The Los Angeles Market
Any tweak to the rules and regulations governing the Los Angeles market are going to have a massive impact on Airbnb, numerous hosts, and the vacation rental space in general. This is because LA is an undeniably important tourism hotspot. In 2018, the West Coast giant set a city record for tourists, as over 50 million people made their way to the City of Angels.
The Airbnb community has responded to this massive tourism economy and the number of units for short-term rentals has been skyrocketing. At the last estimate, there were around 23,000 housing units that were available on vacation rental websites and platforms. Of those 23,000, around 10,000 units are used exclusively as short-term rentals.
The city’s successful attempt to add regulations comes in response to those who have complained that having so many units on Airbnb and other platforms is reducing the number of affordable homes in LA. And in a city where housing and space are at a premium, some regard Airbnb’s rise as a major issue.
The new regulations were passed into law by the city of Los Angeles at the end of 2018, but are now officially in effect. Perhaps the most important one for hosts to know is that all hosts must now register with the city. This registration is coupled with an $89 fee paid directly to the city. Come November 1, 2019, the city’s officials will begin enforcing this new law. Any host that is not registered could be facing hefty fines. This rule has the most widespread relevancy to hosts in LA, however, there are others.
Another drastically crucial rule to be aware of concerns hosts operating multiple properties. This is no longer possible. Now, hosts can only register one property in the city at a time. This registered property must also be the host’s primary residence, meaning the host must live there for at least six months per year. Additionally, even if the host owns their unit outright, a property’s rental period is capped at 120 days per year. Hosts face fines if they rent a unit for any longer.
Property owners can apply for an “extended home-sharing” designation, however, this comes with its own hurdles and fees. If granted, a host can operate an Airbnb for more than 120 days annually. To get the city’s approval, the unit must have been registered previously with the city for a minimum of six months and the owner/property must have hosted guests for 60 days. Hosts must pay an $850 fee to qualify.
Finally, any host that has received a warning within the last three years for not following the other regulations will be disqualified from consideration. That said, hosts with these citations can have their disqualification waved if they pay to have their case reviewed. This fee is upwards of $5,600.
For any long-term renters hoping to become hosts of a property they do not own, must first receive a written letter of approval from their landlord.
While establishing these new regulations, the city made sure to cater to some of the sensitivities raised by those against the growing vacation rental presence. Specifically, they paid attention to affordable housing. Now, any property that has been “stabilized” (another term for rent control), can no longer be used as a short-term vacation rental or Airbnb.
There is some bad news for urban glampers though. The city now strictly prohibits any non-residential building or a temporary structure from being used as a rental. This includes sheds, yurts, trailers, converted vans, tents, etc.
Finally, all hosts must provide guests with a Code of Conduct, not unlike a guest manifesto. This code pays special attention to loud noise at night.
Potential Legal Battle
These new regulations are not without a backlash. The California Coastal Commission is considering taking the city of Los Angeles to court. The California Coastal Commission represents certain coastal communities to attempt to protect the rights of property owners. They also help regulate hotels and rental properties in their neighborhoods.
Their argument is that these new Airbnb regulations in LA have violated the Coastal Act. The act has been active since 1976 and protects the Coastal Commission’s responsibilities.
The official ordinances can be read here.