A Pacific Beach home with a strong vacation-rental history can look like it comes with a revenue stream. Under San Diego's short-term rental ordinance it doesn't. The City states plainly that STRO licenses "are not transferrable between ownership or location/dwelling unit." The license stays with the host, so the buyer starts over.
In Pacific Beach, starting over is easier than many buyers assume. Whole-home licenses outside Mission Beach still had open slots as of late October 2026, and the City was accepting applications. Since the license can't move with the sale, and a new one is available on application, a listing's rental record is useful information about demand. It isn't a scarce permit you are paying to inherit.
What Changes Hands at Closing, and What Doesn't
San Diego's Short-Term Residential Occupancy page sets out the parts of the system that matter in a sale:
- The license belongs to a host. A host may hold only one license at a time and may run only one dwelling unit as a short-term rental at a time.
- It doesn't follow the property. Licenses can't pass from host to host or move to another property location.
- A new host applies from scratch. Before applying, a host needs an active Transient Occupancy Tax certificate and an active, paid Rental Unit Business Tax account. A host who isn't the owner also needs a Business Tax Certificate and a document showing the right to occupy.
- The fees are modest and can't be refunded. Since March 1, 2025, a Tier 3 or Tier 4 whole-home license costs a $41 application fee plus a $1,129 license fee. A renewal costs the same.
- The license runs for two years. Licenses expire two years after issuance and can be renewed under the ordinance.
A July 2026 City rule also clarified that a host must be at least 18. A host who doesn't own the property must submit proof of the right to occupy and a Business Tax Certificate. So the seller's paperwork never becomes the buyer's paperwork. The buyer's own application decides whether the home can operate as a short-term rental after closing.
Pacific Beach Never Had a License Shortage
The cap is real. Tier 3 whole-home licenses, which cover every community except Mission Beach, are limited to 1% of San Diego's housing units outside Mission Beach. The cap is based on SANDAG housing estimates. Demand has simply never reached it.
When the first whole-home application window closed in late November 2022, Tier 3 applications came to less than half of the 5,416-license cap. KPBS reported that the planned Tier 3 lottery was canceled and that the City would reopen applications to fill the remaining capacity. The City's own description of the lottery covers only Tier 4 applicants, who exceeded their cap.
The gap has stayed open ever since:
- May 2023: 3,806 Tier 3 licenses issued, nobody on a waitlist, and 1,613 licenses available under a 5,419 cap, according to a Pacific Beach Town Council review of City figures.
- June 2025: 4,523 Tier 3 licenses issued and 1,028 available, as reported by the San Diego Union-Tribune.
- October 23, 2026: 4,854 Tier 3 licenses issued, 807 available, and the Tier 3 application period open.
The cap has also grown. Issued plus available came to 5,419 in 2023 and works out to 5,661 in October 2026, because the ceiling rises with the regional housing estimates the City uses. More homes citywide means more room under the cap, even as Tier 3 licenses climb.
The Scarcity Sits One Neighborhood South
Buyers who have heard that San Diego vacation-rental licenses are hard to get are usually hearing about Mission Beach. It is the one community under its own tier, and its numbers look nothing like Pacific Beach's.
| As of October 23, 2026 | Tier 3: Whole Home, Outside Mission Beach | Tier 4: Whole Home, Mission Beach |
|---|---|---|
| Cap | 1% of housing units outside Mission Beach | 30% of Mission Beach housing units |
| Licenses issued | 4,854 | 1,099 |
| Licenses remaining | 807 | 0 |
| Application status | Open | Closed |
| Minimum guest stay | Two nights | Two nights |
| Minimum annual use to keep the license | 90 days | 90 days |
According to the City's Tier 4 waitlist FAQ, the last waitlist window ran from July 1 to August 15, 2025. Applicants were placed on the waitlist in random lottery order. On the earlier Mission Beach waitlist, 165 of 209 applicants ultimately got licenses, the Union-Tribune reported. The City said the others had lost interest, moved, or failed to meet requirements.
