Los Angeles Is a Big Step Closer to Regulating Airbnb

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Anyone who has ever listed their Los Angeles residence on Airbnb has done so without paying taxes like hotels do and without having to register with the city like a business does. They’ve probably also done so illegally. The planning department says renting out residences for fewer than 30 days is illegal in most parts of the city.

That’s drawing to an end.

The city is one step closer to legalizing and regulating short-term rentals. The Planning Commission voted Thursday to endorse rules that would require hosts to file applications with the city and start paying taxes. They would also limit the types of places that can be rented out and for how long. Now the rules go to the City Council for further vetting and, eventually, adoption.

 Airbnb

Planning commissioners relaxed the rules a bit from what was initially proposed in April.

Here are some of the highlights:

  • All homeowners, rental property landlords, and tenants would be required to register with the city. (Tenants would have to get “explicit approval” from their landlord to rent out their units).
  • The application would entail obtaining a “Transient Occupancy Registration” certificate to pay hotel taxes.
  • Hosts would only be allowed to rent out a room or entire residence at their “primary residence”—where they live up to six months per year—for up to 180 days annually or face fines.
  • A non-primary residence, a.k.a. a vacation property, could be rented, but for no more than 15 days.
  • The property couldn’t be under rent control or designated as affordable housing—the goal is to protect tenants from being evicted by landowners seeking higher rents.
  • Guest houses, RVs, trailers and other “second dwelling units” would be barred unless it’s the host’s primary residence.
  • Hosts would be legally responsible for nuisance violations by guests.

There’s a lot of passion surrounding these details. Yes, there’s money at stake. But there’s another big issue at play, too: housing.

“The issue of home-sharing … probably elicited the greatest intensity of public response of any city land use issue we’ve had in recent years,” said Ken Bernstein, principal planner with the city planning department.

City officials have and critics have argued that short-term rental platforms such as Airbnb and HomeAway squeeze the already strained local housing supply when property owners convert their housing units from long-term to short-term rentals, because it’s more lucrative. That’s alarming in Los Angeles, where the rental vacancy rate is just 2.7 percent — the lowest of any major metropolitan area in the U.S., according to a city planning report.

“LA has earned the dubious distinction as the most unaffordable rental market in the nation,” said Bernstein. “One of the goals is to recognize there are potential impacts to local supplies and housing costs.”

Low inventory drives up the cost of housing, and ironically, it’s inability to afford mortgage payments and leases that have compelled many people to use Airbnb-type services.

One woman told the commission on Thursday that she rents bedrooms down the hall from the bedroom where she sleeps so, “I can afford to stay in the house I’ve owned for 28 years.”

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