The 2026 Legislative Session is currently underway and Addison Russell, General Counsel for Tennessee REALTORS® recently joined CEO Angela Shields for a recent episode of the Real Tea Podcast to discuss current legislation that affects real estate and private property rights, why member advocacy is so important and why members should attend Day on the Hill.
Addison also gave listeners small glimpse behind-the-scenes of the work being done during Legislative Session. She stated that roughly 1,200-1,300 bills are filed each session. There are 1,200 from last session and an additional 1,200 from this session–essentially 2,500 live bills total. Tennessee REALTORS® follows many of the bills filed, especially bills that relate to property and housing such as fees, taxes, regulations and so on. Other bills that may affect commercial real estate, real estate development and utilities are also closely followed.
Tennessee REALTORS® Day on the Hill Recap
This year’s Day on the Hill was held on Wednesday, February 18 and well over 300 Tennessee REALTORS® gathered to meet with their state legislators to address key issues which currently affect the real estate industry and homeownership. Tennessee REALTORS® also hosted a Legislative Reception the evening before Day on the Hill, giving our members the opportunity to have face time and mix with their legislators in a more relaxed, informal setting. With the member turnout from both events, Tennessee REALTORS® was able to show strength in numbers as we fight for homeownership and private property rights.
The Tennessee REALTORS® Day on the Hill doesn’t just offer the chance to meet your legislator in person; it also gives members a unique experience and perspective seeing how our state government operates in real time. Those who were in attendance enjoyed the rare experience of being on the Senate floor and sitting at the very desks where state senators conduct their work.
At our Hill visit this year, Lieutenant Governor Randy McNally made a surprising announcement during the Legislative Leadership Address in the Senate chamber. McNally announced his retirement from public service after serving for over 45 years. Colleagues from both political parties expressed admiration for McNally.
The Senate will vote for a new Lieutenant Governor (who is technically the “Speaker of the Senate” in Tennessee) and will be revealed in January 2027.
Vacation Lodging Service (VLS) Licenses
Our Day on the Hill attendees paid visits to the many legislators from their districts statewide and brought to their attention several key points that are important to our industry. One of the topics discussed was “Vacation Lodging Service” (VLS) licenses. A VLS license is a license required to manage properties in Tennessee for rentals that are shorter than 14-day periods. Addison explained on the podcast, “So short term rentals–how it operates now is you can be an affiliate broker or you can be a principal broker but you have to get this extra license–a VLS license if you want to manage short term rentals.”
Addison explained further that the current legislation Tennessee REALTORS® supports adjusting training and licensing requirements for affiliate and principal real estate brokers involved with VLS. With this legislation, those that hold an affiliate or principal broker license would not have to take additional classroom hours or seek additional licensure to manage rental properties 14 days so shorter, provided that the affiliate is supervised by their principal broker. Tennessee REALTORS® believes these requirements are redundant and unnecessary due to the fact that both affiliate and principal brokers are already licensed and trained to handle real estate-related services. Additionally, the Tennessee Real Estate Commission (TREC) already has regulations and discipline in place that are applicable to these individuals, rendering these additional requirements unnecessary.
Tennessee Property Classification & Assessment
Addison mentioned that another big issue Tennessee REALTORS® wanted to address is property classification and assessment. Several counties throughout the state as of now assess rental properties at a commercial rate rather than a residential rate. According to the Tennessee Constitution, “residential properties” are defined as properties that do not contain more than one rental unit.
In other words, a single family home that is rented out is considered a commercial property, even though the home is being lived in and is residential. Tennessee REALTORS® is part of a coalition, says Addison, “that is working to seek clarification in statute that, if it doesn’t contain more than a rental property, one rental unit and can be transferred for as simple as that unit, then it should be classified as residential regardless of whether it’s your primary residence.”
The difference between being taxed at a commercial rate versus a residential rate is sizable. The commercial rate is currently set at 40% and residential rate is at 25% which makes a big difference when paying property taxes and may hurt both homeowners and renters alike financially.
Governor Lee’s Starter Home Revolving Loan Fund
Governor Bill Lee announced at the 2026 State of the State address that $30 million will be allocated to the Tennessee Housing and Development Agency (THDA) to create the “Starter Home Revolving Loan Fund.” The fund will allow builders to secure 0% interest rate loans to build starter homes. Because the governor’s proposed budget is not finalized without legislators’ input, Tennessee REALTORS® is lobbying to have this proposal stay in the budget. With this fund, it will help increase inventory on the market and help homeownership become more attainable.
“Yes on 2” Initiative – Elimination on State Property Tax
Tennessee REALTORS® is actively involved with the Yes on 2 initiative, chaired by Governor Lee. A constitutional amendment has passed the Legislature to eliminate a state property tax. This initiative educates voters on why it’s important to vote “Yes” in November. Addison elaborates further on the initiative:
“The state of Tennessee does actually have a state property tax, it’s just set at zero. But if times got tougher, you know, the state can always come in and implement a property tax, which obviously only drives up the cost of housing,” explains Addison. “So a constitutional amendment has passed the legislature that and now it’s going to go to the voters where the voters have the opportunity to say, ‘State of Tennessee will never have a property tax.’ and then in order to get one, you’d have to go through this whole process again of amending the Constitution. So by putting in the Constitution, we really feel that we’re safeguarding–our state is like a lower tax state and saying we don’t have a property tax and we’re not going to have one.”
This will have no effect on local property taxes–county or city, which people already pay. The state property tax is “on top of the property taxes that you already pay. And so I think that that’s the biggest distinction is we understand local governments–they run on property tax. Like, that’s how schools are funded. That’s how your local roads are funded. But since the state isn’t relying on property tax right now, they’ve proven the ability to operate without one and so we’re going to ensure that there is never one. But that does not affect the property taxes that you pay at the local level,” Addison added.
Addison noted that this initiative had to go through several votes via the General Assembly, so making it this far was not easy. A constitutional amendment in Tennessee has to pass the General Assembly twice, which is a two year session each time. The first round needs to pass with a majority vote. With the second round of voting, it needs to pass with 2/3 of the vote in order to place it on the statewide ballot. In order for it to succeed, it needs to receive 50-plus-1% of the people that vote for governor.
Get Involved!
The successes of Tennessee REALTORS® wouldn’t be possible without the hard work and dedication of our legal and lobbying team and member involvement! We’re not just the voice for REALTORS® in Tennessee but also passionate advocates for consumers, homeownership and private property rights. Whether it’s at the local, state or national level, member engagement and being in-tuned with what’s going on in their government and community makes all the difference. Having engaged members active in advocacy helps Tennessee REALTORS® tackle issues before they become even bigger.