Vacation rental rules,
city by city.

Every jurisdiction on the Monterey Peninsula regulates short term rental differently, and most of them have tightened since 2024. Here is where each one actually stands.

The summary table

Unincorporated Monterey County includes Pebble Beach and Del Monte Forest, Carmel Valley, Carmel Highlands and Big Sur.

The county ordinance, and why it changed everything

The Board of Supervisors adopted both the inland and coastal vacation rental ordinances on 27 August 2024. The inland ordinance took effect 14 October 2024. The California Coastal Commission approved the coastal ordinance on 13 August 2025, the Board adopted it on 23 September 2025, and it took effect 24 October 2025. Existing unpermitted operators were given two months from that date to permit or cease.

The ordinance creates three tiers:

• Homestay. The owner is present during guest stays. No countywide cap. Ministerial license.
• Limited vacation rental. Whole house, owner absent, up to three times a year for stays of up to thirty days. No cap. Ministerial license.
• Commercial vacation rental. Whole house, more than three times a year. Capped, and requires a discretionary use permit valid up to seven years.

Commercial vacation rentals are capped at four percent of housing stock per planning area and are prohibited outright in Big Sur, Carmel Highlands, inland Carmel Valley, Moss Landing low and medium density zones, and Carmel Area low density residential zones. Reported allocations include 201 permits for Carmel Valley with roughly 38 available, 226 for North County Inland with roughly 205 available, and 118 for the Carmel Area which is already roughly 100 permits over its cap.

The two rules that disqualify most second home owners

These are the provisions owners most often discover too late.

• Property type. Only detached single family dwellings, manufactured homes and mobile homes on permanent foundations qualify. Condominiums, duplexes, multi unit properties and accessory dwelling units are prohibited from vacation rental use entirely.
• Ownership. Eligibility is limited to individuals and trustees. An LLC or a corporation cannot hold a vacation rental permit. A great many Peninsula second homes are held through entities for liability or estate planning reasons, and those properties are not eligible as currently titled.

Required paperwork for the commercial tier includes a transient occupancy tax certificate, a vacation rental operation license with a reported initial fee of $1,152.40, a business license, and the use permit itself. Processing runs roughly one to two months for a homestay or limited rental and four to five months for a commercial rental. Unincorporated county transient occupancy tax is 10.5 percent.

City by city detail

Carmel-by-the-Sea

No home or subordinate unit may be rented for less than thirty consecutive days in the residential district, a rule the city frames as preserving residential character. Commercial zones may permit transient lodging. Enforcement is active and uses listing site monitoring. A business license is separately required to rent residential property, taxed at one dollar per thousand dollars of gross receipts.

City of Monterey

Rentals under thirty days are banned in residential zones, and advertising a short term rental is itself prohibited. The city contracts monitoring of online listings. Monterey also operates a separate mandatory rental registration program covering all residential rentals, which is covered here.

Pacific Grove

Licenses are capped at 250 city wide with roughly 84 active, restricted to Coastal and Commercial zoning districts, with a 55 foot zone of exclusion between licensed parcels and a 15 percent block density cap. Home sharing with the owner in residence is permitted city wide. Licenses are not transferable to another person or another property, so a buyer cannot assume the seller's license. Renewal falls on 31 March and requires proof of minimum rental activity, inspection reports and listing hyperlinks. Reported fees are $141 to apply, $124 to issue and $221 to renew, with transient occupancy tax at 12 percent remitted monthly. Penalties reach $2,500 per day and become a property lien after ninety days.

For the record, the ballot measure that produced the zoning restriction was Measure M in November 2018. The permit lottery frequently referenced was a one time process, and licenses not selected sunset on 30 April 2019. Current intake is first come, first served against the cap.

Marina

A short term rental is any tenancy of 29 consecutive days or less. The property must be the owner's permanent residence or usual place of return, documented with at least two forms of identification, which prohibits second home short term rentals outright. Occupancy is limited to two per bedroom plus two, capped at twelve. Permits expire 30 June annually and renewal requires a current business license and proof of timely transient occupancy tax payment.

Seaside

Applies to tenancies of thirty or fewer consecutive days, including rooms and guest houses. Hosted rentals, where the owner occupies the property as a principal residence and is present throughout, are uncapped and open. Non hosted whole home rentals are capped at 90 licenses and that category is currently closed, with a waitlist carrying a reported $250 non refundable fee. A 55 foot exclusion zone applies between non hosted properties and one license is permitted per parcel. Licensing requires a licensed contractor inspection against the city checklist. Renewal falls on 30 June and transient occupancy tax is 12 percent.

Del Rey Oaks

Historically the most permissive jurisdiction on the Peninsula, and no longer. Whole home licenses are capped at 25 and none are currently available, with a waiting list. Governed by Ordinance 293 as amended by Ordinance 314 and municipal code chapter 5.24, administered through a third party licensing platform. Submittals include an owner responsibility form, a smoke and carbon monoxide alarm affidavit, and a nuisance response plan.

What owners are actually doing about it

The practical response, and the one we implement most often, is the furnished tenancy of thirty days or longer. It clears the short term rental threshold in every Peninsula jurisdiction, so it needs no vacation rental permit, no cap allocation and no use permit. It is unaffected by the LLC ownership restriction and unaffected by the property type restriction. And in Carmel and Pebble Beach it frequently produces more net income than an unfurnished annual lease, because the tenant pool of relocating executives, visiting faculty, and owners renovating elsewhere pays a real premium and turns over predictably.

It is not the right answer everywhere. In Seaside, Marina and much of Monterey the annual lease is simply the better business. The point is that the decision should be made on the numbers for your address rather than on what used to work.

Questions

Reviewed August 2026. Rules change, and the county ordinance is under active litigation. This is a summary written for owners and is not legal advice. Confirm the current position with the jurisdiction, or ask us and we will confirm it for you.