Short Term Rentals in Palm Springs | Rules and Regulations

It's no secret that short-term rentals in Palm Springs are growing! The allure of Palm Springs, with its captivating landscapes and unique charm, has led to the development of a thriving short-term rental market. However, Palm Springs faces a challenge in regulating this industry in order to balance the interests of residents, tourists, and property owners.

Today, we will explore the intricacies of Palm Springs' short-term rental regulations by exploring city ordinances, Airbnb regulations and the evolving dynamics of this emerging market. No matter if you're a property manager or host, we aim to provide you with a comprehensive guide to short-term rentals in Palm Springs. .

Why Invest in Palm Springs?

Strategic Location

Situated centrally in Southern California, Palm Springs' desirable location ensures a consistent influx of visitors. Its proximity to major cities, airports and natural attractions makes it an appealing investment destination

Steady Appreciation

Palm Springs' real estate market shows strong and consistent appreciation, offering the potential for long-term gains and wealth-building opportunities.

Diverse Property Choices

Palm Springs provides a diverse range of real estate options, including single-family homes, condos and multifamily properties, catering to different investment preferences.

Investing in a Palm Springs Airbnb

Investing in a Palm Springs Airbnb in 2024 can be a profitable endeavor due to the city's popularity as a vacation destination. The Palm Springs real estate market analysis indicates positive trends for short-term rentals, making it an attractive option for investors looking to capitalize on the Airbnb market

According to Mashvisor, statistics for Palm Springs are

• Average Cap Rate - Airbnb 3.65%
• Average Rental Income Airbnb $5,537 (monthly)
• Median Price $720,000
• Airbnb Occupancy Rate 43.34%

Get to Know Palm Springs

Located in Riverside County, Southern California, Palm Springs is a desert oasis! This city isn't just a city; it's a glamorous resort that Hollywood stars and celebrities love to hang out in. The sunshine isn't just for the elite - Los Angeles college students love it too.

The allure of Palm Springs lies in its luxurious getaways that scream relaxation, trendy restaurants and boutiques for the fashion-forward and vast recreation areas with everything from skiing to tennis. In winter, Palm Springs is a magnet for sun-seekers. And let's not forget Coachella and Stagecoach festivals, which turn the desert town into a lively hub..

So, whether you're into celebrity spotting, outdoor adventures or just soaking up the sun, Palm Springs has it all – your perfect slice of California desert charm.

Airbnb Palm Springs - Regulations you should know

As far as Airbnb regulations are concerned, Palm Springs has one of the most stringent. In 2008, these regulations were adopted, and they continue to be implemented even today. Owner-occupied and non-owned rentals are subject to the Palm Springs Airbnb rules. This means that if you're an investor looking to rent out your investment property on Airbnb, you must abide by the Airbnb rules. In order to invest in Airbnb Palm Springs, you must meet the following requirements.

Palm Springs Short-term Rental Ordinance

The Department of Special Program Compliance is responsible for administering the Rules and Regulations adopted by the Council for Vacation Rentals within the City of Palm Springs.

The City Council adopted Ordinance 2075 on November 28, 2022.

Ordinance 2075 amended and restated the City's Vacation Rental Ordinance.

• Vacation Rentals and Homesharing are only allowed as ancillary and secondary uses of residential property in the City.
• Establishes a regulatory program for Vacation Rental and Homesharing lodging to minimize adverse effects of vacation rental uses on surrounding residential neighborhoods.
• Limits Vacation Rental and Homesharing lodging to single-family dwelling units and prohibits Vacation Rental and Homesharing lodging in apartments.
• Provides a permitting process and imposes operational requirements.
• Confirms vacation rental registration certificate is a privilege; not a right.

For Ordinance 2075 Tool Kit

The ordinance states that you need a Vacation Rental/Homeshare Registration Certificate and a Transient Occupancy Tax permit in order to legally operate any short-term rental. Note that Palm Springs has a strictly enforced vacation rental home city ordinance. These rules govern every vacation rental reservation booked in the city of Palm Springs. These are highlights and major concerns regarding vacation rental homes that the city addresses:

Short term Rental License Requirements

To legally engage in short-term rentals, individuals must obtain a Vacation Rental/Homeshare Registration Certificate and a Transient Occupancy Tax permit as mandated by the ordinance.

