Key details:
The Kentucky House passed Senate Bill 61 on March 14, 2025. The bill originally focused on swimming pool safety, but has now been reshaped to restrict cities from enforcing density regulations on short-term rentals.
This bill comes after Lexington passed a package of new regulations in December 2024 that restricted STR density in the following ways:
- A new unhosted STR unit cannot be located within 600 feet of another unhosted unit.
- A new unhosted STR cannot be approved if 2% of housing units within 1,000 feet are currently unhosted STRs.
Senate Bill 61, driven by House Speaker David Osborne, would invalidate existing municipal rules on density, and require cities to approve STR applications within 30 days unless they present specific safety issues.
Osborne said that the additions to the bill strike “a very delicate balance between the ability to regulate and preservation of property rights.”
Local government leaders in Kentucky have strongly opposed this legislative push, arguing it takes away the regulatory control needed to protect neighborhood character and housing markets.
The bill still requires Senate approval; without Senate action or if vetoed by Governor Beshear, current city ordinances—including Lexington’s density limits—would remain intact.
Our Take:
Property rights should be clear, consistent, and equal for everyone. A 600-foot restriction on STRs doesn't pass that test - it penalizes some homeowners while rewarding others for no reason other than timing and proximity.
To get a broader perspective, I spoke with Nathan at Inndoorsy, a company that designs and hosts STRs in Kentucky. He shared insights on the substantial compliance initiatives his team took to ensure their properties in Lexington comply with the city's regulations, and how the current laws make it difficult for new properties to enter the Lexington market.
Similarly, a conversation with Eric at BNBLouisville, a leading STR management company in Louisville, highlighted the strong desire the STR community has to follow the regulations and serve the growing demand for well-managed STRs in Kentucky. However, homeowners and property managers face challenges with frequent regulation updates and inconsistency in the enforcement.
Given the economic benefits STRs bring to local communities, it seems like a more uniform statewide regulatory framework could benefit homeowners, property managers, and enforcement agencies alike.
What this means for hosts:
If passed, this could reshape the STR landscape in some of Kentucky’s biggest cities, which will present both opportunities and risks for hosts.
On one hand - SB 61 would protect property rights, encourage growth, and simplify permitting - benefiting new entrants and property manager’s ability to scale operations. On the other hand - existing operators in regulated markets would likely face increased competition from new players and community resistance if local rules are overridden.
Overall, seeing Kentucky move toward a more STR-friendly, pro-property rights approach would be a positive step for the industry.
Sources: Senate Bill 61, Lexington Herald-Leader, CivicLex
