Earlier this week, the Buzz reported on the details of Planning Department’s Staff Report and latest draft of the proposed new Short-Term Rentals (a.k.a. Home Sharing) Ordinance, which is intended to help regulate AirBnB-style rentals throughout the city. As we mentioned in that story, however, this is an extremely passionate issue for many different stakeholder groups, because it goes right to the core of sensitive issues like housing, property owners’ rights, freedom of commerce and more.
It’s also an extremely complex and multi-sided issue, without simple “pro” and “con” positions. In fact, there are many distinct stakeholder groups, and many of them heartily support various provisions of the proposed ordinance, while vehemently opposing others. This week, the Buzz is taking a closer look at several of those stakeholder groups, and what they seem to support and oppose in the proposed home-sharing/short-term rental ordinance. On Tuesday we looked at the city’s position, and why city officials are moved to act, and act quickly, on short term rentals at this time. Today we look at the issue from the point of view of people who host short-term rentals in their properties.
As with the home-sharing/short-term rentals issue as a whole, attempting to classify short-term rental “hosts” and their interests with a single description can be a complex proposition.
Although complaints about the short-term rental phenomenon tend to target negligent, often absentee hosts, people who host short-term rentals in residential property are not a homogeneous group.
They include owners of single-family properties, owners of multi-unit properties, tenants who sub-let or share their rental units…and both resident and absentee hosts. So any attempt to define or dismiss short-term hosts as a uniform group will not only miss the mark, but will probably upset a majority of the overall “host” demographic.
Non-Resident Hosts
Neighbors who complain about problem short-term rental properties, where there are steady streams of transient guests, over-booking of properties, unsupervised parties, excessive noise and traffic, lack of maintenance and supervision, and other such issues – which are very real – are often dealing with properties with absentee hosts.
But even absentee hosts fall into a couple of distinct categories. For example, there are those who simply capitalize on available space, often by packing multiple beds and bookings into units designed for single-family occupancy. And there are those who evict long-term residents to turn rentals into more lucrative short-term options.
The city agrees that both of those practices are unacceptable and should be prevented through the proposed new control ordinance. But there are other kinds of absentee hosts, who feel they’re being tarred by an unfair brush and proposed rules that would prevent more acceptable short-term rentals of non-owner-occupied spaces.
For example, at a May hearing on the proposed new ordinance, a number of speakers during public comments mentioned that they had inherited homes from their parents, which are now being used as short-term rentals to provide additional income for their families. While the owners do not live at those properties, they do claim – because of their historic family connections – to be very involved with and attentive to them.
Other owners at the May hearing said they own and live in single family homes with guest houses that they would rather rent to short-term tenants than longer-term tenants, because there’s more flexibility, the income potential is greater, and services like AirBnB help screen tenants.
Still others occupy units in duplexes or triplexes they own, but would like to rent out the other unit or two on a short-term basis.
And finally, some resident owners are on site when they rent out a single room in their homes or apartments, but would also like to be able to rent out the full house or apartment when they are temporarily out of town or on vacation. And they would like to be able to list both of those rental opportunities simultaneously, to more easily manage their booking calendars.
In the proposed new ordinance, however, none of the above practices would be allowed. Part of the reason is the city’s need to create oversight and assure the responsibility of short-term rental hosts, by legalizing only rentals in owner-occupied units.
The second reason for the prohibitions on rentals of units that are not the owners’ primary residence is the city’s current housing shortage…and the fact that full units, whether they be houses, apartments, duplex units or guest houses, could all easily be rented to long-term resident tenants instead. Allowing full units to be used as short-term rentals removes those units from availability to the resident population, and further decreases the amount of available (and often more affordable) housing in the city. And that not only increases the scarcity of housing, but pushes up rents for the remaining units, making the long-term housing market even less affordable.
Resident Hosts
But not all short-term rental hosts are absentees or non-residents. In fact, judging from the very vocal crowds at recent hearings on the proposed ordinance, a very large percentage of hosts (84%, according to AirBnB) are on-site resident owners or tenants, who want and truly need the extra income they gain by renting a spare room or two in a home that they occupy. And most of them say they greatly enjoy getting to know their visitors, who enrich their lives in numerous ways.
“This is middle class America loving life,” says Hancock Park homeowner Suzan Fellman of her and her neighbors’ experiences as short-term rental hosts of spare rooms in their homes.
The practice of renting out spare rooms has been around almost as long as people have lived in houses, so the phenomenon is nothing new. But what does seem to be new is how people now prefer to structure those kinds of rentals. In the past, when people (including this writer) rented out spare rooms, it was likely on a month-to-month basis, with tenants staying for one month, six months, or a year at a time…very much like traditional rentals of larger spaces.
With the advent of services like AirBnB, however, it has become very convenient – if not even more convenient – for hosts to rent rooms by the day or week. And according to such hosts, who have been among the most vocal and passionate speakers at recent city hearings, short-term rentals (defined by the city and the current proposed control ordinance as stays of less than 30 days) are preferable to longer-term rentals, because hosts can choose how often they’d like the room occupied, and when they want to rent it and when they don’t. They also say they prefer to have short-term guests, rather than long-term roommates, and they appreciate the help of services such as AirBnB with screening tenants and setting pricing.