It is recommended to thoroughly review the ordinance to comprehend your obligations.

Categories of short-term rentals in Palm Springs

Homeshare

Involves renting one or more bedrooms for 28 days or fewer, with the owner residing in the home throughout the rental period.

Vacation Rental

Encompasses any accommodation available for 28 days or fewer without the owner's presence.

Penalties for operating a vacation rental or homeshare without a Registration Certificate include a $5,000 fine imposed by the City of Palm Springs and permanent disqualification from Vacation Rental operations.

For a comprehensive understanding of requirements applicable to both individual operators and vacation rental agencies, consult the City's short-term vacation rental toolkit.

The registration and permit process

• Each Palm Springs vacation rental or home-share must have a valid, annual permit.
• It is prohibited to operate a short-term rental without a Vacation Rental Registration Certificate.
• It is an extremely serious violation not to register and operate without a permit.
• You can be fined $5,000 by the City of Palm Springs and you will be permanently ineligible for vacation rental operations.
• Vacation Rental Certificate Fee costs - $1,072
• Identification requirement - Copy of Government issued identification is required for all applications.
• Vacation rental certificate form

Documents required for vacation rental applications

• Ownership Form
• Pool Certification Form
• Friends and Family List
• Rental Certificate Safety Inspection Form 8.8.23
• Application for Transient Occupancy Permit
• Land Use Permit 7.24.23
• HOA sample letter

In Palm Springs, Airbnb investors can only hold one registration certificate at a time. That's why you can't own more than one Airbnb property. Moreover, Airbnb Palm Springs hosts need to make sure their registration certificates are clearly visible and displayed in the unit and in advertising, including web-based services, host platforms and print publications.

Using this method, the city will be able to identify unregistered vacation rentals.

Transient Occupancy Tax (TOT)

The Transient Occupancy Tax (TOT), also known as room tax or bed tax, is a tax collected by an operator from each guest, or transient, with the room payment and, subsequently, remitted to the City of Palm Springs.

Current Transient Occupancy Tax rates are as follows:
13.5% for Group Meeting hotels and 11.5% for all other hotels, Vacation Rentals, and Agencies.

A TOT form must be filed monthly for all Vacation Rental and Homeshare Properties. Please file with the Palm Springs Finance Department located in City Hall.

It should be noted, if you fail to file a TOT form as required, the penalty is 10% of the TOT amount due or $50.00 whichever is greater, and interest will apply.

Check the City’s Vacation Rental TOT Information page for more information.

Advertising requirements

A four-digit City ID number will be provided for you once you complete the Vacation Rental/Home Share Certificate application. You need to include that number in the description of your listing in the following format:

__ “The City of Palm Springs ID #XXXX”.__

TBID assessment

The Greater Palm Springs Tourism Business Improvement District (TBID) was re-established in 2020 and includes short-term vacation rentals. As of July 1, 2021, all vacation rental lodging in the district, including Palm Springs, must pay the 1% TBID assessment on short-term stays of less than 28 days. Visit the TBID website to learn more.

Safety standards and measures

Palm Springs enforces rules and regulations with respect to the habitability, health and safety of short-term rental units. During the initial application process for the Vacation Rental Certificate, and each time it is renewed, your short-term rental property will be subject to a safety inspection.

Vacation Rental and Homeshare Safety Inspection Form

A homeshare Vacation Rental Certificate is needed when the Owner hosts visitors in the Owner’s home, for compensation, for periods of twenty-eight (28) consecutive days or less, while the Owner lives on-site and in the home, throughout the visitor’s stay.

• Homeshare - New Registration Fee - $268.00
• Estate Home Land Use Permit - $453.00 (if applicable)
• Transient Occupancy Tax Permit - $25

The property’s owner (Host / Property Manager / Agent) must be present during the said inspection. Furthermore, the owner is required to carry an insurance policy covering short-term rentals or personal liability for the duration of the registration period with a minimum limit of $500,000. At the time of application or renewal, you'll need to provide proof of insurance.

