Updated on October 14, 2025
A federal appeals court on Oct. 7, 2025, struck down two controversial pieces of New Orleans’ short-term rental ordinance, the latest episode in a years-long legal saga over how far the city can go to rein in the proliferation of short-term rentals.
In a split decision, the U.S. Court of Appeals for the Fifth Circuit ruled that the city cannot bar Limited Liability Companies and other business entities from holding owner or operator permits and cannot enforce a rule requiring each listing to advertise only one home. The panel affirmed most of the remaining ordinance requirements, including separate owner and operator permits, disclosures in advertisements, and the requirement that an on-site operator be present while guests are staying.
What’s invalidated
The judges found that New Orleans’ ban on STR permits for “business entities” violates the Equal Protection Clause because it treats similar owners differently without a rational reason.
The court also struck a provision requiring that “each short-term rental listing advertises only one dwelling unit,” finding the city had not shown how that advertising limit directly advances a substantial government interest under First Amendment standards.
What survived
The court reaffirmed that New Orleans has broad authority under Louisiana law to regulate short-term rentals and rejected claims that owners have a constitutional right to rent out their homes on a short-term basis. Under state law, the judges noted, short-term rentals are considered a commercial use, not a traditional residential lease.
The court also upheld a provision requiring operators to display permit numbers and occupancy limits on advertisements as factual consumer protections.
The court accepted the city’s 2023 ordinance amendment, changing from an “owner residency” to an “operator residency” requirement. An operator must be on-site while guests are present but does not have to live at the property full-time. Framed that way, the rule does not discriminate against out-of-state operators, the court found.
What happened before
Each time a court strikes down part of New Orleans’ short-term rental law, the city rewrites the ordinance to comply on paper but doubles down on restrictions.
Airbnb has called the city’s policies “some of the most extreme short-term rental restrictions on hosts in the country,” according to Verité News.
The tug-of-war has been ongoing for several years. The city passed its first ordinance allowing and regulating short-term rentals in 2017.
Citing neighborhood nuisances and the loss of long-term housing, the city in 2019 banned most short-term rentals in residential neighborhoods and required owners to live on-site. But in 2022, the appeals court ruled that the owner-residency rule discriminated against out-of-state property owners, violating the dormant Commerce Clause.
In 2023, the city replaced “owner residency” with an “operator residency” rule, requiring a licensed operator to be physically present while guests are staying. It also capped STR permits to one per city block, imposed new ad restrictions, and limited permits to “natural persons,” barring LLCs and other business entities.
Those changes triggered another wave of lawsuits. The City Council has “repeatedly adjusted city regulations … trying to balance residents’ concerns,” even as the courts continue to strike down overreaching provisions, Verité News reported.
The latest Fifth Circuit decision continues that cycle, upholding parts of the city’s regulatory framework while invalidating others that cross constitutional lines, setting the stage for yet another rewrite.
What’s next
The case now returns to the lower court for further proceedings to comply with the ruling. City officials are expected to amend the ordinance again, likely removing the ban on business entities and the one-property-per-listing rule while preserving the rest.
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