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From 1 July 2019 the City of Los Angeles will introduce a series of measures which will seriously limit the opportunities for residents to rent out their properties on sites like Airbnb, VBRO and HomeAway.
The City of Los Angeles hasn’t gone as far as two of its neighbors (Santa Monica and West Hollywood) who have already essentially banned short-term rentals outright, but the restrictions being introduced from July are still pretty severe.
One of the big problems Los Angeles has faced over the past 5-6 years is that rental prices have skyrocketed and the rise of short-term rentals appears to have been a significant factor in the soaring prices.
In certain areas of LA a 2-bed apartment that cost $2,700/month in 2013 now costs $4,800/month (a 78% increase) and a 1-bed apartment which cost $1,800 in 2015 now costs over $2,500 (almost 40% more).
The Los Angeles Home Sharing Ordinance
Things have been getting out of hand in the rental market and it’s understandable that the City of Los Angeles felt that something had to be done.
So, from 1 July 2019, it’s going to be significantly more difficult for people to rent out their properties on sites like Airbnb and that’s thanks to the introduction of the Los Angeles Home Sharing Ordinance.
The ordinance contains, amongst other things, the following rules:
- 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 as a short-term rental
- Hosts must register with the city
- Hosts have to pay accommodation taxes (like hotels)
- Hosts have to keep records for city inspections
- Hosts have to provide the City with written proof that their landlord (if they have one) authorizes them to sub-let their unit as a short-term rental.
- All rental units must come equipped with smoke detectors, fire extinguishers and information on emergency exits.
* A primary residence is defined as a location someone occupies 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
Landlords will also be able to register their buildings with the City of Los Angeles as buildings in which short-term rentals are not permitted.
The killer here is the fact that a landlord needs to give permission for a property to be sub-let before the City of Los Angeles will issue a short-term rental permit as the overwhelming majority of landlords will almost certainly refuse to do this.
The cities of West Hollywood and Santa Monica have already employed specialist firms to track down, fine and shut down anyone flouting their short-term rental laws and it’s fair to assume that the City of Los Angeles will follow suit….and it’s visitors to Los Angeles who are paying the price.
Hotels Are Emboldened To Rip Guests Off
One of the benefits of Airbnb in Los Angeles is that it has given visitors are a realistic alternative to the mainstream hotels and, over the past few years, visitors have has a veritable smorgasbord of apartments to choose from when visiting Southern California.
For families in particular, apartments booked through Airbnb have offered a fantastic money-saving option as, rather than having to pay for multiple hotel rooms to accommodate everyone, they’ve been able to rent 1- and 2-bed apartments for far less than a stay in a hotel would cost and they’ve usually had the added bonuses of free parking ($30 – $50 per night at most hotels) and full kitchens.
Now that Airbnb rentals are essentially illegal in West Hollywood and Santa Monica, and that they’re about to become a lot harder to run as businesses in the City of Los Angeles, we’re seeing hotel rates slowly creeping upwards and, far more worryingly, we’re seeing the appearance of destination/resort/facility fees at properties all over LA County.
A number of Kimpton properties in Los Angeles have had a ‘guest amenity fee’ for a while but it’s only in the past few months that properties like the Andaz West Hollywood and the InterContinental Los Angeles Downtown have added exorbitant and indefensible facility fees to all bookings….and they’re attempting to justify them in the most ridiculous ways. In Santa Monica, hotels like the Fairmont Miramar Hotel ($30/night) and Shutters on the Beach ($34.20/night) are charging guests additional fees for amenities any right-thinking person would expect to be included in the room rate….and in the case of the Fairmont it’s next to impossible to know you’re being a charged an added fee unless you look for it very very carefully (check for yourself – here’s a link to the hotel’s website).
These fees are nothing short of a very obvious rip-off as not one of the properties that charge them can genuinely justify their place on a guests bill.
These fees are often hidden from view, often offer limited benefits to just a handful of guests and, even when they do cover a genuinely useful benefit it’s often a benefit that shouldn’t come at an extra cost anyway (like wi-fi or access to the hotel gym).
Destinations fees are an abomination that no one should have to put up with and, although Los Angeles and its neighboring cities may have eventually succumbed to this evil anyway, there’s little doubt that the curbs placed on short-term rentals have hastened their arrival.
With a rapidly dwindling supply of quality alternatives, hotels can see that visitors have fewer choices when it comes to the accommodation they book in Los Angeles so they know they can get away with a lot more than they’ve been able to get away with up until now….and they’re doing their best to get away with as much as possible.
I fully understand why cities like LA, Santa Monica and West Hollywood have felt the need to place restrictions on short-term lets but, if there’s to be legislation to prevent people being given genuinely good alternatives to hotels, there should be legislation put in place to prevent hotels from ripping off their guests…but I’m not holding my breath.