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In 2020, iPropertyManagement reports that Airbnb has more than 150 million users, with about six guests checking in every second. In the United States, those guests check in to any one of roughly 660,000 listings, giving the company an estimated valuation of $35 billion. Based on the scope of this legendary unicorn startup alone — not to mention popular contemporaries like HomeAway and Vrbo — there's little wonder that it's been so disruptive to the short-term rental market across California. It's also little wonder that laws across the West Coast have responded accordingly. Airbnb and home-sharing laws are largely an issue of local jurisdiction, though, so the rules and regulations vary widely depending on the city.
While legislators in Los Angeles continue to scramble in response to Airbnb's popularity, the company finds the core of its legal justification in local legislation known as Council File 14-1635-S2, introduced in June of 2015 and last amended in February 2020. Under this ordinance, it is legal to share a home in Los Angeles for short-term rentals if the listing is the host's primary residence. This means that the host lives there at least six months of the year and is not subject to rent stabilization laws. Hosts are required to register with the city to receive a house-sharing permit and registration number from the Los Angeles Department of City Planning, which requires a yearly fee, a photo ID, two documents proving the host lives at the primary residence (voter registration card, recent utility bill, property tax bill) and notarized landlord approval, if the residence is a rental.
These rules apply to short-term home sharing — fewer than 30 nights at one time — of an entire home or private room. While all short-term rentals are subject to a 14 percent transient occupancy tax paid to the city, different types of home sharing in L.A. have different requirements:
Like Los Angeles, San Francisco lawmakers have enacted registration requirements for Airbnb, Vrbo and other home-sharing hosts in the form of short-term rental laws, similarly aimed at ebbing the homelessness crisis, rising rent and property values. In short, these laws help prevent property owners from snapping up large amounts of real estate strictly for short-term rental purposes. In the Golden City, hosts operating from a primary residence where they reside for a minimum of 275 days per year will need a Short-Term Residential Rental Certificate and a Business Registration Certificate from the City of San Francisco's Planning Department and the San Francisco Treasurer's Office, respectively, to be renewed every two years.
Unlike in L.A., Airbnb offers a pass-through registration service so that San Franciscos hosts can get these credentials by applying right from the Airbnb website, though applicants will still need to provide basic listing info, a photo ID and proof of address. Anyone except a licensed hotel, bed and breakfast or timeshare owners will need both the Short-Term Residential Rental Certificate (at a nonrefundable $450 fee, as of 2020) and the Business Certificate (at a $91 fee in 2020, which is refundable if the certificate is used exclusively for short-term rentals) to list residential property for periods of less than 30 nights at a time.
Certified Hosts in San Francisco are required to pay federal income tax on their earnings and may be required to pay business personal property taxes. Airbnb directly collects transient occupancy taxes from the guests and pays them to the city. Similar to L.A., long-term stays of 30 nights or more do not require registration and multiple listings at the same address do not need to be registered individually unless they are different units or apartments. Detached residences zoned RH-1(D) require an additional neighborhood notification before they can be rented, and hosts must have property liability insurance of no less than $500,000 (at 2020 rates), remedy any code violations so that the units comply with current code enforcement, and observe group housing limits, which means hosting no more than five distinct short-term renters simultaneously.
Compared to other popular California travel destinations like San Francisco and Los Angeles, San Diego is a bit behind on short-term rental legislation. As of early 2020, city officials await new city hall proposals after the city council previously floated short-term vacation rental regulations, but failed to pass them. In July of 2019, Assemblywoman Tasha Boerner Horvath put Assembly Bill 1731 on hold for a year. This law would have outlawed short-term vacation rentals in San Diego County residential and state coastal zones unless there is a full-time resident on site. In the meantime, Mayor Kevin Faulconer has publicly promised not to crack down on short-term rentals until clearer laws are in place, even though city attorneys have reached various conclusions about their legality.
Until the new rules arrive, anyone renting property to transients for less than one month at a time — including hotels and motels, RVs and campgrounds and, yes, short-term vacation rentals like Airbnbs rented out by their owners or property management companies — just needs a Transient Occupancy Registration Certificate. This can be attained online via the city treasurer's Transient Occupancy Registration System or by delivering an Application for Transient Occupancy Registration Certificate form to the Office of the City Treasurer. In either case, hosts must provide basic property and owner information. Short-term rental hosts in the city are subject to a transient occupancy tax rate of 10.5 percent on all lodging businesses.
San Jose, the third-most populous city in California and the unofficial capital of Silicon Valley, has a municipal code that regulates short-term rentals, such as those on home-sharing platforms. All legal homes and apartments are permitted to host travelers without registering for any sort of certificate or permit. The city does, however, assess a transient occupancy tax and requires a business license and taxes anyone operating a business. Moreover, short-term rentals are subject to some restrictions in Section 20.80, Part 2.5 of the municipal code, such as:
Of course, legislation doesn't have a reputation for prompt action, and many of California's Airbnb-related laws remain in flux. Hosts looking for legal help from Airbnb won't find much to go on as the company's official word on that front is: "It's important for you to understand the laws in your city. As a platform and marketplace we do not provide legal advice." Likewise, each city's legal stance on short-term rentals will vary as the laws continue to evolve.
That doesn't mean there's no hope for hosts, it just means they have to stay on their toes and follow the letter of the law. In virtually any California city, the local city planning department will serve as a de facto source for current short-term rental laws and home-sharing guidelines, while local rent boards may offer more nuanced assistance to hosts seeking to offer property listings that they themselves rent. Some cities, like San Francisco, are catching up to the Airbnb and home-sharing trend more quickly and already offer bespoke departments just for short-term and vacation rentals, in this case, the San Francisco Office of Short-Term Rentals serves as a definitive resource for aspiring hosts.