Airbnb: New Rules, My Predictions

As you may have heard, the laws have passed in Los Angeles:  Vacation Rentals are going to be regulated.  Here are four primary new guidelines:

1. The rental must be your primary residence (which means occupied by you at least six months out of the year).
2. Maximum Airbnb usage of 120 days a year (you can apply for exceptions).
3. Properties under the Rent Stabilization Ordinance (Rent Control) are not allowed to be used for short term rentals (such as through Airbnb).
4. Additional fees and guidelines that must be followed, including a yearly fee of $89 from the host and a required registration with the City of Los Angeles.

Some people are happy, and others are disappointed.  This changes the dynamics of the rental market here in Los Angeles.  The market will ultimately tell what happens, but here are three predictions that I have come up with:

1. Many tenants are going to get disappointed as to how little increase in rental inventory there will be: There is a percentage of home owners who owned their properties strictly because of Airbnb.  Therefore, if they can’t financially operate in the new guidelines, those homes are going to be sold off.  The increase in rental inventory for single family homes and condos won’t be as great as many are hoping.
2. We won’t see a major rental price reduction: At least not nearly to the degree many tenant advocates are hoping for. Even though there won’t be as many rentals coming to the market, there will still be a chunk, but in multifamily.  Because those under the Rent Stabilization Ordinance will be barred from vacation rentals, that does mean more to the market.  This will help in slightly easing the rental market and creating more options for tenants.
3. This is a battle; the war will still live on: There will be battles between sites like Airbnb and hosts who are going to try to prove major hardships with the City and the necessity to do vacation rentals versus long term.  We are going to see more regulation and clarification on much of what is going on, including enforcement of the laws.

Of course, these are predictions and can go either way.  Time will tell, and I will keep you posted.