Successful short-term rental companies like Airbnb Inc. and others are now facing new rules in the Los Angeles area. On May 2 the L.A. City Council unanimously agreed upon their first set of proposed regulations for this booming industry.
The proposed ordinance would limit the maximum amount of days that a residential unit can be rented to 120 days per year. However; after 120 days, the hosts could seek city permission to exceed the limit as long as they are free from multiple or outstanding citations. Additionally, only primary residences could be rented out while any primary residences that are subject to L.A.’s rent control ordinance or an affordable housing covenant would be disallowed. The proposal must still go back to the city Planning Commission and then return to the full Council later this year for a final vote.
Before the final vote, one minor adjustment that has been suggested would be to allow short-term rental hosts to rent out their place for the entire year as long as they demonstrate proof of their plans to live on site during the whole year. This tweak has not yet been added to the proposal, so it remains to be seen if it becomes part of the final proposal. Additionally, a second ordination has been suggested in order to allow night-to-night rentals of vacation rentals (in contrast to the primary residences allowed in the first ordinance), but that suggestion has not yet been voted upon.
Though the short-term rental industry has been lobbying to avoid heavy regulations, neighborhood groups, housing advocates and the hotel industry are celebrating this small milestone. Many have been insisting that uncontrolled short-term rentals disrupted neighborhoods, in practice operating as hotels in residential areas. In the midst of a housing crisis in Los Angeles, advocates have been pushing to use housing for its original intent. Cynthia Strathmann, executive director of the nonprofit Strategic Actions for a Just Economy, has stated that “our primary concern should be how do we keep housing on the market, and not turn it into a profit vehicle on the short-term rental market.”
Finally, much like the impact of Uber, (another startup sensation) on the taxi industry, the hotel industry has sought greater oversight for short-term rentals. Arguing more on behalf of the DNA of local neighborhoods, Katherine Lugar, chief executive of the American Hotel & Lodging Association said in a statement that “We applaud the Los Angeles City Council for taking a critical step that provides common-sense protections, holds short-term rental platforms accountable in an effort to reduce their negative impacts on neighborhoods across Los Angeles.”
Conversely, companies like Airbnb Inc. and HomeAway have argued that all attempts to limit short-term rentals will hurt L.A. residents by restricting their ability to earn supplemental income. In a city where the cost of living is high, many residents depend on the extra earnings just to get by. These companies have expressed a willingness to strike a balance with the city in order to provide their hosts with ongoing rental opportunities. Groups on both sides of the debate have spent tens and even hundreds of thousands of dollars lobbying and it remains to be seen what the final vote will reveal later this year.
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