Three years ago, the city of Los Angeles began apply a new law aimed at regulating short-term rentals on platforms like Airbnb. But a new study suggests enforcement has been weak and law breaking is becoming more common.
The reportwritten by McGill University professor of urban planning David Wachsmuthfinds that nearly half of recent listings on Airbnb and Vrbo appeared to be non-compliant with the city’s home-sharing ordinance.
“Los Angeles is one of many cities that has short-term rental rules that, on paper, look pretty good,” Wachsmuth said. “But what I find in practice when I dig into the data is that the LA rules aren’t being enforced effectively.”
Among the findings of the study:
- An estimated 45% of recent listings on Airbnb and Vrbo likely violated Los Angeles’ home-sharing law.
- The city could have collected up to about $300 million in fines last year for violations. But he imposed less than $40,000 in fines over a similar period.
- Short-term rentals took about 2,500 homes off the market for long-term residents.
In response to the report, Councilman Bob Blumenfield introduced a motion on Friday asking various city departments to investigate the study’s findings and report on plans for future enforcement.
“The laws are clear and the city needs to do more to ensure those who deliberately bend the rules are held accountable,” Blumenfield said in an emailed statement.
The city’s planning department, one of the departments responsible for enforcement of regulations, did not respond to questions from the LAist regarding the report’s findings. But a department spokesperson said enrollment numbers in Los Angeles have been down sharply since the city began enforcing the law in late 2019.
“Listings on all accommodation platforms in Los Angeles have declined by approximately 78% – from approximately 36,600 short-term listings in November 2019 to approximately 8,000 as of November 24, 2022,” they said. .
Wachsmuth’s study also found a sharp drop in enrollment in Los Angeles since the law took effect. But he largely attributed the trend to the global tourism crisis caused by the COVID-19 pandemic, not regulatory changes in Los Angeles.
Estimate of Illegal Listings in LA
In order to do business legally in Los Angeles, short-term rental operators must register with the city and post their registration number in online listings.
The study compared Airbnb and Vrbo listings to a database of valid registration numbers provided by the city. He found that many listings showed invalid or expired registration numbers.
Other listings had valid registration numbers but likely broke the rules, the study found. For example, some listings appeared to be booked more than 120 days per year, even though they lacked the permit required by the city for “extended” home sharing.
There is a huge amount of illegal activity that the city could deter with aggressive fines. And they just chose not to.
— David Wachsmuth, Professor, McGill University
In total, the study estimates that 45% of ads posted in August 2022 likely violated Los Angeles’ home-sharing law.
The study did not definitively prove that all of these listings were illegal. But Wachsmuth said he found enough red flags to suggest breaking the law is becoming more common. In a July 2021 studyhe found that about a third of registrations in LA were likely illegal.
“More and more hosts are realizing, ‘You know what, you can just get away with it,'” Wachsmuth said.
Up to $300 million in fines not imposed
Hosts who violate city rules can be fined $500 each day they post a non-compliant listing. The daily fine is $2,000 for hosts who rent accommodations more than 120 days a year without city approval.
Wachsmuth said based on its estimates of illegal activity on Airbnb and Vrbo, the city could have collected up to $302.2 million in fines last year. However, his study found the city collected a tiny fraction of that figure, imposing just $36,500 in fines between November 2021 and August 2022.
“There is a tremendous amount of illegal activity that the city could deter with aggressive fines. And they just chose not to,” Wachsmuth said.
Short-term rental companies respond
Representatives for Airbnb and Vrbo have denied that their platforms enable widespread non-compliance with Los Angeles’ home-sharing law.
Philip Minardi, head of public affairs at Vrbo’s parent company, Expedia Group, said in a statement, “Vrbo has made every effort to ensure that all listings display a valid, unexpired registration number.”
Vrbo recently agreed to settle a court case filed by the LA City Attorney alleging a routine violation of the city’s home sharing ordinance. The settlement required Vrbo to pay $150,000 in civil penalties and provide annual compliance reports to the city for the next three years.
Airbnb entered into an agreement with the city in 2019, designed to promote compliance with local regulations and streamline enforcement, allowing the city to flag listings for removal.
Airbnb spokesperson Sam Randall disputed the new report’s findings and questioned the study’s funding source, saying in an emailed statement: “We are proud of the tools we have built. partnering with the City of Los Angeles to help officials enforce local rules.
The study was commissioned and funded by LA Best Neighbors, a coalition that seeks to combat illegal short-term rentals. The group includes a union representing local hotel workers. Wachsmuth said the group had no influence on the study’s conclusions.
Edward Kung, professor of economics at California State University, Northridge, who led his own research on short-term rentals, said the study’s finding “that Airbnb is reducing rental stock and increasing rents is certainly consistent with previous academic findings.”
How do short-term rentals affect long-term tenants?
Tenant advocates have long argued that platforms like Airbnb are worsening the housing crisis in Los Angeles by encouraging landlords to pull homes from the long-term rental market in search of higher profits in the rental market. holidays.
Los Angeles’ home-sharing ordinance was intended to deter Airbnb apartment conversions by requiring hosts to use only their primary residence for short-term rentals.
The new McGill study finds fewer homes are being removed from LA’s long-term housing market today compared to 2019 estimates. At the time, Wachsmuth estimates that 6,510 housing units were operated as as dedicated short-term rental properties – meaning LA residents might no longer use them as long-term residences. Wachsmuth estimates that number has now fallen to 2,500 homes that are not accessible to long-term renters.
These missing homes affect housing affordability in Los Angeles, Wachsmuth said. He estimates that by reducing the city’s housing supply and increasing demand for the remaining units, short-term rentals have raised rents by $67 per month for the average tenant household in Los Angeles.
This rent increase may seem small, but Wachsmuth argued that it was large enough to have pushed many tenants living on the edge towards roaming.
“Short-term rental has made a fairly substantial contribution to [L.A.’s] housing affordability issues, which themselves drive homelessness,” he said.
City council considers stricter enforcement
Since the home-sharing ordinance came into effect, some city council members have expressed concern about lax enforcement, particularly those representing neighborhoods with a high concentration of vacation rentals, such as Venice and the Hills. of Hollywood.
In March 2022, Board Member Mike Bonin sent a letter to various city department heads about efforts to convert a rent-controlled apartment building in Venice into a vacation rental property.
“In light of this and other similar projects in my district, I strongly reiterate my previous request to the City to identify an appropriate and immediate enforcement remedy for the improper conversion of multi-family properties to short-term rentals” , wrote Bonin.
Last year, Bonin was one of four board members who submitted a movement calling on the various services to provide increased vigilance against illegal registrations. The McGill study estimates that Airbnb and Vrbo listings currently account for around 1.5% of all housing units in Venice.
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