Fifth Circuit Upholds New Orleans Short-Term Rental Regulations
This week marked another chapter in the long running saga of short-term rental regulation in New Orleans and Orleans Parish. The U.S. Court of Appeals for the Fifth Circuit upheld key portions of New Orleans’ regulatory scheme governing short-term rentals, rejecting constitutional claims brought by property owners and a federal preemption challenge brought by Airbnb.
What the Fifth Circuit Decided in Bodin v. City of New Orleans
In Bodin v. City of New Orleans, No. 25-30524, decided August 5, 2026, a three-judge panel affirmed the dismissal of challenges to two City ordinances. The first, adopted in 2023, generally limits non-commercial short-term rental licenses to one property per residential block and distributes licenses by lottery when there are multiple applicants. The second, adopted in 2024, prohibits short-term rental platforms from facilitating bookings for unlicensed properties and requires platforms to verify a property’s license status.
One STR License per Residential Block: The Court Rejects the Takings Claims
The property owners argued that the one-per-square block restriction on residential STRs amounted to an unconstitutional taking of private property. The Fifth Circuit rejected these arguments. As to a per se taking, the court held that the ordinance neither physically appropriated the owners’ property nor interfered with their right to exclude others. The court declined to equate the asserted right to lease property to short-term guests with the right to exclude, which receives special protection under Supreme Court takings precedent. The court also rejected the owners’ regulatory-takings claim, that is, that the regulation amounted to a taking.
Despite the considerable losses that some property owners have suffered due to the City’s STR regulations, the court found that even if hosts “allegedly” lost profits due to being unable to rent their property short term, “that loss is not severe.” Id. at 7. The court emphasized that ‘“the mere fact that [a] regulation’ extinguishes a property’s ‘most profitable use’ does not ‘necessarily’ show a taking.”’ Id. citing United States v. Cent. Eureka Mining Co., 357 U.S. 155, 168 (1958). The court suggested that even a 25% diminishment in a property’s rental revenue would not be severe enough to qualify as a regulatory taking. Id. at 7.
The court emphasized that the owners retained other economically beneficial uses of their properties and characterized the ordinance as a conventional land-use regulation rather than the functional equivalent of a physical appropriation. The court found that even though hosts are not permitted to rent their properties on a short-term basis, the properties still maintain value: “The 2023 Ordinance may have frustrated the Hosts’ ambitions to operate short-term rentals. But it did not extinguish their ability to rent entirely—they can still rent long term.” Id. at 8.
The court characterized the 2023 New Orleans Ordinance as “a reasonable zoning regulation” enacted to combat the supposed lower quality of life caused by the proliferation of short-term rentals in residential neighborhoods.
Airbnb’s Section 230 Challenge to New Orleans’ STR Platform Rules Fails
The City's requirement that STR platforms like Airbnb verify licenses and refrain from processing transactions involving unlicensed rentals was also upheld.
While earlier versions of the City's STR regulatory scheme faced successful constitutional challenges, the City Council’s revised residential STR rules appear to have greater staying power. The Council itself characterized the latest decision as confirmation of its authority to regulate both short-term rental operators and the platforms through which rentals are booked. For municipalities, property owners, and online rental platforms, Bodin is significant because it reinforces the substantial latitude local governments generally possess to regulate land use.
Here at the Stow Firm, we understand that property has value and that, for many individuals and corporations, property acquisition is an investment strategy. We are disappointed by the court’s minimization of the economic impact of the STR regulations on would-be entrepreneurs, many of whom were single property owner-operators attempting to support their families or defray ever-rising cost of living expenses with short term rental income.
Speak with New Orleans Real Estate Attorney:
Though the Stow Firm and New Orleans Real Estate Attorney Christopher Stow-Serge stands ready to help New Orleans property owners understand the residential short term rental regulatory scheme and navigate permitting. We also assist in short term rental violation defense for owners and operators cited and penalized by the City of New Orleans. Get in touch if we can help you understand the ever-shifting short term rental landscape in Orleans Parish.
References:
- Full text of the opinion
- City Council's Press Release