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Santa Monica essentially banned residents from renting out their properties via AirBnB over a year ago (AirBnB lost an appeal earlier this year), the City of West Hollywood followed suit in the first half of 2018 and now the City of Los Angeles (covering by far the biggest area of the three) has announced new rules to curb the rapid growth of AirBnB within its borders.
On Tuesday (11 December 2018) the LA City Council announced a series of measures to limit what units can be rented out via platforms like AirBnB and how many days such united can be rented for.
Los Angeles has long had an ordnance which prohibits people from renting out properties for fewer than 30 days at a time but the city has historically shown little appetite for enforcing that law and AirBnB has thrived in LA.
Now it would appear that Los Angeles is taking things a little more seriously and the new rules, which come into force in July 2019, will probably put a lot of AirBnB landlords out of business.
These are the new rules the City Council has passed:
- Only primary residences can be rented out*
- Primary residences can only be rented out for up to 120 days/year**
- Residences covered by the Rent Stabilization Ordinance (rent controlled buildings) cannot be rented out via platforms like AirBnB
- Hosts must register with the city
- Hosts have to pay accommodation taxes (like hotels)
- Hosts have to keep records for city inspections
- All rental unites must come equipped with smoke detectors, fire extinguishers and information on emergency exits.
* A primary residence is defined as a location you occupy for at least half of the year
**Hosts can exceed the 120 day limit if they can make a successful case to the city that it will not hurt their neighborhood
The cost to rent a property in LA has skyrocketed over recent years (a unit I rented for $2,500/month in 2013 now rents for over $5,500/month) and there’s quite a bit of evidence to suggest that the growth of AirBnB has had a lot to do with that inflation.
A lot of LA properties you’ll find advertised on AirBnB are not people’s primary residences and have been rented out by people who are specifically looking to sub-let them on AirBnB for a profit..and a lot are doing this very successfully.
As more and more properties have been snapped up by wannabe AirBnB landlords LA has become a very expensive city in which to rent and the City Council has finally been forced to do something about it…so I get it.
I understand where the City is coming from but that doesn’t mean that I can’t see the downside that’s coming for travelers.
These new rules should mean that we see a lot fewer LA properties available to rent on AirBnB and that means that AirBnB rental prices will go up (demand won’t decrease but supply will).
Also, with fewer AirBnB properties on the market there’s a lot less reason for hotels to keep prices in check so we’ll probably see room rates going up too.
LA may not be a cheap city in which to rent but it’s also not a cheap city in which to book a hotel so renting out a property on AirBnB has been a great way for travelers to save some cash.
Not only has it been easy to find decent, well-priced properties available for rent on AirBnB (usually for less than half the cost of a hotel room) but, more often than not, these properties offer amenities that make travel even cheaper:
- A lot of AirBnB rentals come with free parking while hotels gouge travelers on parking fees (you’ll need a car if you’re visiting LA)
- A lot of AirBnB rentals come with laundry facilities which allow travelers to pack light and avoid checked baggage fees.
- With an AirBnB property you almost always get a kitchen so you don’t have to eat out 3x/day if you don’t want to. A family of 4 can easily spend over $175/day just on food if they’re eating out while the costs are far lower if they choose to eat some meals in their AirBnB rental.
I’ve used AirBnB in LA on multiple occasions when I’ve had friends coming to stay so I know first hand how useful the platform can be…..but those days may be numbered.
These new rules won’t kill AirBnB in Los Angeles but it will see a lot of its properties taken off the market.
This should be good news for people looking for long-term rentals with properties that were once rented out on AirBnB now back in the regular rental pool. People should soon have more choice of what to rent and possibly see cheaper rental prices too…. or at least a halt to the crazy price inflation we’ve seen over the past 4-5 years.
For travelers, however, this is almost certainly bad news.
We can probably expect a lot less choice from AirBnB in LA going forward, short-term rental costs will probably increase and we can almost certainly expect the hotel industry to make the most of this and to start increasing prices too.
I suspect that LA may be about to become a slight cheaper place to live but that it’s also about to become a more expensive place to visit.