Airbnb and rent control
For more than three years, the city of Los Angeles has been developing an ordinance to permit but regulate short-term rentals as advertised on Airbnb, VRBO and other websites. It’s taken so long because it’s difficult to strike the right balance, allowing people to earn extra money by renting their homes to visitors while not letting them create local nuisances or take too much badly needed housing off the market.
Although city leaders squabbled over how many days per year hosts should be allowed to rent out their homes (120 under the current proposals) and whether property owners should be permitted to rent out second homes (the current proposal says no), they quickly seemed to settle on one particular prohibition: Short-term rentals should be banned in rent-controlled buildings, both by tenants and landlords.
Such a ban would have a big effect — 85% of Los Angeles’ rental housing stock falls under the city’s Rent Stabilization Ordinance, which limits annual rent increases in buildings built before October 1978. City staff said the prohibition was necessary to reduce the incentive for landlords to evict long-term tenants and convert apartments or buildings into de facto hotels.
Recently, however, Mayor Eric Garcetti and the Planning Commission, whose members he appoints, changed course and backed a version of the ordinance that would allow home sharing in rent-controlled units. It wouldn’t be fair, Garcetti’s aides argued, to exclude lower-income people from participating in the new sharing economy.
But in promoting the benefits of the sharing economy, Garcetti is ignoring the real-world economy and the city’s housing crisis. Tenants with rent control enjoy a unique government protection that’s meant to provide stability over the long term, not to create an opportunity for profit. And there are already examples of landlords pushing out long-term tenants in order to convert the units to vacation rentals.
The proposed ordinance seeks to curb that sort of abuse with rules declaring which properties can be rented out and for how many days per year. Nevertheless, tenant advocates warn that there is so much money at stake that shady landlords will look for opportunities to break the rules and evade detection. Even city staffers have voiced concern about whether they will have enough manpower to catch and crack down on fraud.
In a city with an extreme housing shortage, the top priority has to be preventing the loss of affordable rental units. For now, rentcontrolled apartments should be banned from short-term rentals at least until the city can provide enough enforcement to ensure that tenants are protected and that scofflaw property owners can’t turn their rent-regulated units into illegal hotels.