Thinking about listing your Prospect Heights home as a short-term rental but not sure where to start? You are not alone. Local rules can feel complex, and small mistakes can lead to fines or delays. In this guide, you will learn the key ground rules so you can plan with confidence and stay compliant from day one. Let’s dive in.
What counts as a short-term rental
Prospect Heights treats short-term rentals as single-family homes rented for fewer than 30 consecutive days through a hosting marketplace. A dedicated short-term rental license is required, separate from general rental licenses. The city may ask for documentation showing which platform you use. You can review definitions and licensing requirements in the city code on licensing and rental programs.
- See the city’s licensing section for definitions and fees: Prospect Heights rental licensing requirements
- Review the city’s rental inspection program details: Residential Rental License Inspection Program
License and inspection basics
You need an annual short-term residential rental license. The fee is $500 per year, and the property must pass the city’s safety and maintenance inspection. Re-inspection fees apply if the property does not pass on the first visit.
Annual fees and timing
Plan ahead for renewals. The city can audit bookings and payments at renewal, so keep organized records from your hosting platform and any tax payor service you use. Submit renewal materials early to avoid any gap in your license status.
Council authorization and zoning
No new short-term rental license is issued unless it is authorized by the City Council and consistent with zoning. Confirm your property’s zoning and factor this step into your timeline.
- Read the licensing and authorization requirements: Licensing requirements and procedures
Operating rules to follow
Prospect Heights writes specific operating standards into the ordinance. Key items include:
Minimum stay is 3 consecutive nights. One- or two-night bookings are not allowed.
Whole-home only. Renting individual rooms or portions is not permitted.
Occupancy limits must match what the city establishes at inspection under the International Property Maintenance Code. Do not advertise above that limit.
Parking must be accommodated on site or at another approved location and must meet code.
Security cameras are required. Maintain cameras that show the driveway/parking and each entrance door. Store footage and make it available to the city or police upon request.
Review the city’s short-term rental operating standards: STR operations and compliance
Insurance you must carry
You must maintain liability insurance that specifically covers short-term rental activity with limits of at least $1,000,000 per occurrence. The policy must include a 30-day notice to the city before cancellation. Failure to maintain coverage can lead to suspension or revocation of your license.
- See the insurance requirement: STR insurance standards
Taxes and who remits
Prospect Heights imposes a local Hotel Operators’ Occupation (hotel/motel) tax of 5% on gross rent for transient stays. The ordinance requires short-term rentals to comply with that tax. If your hosting platform does not remit the city tax, you must use a third-party tax payor service and keep documentation for audits.
At the state level, the Illinois Department of Revenue notes that beginning July 1, 2025, hosting platforms that meet the state’s “re-renter” definition may be subject to the Hotel Operators’ Occupation Tax. Check current IDOR guidance and confirm whether your platform remits on your behalf.
- City hotel tax requirements: Prospect Heights hotel/motel tax
- State hotel tax forms and bulletins: Illinois Department of Revenue hotel tax guidance
Safety and life-safety checklist
Your property must meet city building, fire, and property maintenance codes, plus applicable state safety laws. During inspection, expect the city to verify key life-safety items.
Use this quick checklist:
Smoke alarms installed per Illinois law. For new installs and replacements, Illinois requires 10-year sealed-battery smoke alarms in most homes.
Carbon monoxide alarms within 15 feet of every sleeping room, as required by state statute 430 ILCS 135.
Clear exit paths from bedrooms, properly mounted fire extinguishers where appropriate, safe wiring and heating, and adequate lighting in stairs and hallways.
City compliance reference: STR compliance requirements
Smoke alarm law overview: Illinois Smoke Alarm Law
CO alarm statute: Illinois Carbon Monoxide Alarm Requirement (430 ILCS 135)
HOAs and condo rules
If your home is part of an HOA or a condominium association, you may need written approval for short-term rental use. The city can request documentation that your association allows it. Association rules can prohibit STRs even if you have a city license.
- HOA and condo documentation expectations appear in the city’s STR standards: STR operations and compliance
Enforcement and penalties
Prospect Heights actively enforces its STR ordinance. Violations can trigger fines of $100 to $750 per offense per day. The city may suspend or revoke your license for violations or nuisance activity. If a license is revoked, no new license can be issued for that property, or to that licensee or co-owners, for three years. The city also reserves the right to audit bookings, tax payments, insurance, and required documentation at renewal.
- Fine schedule: City penalty provisions
- Audit and renewal authority: Licensing requirements and procedures
Tips for buyers and sellers
- If you are buying with STR plans: confirm zoning, parking capacity, HOA approval if applicable, and whether the property has a clean history with the city. A past revocation can block licensing for three years.
- If you are selling an active STR: organize your license, inspection reports, insurance certificates showing the required coverage and notice clause, booking statements, tax remittance records, and any HOA approvals. These items matter during renewals and can support buyer due diligence.
- If you plan to operate: maintain a responsive local contact, keep camera systems in good working order, and cooperate promptly if the city or police request information related to nuisance or criminal activity.
Ready to run a compliant STR?
With the right plan, Prospect Heights STRs can be straightforward to manage. Focus on your license, safety standards, insurance, and tax processes, and keep your documentation clean. If you are sizing up a property for short-term rental use or preparing to sell one, we can help you pressure-test the plan and position the home for success. Connect with The PAK Group for hyperlocal guidance and next steps.
FAQs
What is the minimum stay for short-term rentals in Prospect Heights?
- The ordinance requires a minimum stay of 3 consecutive nights and prohibits 1- or 2-night bookings. See the city’s STR standards in the code section on operations and compliance.
Do I need special insurance to host a short-term rental in Prospect Heights?
- Yes. You must carry liability insurance that covers STR operations with at least $1,000,000 per occurrence and a 30-day cancellation notice to the city, as outlined in the city’s STR standards.
Are short-term rentals in Prospect Heights subject to hotel tax?
- Yes. STRs are subject to the city’s 5 percent hotel/motel tax. If your platform does not remit locally, you must use a third-party tax payor service and keep documentation. Also review IDOR guidance on platform collection responsibilities.
Can I rent a single room instead of the whole property in Prospect Heights?
- No. The city requires whole-property rentals for STR licensing and does not allow renting individual rooms or portions of the home.
What happens if my short-term rental generates noise complaints or nuisance calls in Prospect Heights?
- The city prohibits nuisance and criminal activity. Repeated issues can lead to fines, license suspension, or revocation, and the city can require cooperation and documentation during enforcement.
What are the penalties for violating Prospect Heights short-term rental rules?
- Fines range from $100 to $750 per offense per day. The city can suspend or revoke your license, and a revocation triggers a 3-year prohibition on licensing at that property or to that licensee or co-owners.
