constraints.

The county has confirmed that a vacation rental business license can’t be transferred to a new owner. If you’re buying and apply before the seller’s license goes inactive, you can be issued your own license with a new zoning clearance. If the license has already lapsed, the property has to qualify again from scratch against every current standard, including the separation rules. A property that was compliant when the seller started may no longer be.

Rentals aren’t allowed in an accessory dwelling unit, a guesthouse or agricultural worker housing. The Board of Supervisors approved an annual short-term rental review fee beginning January 2026. It’s billed with the vacation rental business license renewal. The Board cited a register that has grown past 2,200 license holders.

In the coastal zone, section 23.08.165 of the Coastal Zone Land Use Ordinance governs. It defines a residential vacation rental as the use of an existing residence as a transient rental. That excludes single-tenancy rentals of 30 consecutive days or longer. No residence may host more than four individual tenancies in a calendar month. Occupancy may not exceed two people per bedroom plus two more, and may not exceed what the on-site parking supports. All parking must be on site. Tenants may not use street parking at any time.

Operating standards run through noise and notice. The county measures a noise complaint against a threshold audible 50 feet from the rental’s property lines. An applicant must notify every property owner within 200 feet, plus the county Sheriff’s Office, the local Sheriff substation and the local fire agency. The applicant must also name a local contact reachable 24 hours a day.

Four communities carry extra standards inside their urban reserve lines: Cambria, Cayucos, Avila Beach and Los Osos. In the first three, the extra standard is a separation buffer. The strictest of them is Cambria’s, at 200 feet. In Cayucos it’s between 50 and 100 feet, varying by residential category. In Avila Beach it’s 50 feet, measured property line to property line, or unit wall to unit wall for condominiums. Los Osos is the only one with a numerical cap, and it’s covered in the table below. Where a parcel misses a location standard, a minor use permit process can modify it.

The permit path isn’t the same everywhere in the coastal zone. Cambria, Cayucos and Avila Beach can proceed on a zoning clearance where the property complies. The county requires a minor use permit instead in rural areas and in the other coastal communities. It names Los Osos, Oceano and San Simeon among them. That permit acts as the coastal development permit. That makes it a discretionary approval rather than a counter transaction.

Templeton, Nipomo and Santa Margarita sit inland, where Title 22 of the county code governs instead. Its section 22.30.510 covers residential vacation rentals. Hosted homestays are addressed separately in the same title. The inland path is administratively lighter than the coastal one. There’s no coastal development permit, so a compliant property proceeds on a zoning clearance and a business license.

If you’re buying inland, don’t overlook the notice requirements. They’re heaviest in the Adelaida and Willow Creek area west of Paso Robles. There, an applicant notifies every property owner within a 1,500-foot radius, along with the Sheriff’s Office, the local substation and the fire agency. A change of ownership there triggers its own notification to owners within 200 feet.

Agricultural parcels carry their own limits on transient occupancy, and a Williamson Act contract adds a further layer. So a rural inland parcel is the case where the general answer is least likely to be the right one. Confirm the specific parcel with Planning and Building before you assume the standard inland path applies.

Oceano is unincorporated, so the county rules govern, and the coastal zone boundary runs through the community. The first thing to establish about an Oceano address is which side of that boundary it’s on. That decides whether Title 23 or Title 22 applies. With it come the permit path, the notice radius and the operating standards.

On the coastal side, the county names Oceano among the communities where a minor use permit is required rather than a zoning clearance. Los Osos and San Simeon are on the same list. That permit is a discretionary approval acting as the coastal development permit, not an over-the-counter clearance. It’s the single biggest difference between buying in Oceano and buying in Cayucos.

Section 23.08.165 writes a community-specific separation table for Cambria, Cayucos, Avila Beach and Los Osos. Oceano doesn’t have one, so the general coastal standards govern. Those are four tenancies a month, two people per bedroom plus two, on-site parking, the 50-foot noise threshold and the 200-foot notice.

If you’re buying here, eligibility is genuinely parcel-specific and genuinely discretionary. A neighboring property operating as a rental tells you what was approved for that parcel, not what will be approved for yours. The county license doesn’t come with the house, either.

Here they are, stated plainly, with the rule behind each one.

Regulation here moves, which is why this page carries a review date. As of September 2, 2026, four things are genuinely open.