The city of Los Angeles is inching closer to enacting regulations for short-term rentals meant to businesses such as Airbnb from encroaching on an increasingly limited supply of affordable housing. But a new report from Inside Airbnb—a website that monitors listings offered through the short-term rental service—finds the rules, as proposed, would provide landlords with little incentive to make their units available longterm renters.
Restrictions recommended by the Planning Commission in June would impose a 180-night limit on the length of time property owners can offer up a room or their entire primary residence to short-term renters (non-primary residences would be limited to 15 nights per year). That limitation is partly meant to keep housing available to residents.
The report, however, shows that the financial gains offered by short-term rentals are often more than enough to negate this concern. Murray Cox, the report’s author, finds that, on average, LA landlords only need to fill up Airbnb units for 83 nights per year in order to make more money than they otherwise would by bringing in a yearlong renter.
Not surprisingly, that number is a good deal lower in certain neighborhoods. It’s just 79 nights in Silver Lake and Echo Park, and 78 in Koreatown. In Encino, Northridge, and some areas of Downtown, landlords can make more listing properties on Airbnb even if those units are occupied less than 60 nights per year. That number falls all the way to 26 nights in San Fernando, and 18 nights in East LA.
Cox says leaving such financial incentives on the table for landlords could cut into LA’s stock of affordable housing for permanent residents. Under the city’s proposed legislation, he says, "landlords will be economically motivated to turn more affordable apartments and homes into short-term rentals."
Because these estimates are based on Census data, they likely include subsidized and rent-controlled units that would not be eligible for short-term rental under the city’s proposed restrictions. In a written statement to Curbed, a spokesperson for Airbnb says that the study, "cherry picks data and uses exceptionally low rent figures and inaccurate data to draw misleading conclusions about Airbnb."
A separate study overseen by the company itself found LA landlords would need to host short-term renters 177 nights per year to match the potential income from renting longterm. That study also found that 80 percent of entire home listings are rented less than 90 nights per year.
Given that LA officials are considering a 180-night limit, it seems the city is buying into Airbnb's data. But Cox says it would be almost impossible to enforce. "Again and again regulations have failed," he says. "New York and San Francisco, as examples, have revised their ordinances because enforcement is impossible and compliance rates are low."
In July, West Hollywood’s Department of Public Works issued a report detailing the city’s struggles enforcing its strict short-term rental requirements. Among the issues: Cracking down on violators can be time consuming. According to the department’s report, "it is not uncommon for Code Compliance to spend more than an hour, sometimes two, on a single listing to find the necessary information to begin the citation process."
Such administrative difficulties are part of the reason why some cities, including Anaheim, have chosen to ban short-term rentals entirely. Given the growing popularity of the service, it’s unlikely Los Angeles would adopt such an extreme measure—at least, not right away. But that’s an option that Cox maintains the city should consider. "It’s vital that the City of Los Angeles adopts short-term rental ordinances that are both enforceable and truly protect affordable housing," he says. "And that means a complete ban on entire home rentals, or a low cap with data sharing and platform accountability."