Buying a Hot Springs Vacation Rental? Why the City License May Not Come With the Keys

"A short-term residential rental business license shall not be transferable to any other person or location, except as provided herein."

That sentence comes from Ordinance No. 6405, which the Hot Springs Board of Directors adopted on December 7, 2021 and still governs short-term rentals inside city limits. For anyone writing an offer on a booked, reviewed and operating vacation rental in a residential part of Hot Springs, it sets up the question that matters most. Will the city license that makes those bookings legal still be valid when the deed changes hands?

The honest answer is that the ordinance does not promise it will. In the residential zones it applies to, the license is the scarce part of the deal. A buyer can find another house. A license under the cap is a different matter.

The license belongs to a person, and the permit belongs to the license

Three ordinances, read together, explain the mechanism.

1. Ordinance 6405 (December 7, 2021) says each short-term residential rental license is issued in the name of the property owner. It bars transfer "except as provided herein." The one transfer it actually describes is ownership passing to an immediate family member by gift or testamentary transfer. In that case the new owner "shall also acquire ownership of the existing short-term rental license until its expiration without paying additional fees."
2. Ordinance 6435 (August 2, 2022) governs the special use permit that residential STRs need. It says the permit "is not the same as a conditional use permit, and therefore does not run with the land." The permit stays valid only while its license is current, and it lapses if the license lapses.
3. Ordinance 6454 (December 20, 2022) sets the residential cap at 400 licenses per calendar year starting January 1, 2023. It also adds a $100 fee "for processing any transfer of a short-term residential rental license."

That $100 fee is the one loose thread. Read alone, it suggests transfers happen often enough to have a price. Read next to the non-transfer clause and the narrow family exception, it never says which transfers qualify. The text clearly protects a gift or inheritance to immediate family. It does not clearly address an arm's-length sale to an investor. Ordinance 6405 does require license information to be updated within 30 days of "any change of owner," which shows the city expects to hear about a sale. It does not say what happens to the license afterward.

That is why the answer has to come from the City, about the specific address, before the option period ends.

Why a lapsed license is hard to replace

If the license and permit do not carry over, the buyer applies as a new applicant. In residential zones, that means joining a capped pool where renewals come first. Ordinance 6454 gives renewal of existing licenses "priority over initial applications for new transient use sites."

New applications also run on a fixed calendar. If the residential count is below 400 after May 1, the portal reopens on the following second Monday of July and stays open until the count reaches 400. Then it closes and pending applications stop being processed. It does not reopen until the count falls below 400 after May 1 of a later year.

Here is how the rule plays out for a buyer closing this fall:

The rule creates the window. It does not guarantee one. We could not find public confirmation that the portal actually opened in July 2025 or July 2026, or a current count of residential licenses. The cap was being treated as nearly full in spring 2025, though. The Arkansas Democrat-Gazette's April 24, 2025 coverage ran under the subhead "Hot Springs expects to hit capacity."

So a buyer who closes on a residential STR in October 2026 and loses the license may wait until at least July 2027 to apply again. That depends on renewals leaving room under 400.

The cap has held through recent pressure to loosen it

The cap has come up for debate and has stayed in place. At its April 15, 2025 meeting, the Hot Springs Board of Directors deadlocked 3–3 and defeated an exemption from the 400 cap for veterans with permanent, 100% rated service-connected disabilities. The Sentinel-Record reported on May 19, 2025 that a later work session ended without District 4 Director Dudley Webb finding support to bring the proposal back for debate.

The state did not override the city's rules either. In the 2025 session, HB1445, which would have limited certain local STR restrictions, was withdrawn by its author and sent to interim study. HB1790, another bill on local STR regulation, failed on third reading and died at adjournment.

The city also had a recent chance to rewrite the cap and kept it. On September 16, 2025, the Board passed an ordinance updating city code to match the zoning code adopted November 19, 2024. The STR section now lists the new residential districts, R-R, R-S and RN-1 through RN-6, and keeps the limit at 400 per calendar year. The city-hosted file lists that ordinance as O6549 in its title and C0549 in its heading, so check the number with the City Clerk before citing it in a contract. The Board agenda posted for September 29, 2026 lists no STR item.

Zoning decides whether any of this applies

The cap and the special use permit requirement cover specific districts: R-R, R-S, RN-1 through RN-6, and planned development districts created after January 18, 2022. Horizontal property regimes recorded before January 18, 2022 are exempt from those rules. Arkansas condominium regimes are set up under that horizontal property statute, so a condo's recording date can matter as much as its floor plan.

Properties in districts outside that list still need an STR business license. They are not under the 400 cap or the special use permit rule that the cap language describes. Two homes that look alike on a booking site can carry very different risk at closing because their zoning designations differ. Pulling the zoning designation for the exact parcel comes first. Price analysis comes after.

What the license costs to carry once you have it

Holding a license also comes with recurring obligations, and these belong in any rental pro forma. The City's GovOS tax portal currently lists:

• Annual license fee by bedroom count. It starts at $200 for zero or one bedroom and rises $100 per bedroom, reaching $1,600 for fifteen bedrooms. Ordinance 6454 set a different formula of $50 per authorized overnight occupant with a $200 minimum, so confirm which schedule the City applies to your property.
• A 3% STR tax on gross rents not already remitted by a platform. Cleaning fees, booking fees and pet charges count toward gross rent.
• Monthly filing. Airbnb and Vrbo remit the tax on their bookings, but hosts still file a monthly form by the 20th of the following month, including a zero return when nothing was booked. Late payments carry a penalty of 5% per month, capped at 35%.

Each of these runs on the license account. If the license changes or is newly issued, the tax account changes with it. Sorting that out before closing avoids a gap in filings during the first months of ownership.

Before the option period ends

For buyers, the checks run in this order:

1. Confirm the parcel's zoning district and whether it falls under the residential cap.
2. Ask the seller for the license number, the special use permit and the renewal history.
3. Email the City at [email protected] with the address and license number. Ask in writing whether this license and permit can transfer to you in this sale, and what the process involves.
4. If the answer is no or unclear, decide whether the offer still works for long-term or personal use. Build your timeline around the May 1 count and the July window.

For sellers, the same facts shape the listing. An operating rental's booking history helps an investor most when it comes with a straight answer about the license. Gather the license documents, permit, and tax filing records before going live. Buyers will ask for them in the first conversation, and a seller who already has the City's answer in hand avoids a renegotiation during the option period.

Quick answers

Does my license carry over if I inherit a rental from a parent? Ordinance 6405 lets an immediate family member who receives the property by gift or testamentary transfer keep the existing license until it expires, with no extra fee. The ownership information still has to be updated within 30 days.

Can the special use permit stay with the house if the license is reissued? The ordinance says the permit does not run with the land and is tied to its corresponding license.

Does this apply in Hot Springs Village? No. These are City of Hot Springs ordinances, and the cap covers specific zoning districts inside city limits.

If you're weighing an offer on an existing vacation rental in Hot Springs, or getting one ready to sell, I'd be glad to walk through the zoning, the license history, and the questions to put to the City before you commit. Trademark Real Estate, Inc works through these license details with investors and owners all the time. Let's Connect.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.