But, finally, it is also, quite frankly, much more lucrative to rent spaces by the day than by the month. A quick online search today shows an average rate around $100 per night for AirBnB rooms in the Hancock Park area…and a monthly rate of around $1000 for longer-term single room rentals (as currently advertised on CraigsList.com). So a host could realize the same amount of income from either 10 nights of short-term rentals, or a full month of a longer tenant stay. It’s not hard to see which they’d prefer, if income is the primary motivator.
So a lot of spare rooms that might once have been rented to permanent or semi-permanent residents of the city – most with modest incomes – are now being rented to travelers and visitors instead.
Fellman is one such resident host, who rents spare rooms in her large Hancock Park home through AirBnB. Like many others speaking out on short-term rentals these days, Fellman says she came close to losing her beloved home in the economic downturn a few years ago, but that renting out rooms to short-term visitors provided the income she needed to stay in her home, maintain it properly, and even improve the property, which benefits the overall neighborhood.
Fellman says it’s “disheartening” that the city is becoming more unaffordable, especially for senior citizens (and especially older women) who may have lost a spouse and would be in danger of losing their homes without the supplemental income short-term rentals can provide. Fellman says she has seen “the feeling of desperation of ‘how am I going to keep my home?'” among many of her neighbors. “I keep seeing the faces of these older people,” she told the Buzz, “and I know they’re scared.” But she said several of her neighbors have been “saved” by turning to AirBnB, which has created a “safe platform” for people to invite paying guests into their homes.
Fellman also insists that her visitors do not add to neighborhood parking woes, because the vast majority travel via ride-share services like Uber. And the visitors do benefit the broader local economy by spending money with local merchants, who often thank Fellman for bringing them the extra business. Fellman says she also spends her additional income on needed improvements – such as air conditioning and landscaping – that provide work for the people she hires, and increase the value of the property. “Homes in this area are old,” she said. “They need work.” And short-term rentals make that work possible for many owners who couldn’t otherwise afford it.
Interestingly, Fellman and other hosts like her who now are speaking up about short-term rentals, say they don’t object to some city regulation of their rentals and to measures intended to eliminate abuses of the system. In fact, Fellman and others say they don’t mind registering their rentals with the city, and they even welcome paying the city’s Transient Occupancy (or “hotel”) Tax. (Fellman, like many others, suggests that the tax money should go straight to the city for use in building more affordable housing, and providing services to the homeless.)
What Fellman and a great number of other resident hosts do object to in the current proposed short-term rental ordinance, however, are two particular provisions: a proposed 120-day limit on the rental of any one space…and a provision that would allow hosts to advertise and rent only one space at a time.
The first provision is intended by the city to do two things. First, it provides a very trackable statistic to help regulate overall rental activity…and second, it may help prevent spaces that could be rented to long-term resident tenants from being used instead for short-term visitor rentals.
But Fellman and other resident hosts say the 120-day provision is too restrictive, and too intrusive, and that the city has no business telling them how or when they can rent spaces in their own homes.
Rather than limiting the number of days a property can be rented, Fellman says it should be sufficient to require that short-term rentals take place only in owner-occupied units. The City Planning Department, however, in its recent staff report, notes that cities like San Francisco, which have an owner occupation requirement but do not have a more trackable companion metric, such as a 120-day cap on rentals of a single space, have found regulation nearly impossible. It’s too hard, they say, to objectively identify whether or not someone actually lives in a space that’s being rented. It’s much easier to track the number of days the space was actually rented to short-term tenants.
As for whether a 120-day cap on short-term rentals, or a prohibition on renting more than one room to short-term tenants, would encourage more owners to go back to long-term (more than 30 day) rentals of their spaces (which currently are and would remain legal), Fellman said no. She said she and others she knows definitely prefer short-term rentals.
Also, say Fellman and other resident hosts, the provision limiting hosts to the advertised rental of just one space is unfair, because many (especially older) people with larger homes have more than one spare room. And preventing them from renting more than one room at a time, on a short-term basis, severely limits their income potential…which again, becomes more intrusive than helpful.
Fellman said that if the 120-day and one-unit limits are included in any control measures passed by the city, she and others won’t stop renting multiple spaces, or renting spaces for more than 120 days per year…and they definitely won’t convert their spaces to long-term rentals. But they will, she said, refuse to register their rentals, and many short-term rentals will just “go back underground,” using services like CraigsList instead of the more regulated short-term rental platforms that would be covered by the new ordinance.
So the delicate balancing act continues. What’s best for the city? For neighborhoods? For hosts? For customers?
The City Planning Commission will conduct a hearing on the proposed new ordinance at 10:00 this morning, and resident hosts like Fellman are hoping they can convince the city to loosen the reins on those two particular provisions.
Meanwhile, although we’ve looked so far at the interests of the City of Los Angeles and those who host short-term rentals in their properties, there are still many more points of view on this multi-faceted topic. Next, we’ll look at the interests of neighbors, the hotel industry, travelers and the home-sharing platforms themselves.
