Cape May, NJ Airbnb & Short-Term Rental Regulations 2026

Regulation Overview

Victorian-era beach resort and National Historic Landmark district with premium nightly rates and year-round tourism draw; STRs are broadly permitted across most residential zones, but licensing is administratively strict (inspections, insurance, local managing agent).

STRs are permitted in most residential zones (no broad zone-based ban found) but licensing carries real conditions: a mandatory Fire Prevention Bureau inspection, an in-county managing-agent requirement, and annual renewal — a permit-with-real-conditions profile rather than a hard cap or ban.

New Jersey State Law

State preemption: No express preemption of local zoning. P.L.2018 c.49 (approved July 1, 2018) is a tax law, not a zoning-preemption law — it imposes state sales tax + State Occupancy Fee on transient accommodations booked via marketplaces and lets municipalities add a local occupancy tax. A later amendment (A4814/4520) narrowed the tax-collection regime to professionally managed units and rentals obtained through a transient space marketplace or travel agency. Municipal licensing/zoning control (Ocean City's, Cape May's, etc.) remains separate and local.

Statewide rules: No statewide STR registration or licensing system found; licensing occurs at the municipal level. Marketplaces (Airbnb/Vrbo) collect and remit the state sales tax (6.625%) and State Occupancy Fee (5%) on hosts' behalf under P.L.2018 c.49.

Taxes: NJ Sales Tax 6.625% + State Occupancy Fee 5%, plus an optional municipal occupancy tax and county tourism assessments in some counties.

2025–2026 legislation: No pending 2025/2026 statewide STR bill found. Recent STR regulatory activity (2025-2026) has been municipal, e.g. Ocean City's phased R-1/MH rental ban.

Cape May Rules

Governing jurisdiction: City of Cape May, NJ (Municipal Code, Chapter 310 Licenses and Permits, Article IV — Short-Term Rental License Regulations).

• Cape May is a National Historic Landmark District, which drives high nightly rates but also brings historic-preservation rules into play for renovations.
• A City of Cape May Rental License is mandatory before any short-term rental (defined as under 175 consecutive days) can be advertised or occupied.
• Short-term rentals are broadly permitted across most of the city's residential zones, unlike some neighboring Shore towns that restrict STRs to certain districts.
• The rental license must be renewed annually, 12 months from the date of issuance.
• Properties must pass a Fire Prevention Bureau inspection before a rental license is issued.
• Owners must designate a managing agent who physically resides in Cape May County, New Jersey, to handle compliance duties.
• Enforcement of the STR ordinance involves multiple city departments (Police, Construction Code, Fire, Licensing, Code Enforcement, Zoning) plus the Cape May County Department of Health.
• Exact license fees, any per-zone caps, and specific penalty amounts could not be verified from a primary source and should be confirmed directly with the City Clerk's office before relying on them.

Not confirmed

We could not verify the following against a primary source. Confirm each with the jurisdiction before you rely on it:

• Exact rental license fee amount
• Whether any numeric cap/quota on licenses exists per zone
• Specific minimum-stay rule beyond the 175-day STR definition threshold
• Owner-occupancy requirement (none found, but not exhaustively ruled out)
• Whether the license transfers on sale
• Exact occupancy limit numbers
• Exact penalty amounts
• Precise municipal/county tax percentages (secondary-source only)

Buyer Due Diligence Checklist

Before you write an offer on a short-term rental here:

• Get a written determination from the governing jurisdiction for the specific parcel. Verbal guidance from anyone else is not diligence.
• Establish which jurisdiction governs — city, town, village and unincorporated county can differ sharply within a few miles.
• Ask whether an existing permit transfers on sale. In many markets it does not, and a listing marketed as a running short-term rental may convey nothing of the sort.
• Read the HOA or condo covenants during your inspection period. Private covenants bind even where the jurisdiction permits the use.
• Model revenue against the legal occupancy cap, not the bedroom count.

Frequently Asked Questions