Other rules

• Remember to check with your community about other types of local rules if your home belongs to a condo complex, HOA, time-share, or other tenant organization.

• If your property is on a lease, check your contract or contact your landlord to make sure you’re permitted to sublet.

• Each Palm Springs investment property must have a local contact who can respond to any issue or complaint within minutes whether it concerns the property itself or the surrounding area.

• An apartment cannot be converted into a vacation rental by evicting a tenant or ending the lease

• The ordinance carries criminal penalties as well as administrative penalties for anyone who violates it. In the event of three violations in a 12-month period, the permit of the property will be suspended for 2 years.

Vacation rental contracts with guests / occupants

Airbnb property managers or property owners must enter into a contract before allowing guests to stay at the property.

There’s a variety of requirements for what the contracts must specify.

1. Palm Springs requires the Airbnb guest signing a vacation rental contract to be at least 25 years of age.
2. A guest must provide his/her name, age, address, and a copy of a government-issued identification card
3. Conditions of the contract must include occupancy limits, parking policies and noise restrictions which need to be clearly communicated in the contract.
4. Airbnb Palm Springs hosts must provide a copy of the “Good Neighbor Brochure” to the occupants/guests on arrival at the property.
5. The guest must provide a list of guest names, vehicles, and acknowledge that he/she is legally responsible for the compliance of all occupants of the rental.
6. Hosts must meet and greet guests in person to explain the local rules and regulations
7. Obtain a signature of receipt of the Statement of Rules and Regulations/Good Neighbor Brochure

Occupancy limits and other applicable rules

• Prior to renting their property, homeowners in Palm Springs must secure a valid vacation rental permit from the city.

• The maximum occupancy for vacation rentals is set at two adults per bedroom, with an additional allowance for two occupants, reaching a cap of 10 adults and four children.

• Between the hours of 10 PM and 8 AM, vacation rental occupancy is strictly prohibited.

• Guests of vacation rentals are restricted to parking on the property or an approved public lot in close proximity, as sanctioned by the city.

• To ensure safety, vacation rental properties must comply with all local fire and safety codes.

• A 24-hour contact person must be available for guests at vacation rental properties.

• Vacation rental properties must provide adequate trash collection services.

• Guests in vacation rentals are required to observe a quiet time starting from 10 PM.

• Owners of vacation rentals must furnish guests with an itinerary featuring activities, places of interest, and attractions in the Palm Springs area.

• Vacation rental properties must adhere to all local zoning regulations in Palm Springs.

Vacation Rental Fee structure update

A resolution modifying certain user fees and charges was adopted by the City Council on May 25, 2023.

Vacation Rentals and Homeshares will be subject to the following fees from July 24, 2023 onwards

• Vacation Rental - New/Annual Registration Fee - $1,072
• Junior Vacation Rental - New/Annual Registration Fee - $642
• Homeshare - New/Annual Registration Fee - $268.00
• Land Use Permit (LUP) Fee for Estate Homes - $453.00
• Administrative Appeals Board - Appeal Fee - $911.00
• Transfer Fee - $174.00

Is Airbnb Palm Springs a Profitable Investment?

If you've just learned the most important rules for investing in Palm Springs short-term rentals, you might be wondering if it's worthwhile. Let's take a look at a few data analytics to supplement the cause.

According to AirDNA statistics for Palm Springs California Having a market score of 75, the market is doing well.

• Occupancy Rate: 40%
• Average Daily Rate: $ 352.5
• Annual Revenue : $38.8K
• RevPAR : $194

As We Close

The city of Palm Springs has strict regulations regarding short-term rentals, requiring homeowners to get permits, adhere to occupancy limits and maintain quiet hours. Homeshare and vacation rentals are recognized in the city, with conditions defining whether the owner is present or not.

Owners must keep up-to-date with Airbnb's guidelines and obtain the necessary certifications to ensure harmonious coexistence between guests and residents.

Oftentimes, automating your business is a great way to improve your business and enhance the guest experience. Your vacation rental income will increase when you save time on mundane day-to-day operations. At Hostaway we offer state-of-the-art Property Management Software integrated with channel manager software with over 200 more applications that can help ease the load off your back, saving you a ton of time.

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