So in Mission Beach the license really is scarce, but it still doesn't transfer to a buyer. In Pacific Beach it isn't scarce and doesn't transfer either. In both places, a listing's rental history describes what the seller did with the home. It doesn't tell you what the buyer is allowed to do.
Pacific Beach Holds an Outsized Share Anyway
Open licenses didn't stop concentration. Pacific Beach has gathered a large share of the city's whole-home licenses, and it got there through steady applications rather than a lottery.
The Pacific Beach Town Council's June 2023 data counted 838 Tier 3 licenses in Pacific Beach. That was 17% of the city's 5,066 whole-home licenses and 3.7% of the community's 22,374 housing units. By March 2024, a community presentation on short-term rentals counted 929 whole-home licenses in Pacific Beach, or 4.2% of local housing. It argued for caps set community by community instead of citywide.
Our own count of the City's active-license dataset, updated October 25, 2026, finds 984 Tier 3 licenses in the Pacific Beach community planning area and 1,223 active licenses across all tiers. Against the City's 4,854 Tier 3 licenses issued, that puts roughly one in five of San Diego's whole-home rental licenses outside Mission Beach in Pacific Beach. The dataset is a snapshot. Records change as licenses are issued, expire, or are canceled.
Pacific Beach supports a lot of whole-home rentals because of where it is, and that location is what a buyer pays for. The permit costs $41 to apply and $1,129 for the license itself.
The Obligations Every New Host Takes On
A buyer who plans to rent the home short-term takes on operating obligations along with the application:
- Minimum use. Tier 3 and Tier 4 licenses require at least 90 days of short-term rental use each year to keep the license.
- Minimum stay. Guests must book at least two nights.
- Occupancy tax. Effective May 1, 2025, San Diego has three Transient Occupancy Tax zones at 11.75%, 12.75% and 13.75%. The City's TOT page points owners to its map to find the rate for a specific property.
- ADU screening. In September 2025, inewsource and KPBS reported that City officials had approved licenses for properties with ineligible ADUs. The City said it began screening ADU permits against license applications in August 2025. If a listing's rental income has come from an ADU, a new application now goes through that screening.
This post is general information, not legal, tax or financial advice. Buyers should confirm how the ordinance applies to a specific property with the City and with qualified legal and tax professionals.
What Could Still Change
The ordinance isn't settled, and two recent proposals show where the debate is.
Councilmember Jennifer Campbell's office planned to bring amendments to an October 21 committee meeting. KPBS reported that they target a loophole letting a property owner get a short-term rental license after a no-fault eviction. Anyone buying a Pacific Beach home that currently has long-term tenants should check where those amendments stand before closing.
A separate proposal for a tax on vacation homes and short-term rentals is off the table for now. inewsource reported that the Rules Committee rejected the revised version 2–3 in January 2026, so it didn't reach the June ballot.
The Tier 3 cap itself is set by formula. As San Diego's housing count grows, the 1% ceiling rises with it.
FAQ
Can a seller transfer a short-term rental license to me as part of the sale? No. The City says STRO licenses can't pass from host to host or move to another property.
Is there a waitlist for whole-home licenses in Pacific Beach? As of October 23, 2026, Tier 3 applications were open and 807 licenses were still available.
Does Mission Beach follow the same rules? Mission Beach has its own tier, Tier 4, capped at 30% of its housing units. As of October 23, 2026, all 1,099 licenses were issued and applications were closed.
Can I hold licenses on two Pacific Beach homes? No. A host may hold one license at a time and run one dwelling unit as a short-term rental at a time.
If you're weighing a Pacific Beach home with a rental history, or planning to sell one, The Middleton Team can help you separate what the booking record shows from what actually changes hands at closing, and price the home on that basis. Reach out when you're ready to go over the numbers on a specific address.
