Los Angeles Commercial Real Estate Industry Gives Mixed Reaction to New Airbnb Regulations

CoStar
07/03/19

Los Angeles Commercial Real Estate Industry Gives Mixed Reaction to New Airbnb Regulations
New Ordinance in Limits Days of Operation, Requires Annual Fee
By Karen Jordan

The city of Los Angeles is enacting new regulations on short-term rentals, made popular by companies such as Airbnb, that apartment owners are rebuking but hoteliers are hoping help curb the competition.

Short-term rental companies such as Airbnb or VRBO provide online services that connect property owners or renters with visitors who want to pay for space for 30 days or less instead of going to a hotel. They have become a dominating force nationwide since entering the marketplace in earnest a decade ago, and now cities nationwide are moving to regulate the services as neighborhood residents complain about the influx of strangers to the rentals and hoteliers complain that the homeowners don’t pay the same taxes or fees for their rentals.

Among the Los Angeles regulations, which took effect July 1, hosts will only be able to rent out their primary residences and will not be allowed to take in visitors for more than 120 days unless they register for “extended home-sharing,” which is a discretionary designation with criteria including having good standing with the city and having 60 days of hosting experience. Hosts must now register and pay an annual fee of $89 to the city of Los Angeles.

But the apartment landlord community, which operates some short-term rentals across the city’s more than 943,000 apartments, has already fired back at the rules.

“It’s more chipping away from people’s property rights,” said Daniel Yukelson, executive director at the Apartment Association of Greater Los Angeles, which represents 10,000 members who own or manage their rental properties. “The government is dictating how they’re able to manage their rental properties.”

But hotel operators see a silver lining in the restrictions.

Los Angeles had a record number of tourists last year with 50 million visitors, according to the Los Angeles Tourism and Convention Board. Alan Reay, president at hospitality firm Atlas Hospitality Group in Irvine, California, said the ordinance could have a positive impact on the local hotel industry by limiting their competition.

“Hopefully, it will reduce the supply” of short-term rentals, Reay said. Home-sharing hosts have until Oct. 31 to register with the City of Los Angeles Department of City Planning.

The new rules, which were passed last December, come as the state of California is weighing a bill that could restrict some short-term coastal home rentals. The California Coastal Commission, the group that oversees the state’s waterfront, has warned bans on short-term rentals could violate the California Coastal Act, according to reports.

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