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Los Angeles To Regulate Airbnb-Type Short-Term Housing Rentals

Posted Friday, December 14, 2018 - 3:20 pm

By Victoria Talbot

The Los Angeles City Council voted Tuesday to impose new regulations on short-term housing rentals that would affect rented rooms, apartment dwellings and whole homes being used by platforms such as Airbnb, throughout the city.

In Los Angeles, there are more than 16,700 rentals available, and 65 percent are for entire homes, reports Airbnb of their stock.

Los Angeles will join Malibu, West Hollywood and Santa Monica in cracking down on short-term rentals.

Under the new rules, three-and-a-half years in the making, only homes that are used as “primary residences” can be rented out for short stays up to 120 nights annually. They will be legal only if the host registers with the city and pays taxes.

Under existing laws, rentals of less than 30 days at a time are barred throughout much of the city, though officials rarely enforce the restrictions.

Councilmember Mike Bonin, who originally introduced restrictions on short-term rentals with Council President Herb Wesson in 2015, calls the current law “absolutely unenforceable.”

Under the new ordinance, hosts can exceed the 120-night cap if they do not have more than one recent citation from the city, or if they can make a case to planning officials that they are not harming the neighborhood.

The housing crisis has increased pressure on rental units as more commercial owners are renting out not only entire homes, but entire apartment buildings for short-term vacation rentals, in the peer-to-peer economy.

The ordinance, said Bonin, would only restrict “bad short-term rentals,” and owners of multiple homes or whole apartment buildings who transform them into “rogue hotels.”

The new ordinance, which passed unanimously, enjoyed support from a coalition of tenant advocates, housing advocates, neighborhood activists and hotel unions.

“We support what home sharing was intended to be. What we oppose is entire apartment buildings being transformed into what amounts to illegal motels,” said Charlie Carnow, a Unite Here Local 11 organizer.

It was opposed by hosts and the rental platform companies.

The new regulations, which are slated to go into effect in July, will prohibit units that are covered by the Rent Stabilization Ordinance from being used for short-term rentals, which could affect as much as 600,000 units across the city.

The new law will also bar online platforms from booking for a host that has not registered with the city, or who has exceeded the annual limit on how many days they can rent out their home.

Violators can be hit with fines totaling $1,000 per day.

In addition, the new regulations require that the online platforms provide information on their hosts activities, which L.A. officials say is needed for enforcement.

Airbnb argues that it is a violation of privacy, and says it will only hand over data if the city includes vacation rentals – the renting of something other than one’s primary residence – for short stays.

Studies show that tourism, as it affects the housing market, displaces renters and removes a substantial number of units from the regular housing market, squeezing the housing market and driving rents higher.

One UCLA study by Alex Scott (UCLA Law Review) cites tourism as “creating a specific kind of gentrification.”

The Wall Street Journal published an interview with Dr. Edward Kung, an assistant professor of economics at UCLA, and the author of a study that examines the effect of short-term rentals on the housing market in Los Angeles.

That study found that a 10 percent increase in Airbnb listings leads to a 0.39 percent increase in rents and a 0.64 percent increase in home prices.

Since 2012, Los Angeles has experienced a 448 percent increase in Airbnb listings.

The number of Angelenos spending over 30 percent of their income on housing has increased from 30 percent in 2000 to 39 percent in 2014, said Kung.

Removing housing from the rental housing market and placing it in the short-term tourist market is almost one-for-one, meaning one unit on Airbnb to one housing unit in neighborhoods where there are greater numbers of Airbnb listings, he told WSJ.

The impacts on housing markets are most acute where nonowner occupiers are taking homes off the long-term market and putting them in the short-term rental market, said Kung. Homes that are owner-occupied are most commonly rented while the owner is away on vacation or to share an extra room, he said.

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