Short-Term Rentals in Los Angeles | Airbnb Rules and Regulations

It's time to see what all the buzz is about around Los Angeles' short-term rentals!

The rise of short-term rentals in Los Angeles, particularly through Airbnb, has created challenges in regulating the industry while balancing residents', tourists' and property owners' interests. LA City Council has regulated this sector, but the rapidly evolving landscape poses significant concerns due to motions filed and crackdowns on illegal rentals.

Let’s discuss the intricate regulations and laws governing Airbnb in Los Angeles, providing a comprehensive understanding of the regulatory landscape for success in this rapidly growing market.

Is Los Angeles a Good Location for Investing in Short-Term Rentals?

Yes, it is.

Los Angeles is a magnet for tourists, drawing them in with its lively culture, iconic landmarks and endless sunshine. Imagine investing in Airbnb properties amidst the glitz of Hollywood stars, the bustling TV & movie industries, and the allure of stunning beaches – it's more than just a smart move, it's a golden opportunity for savvy investors.

LA's fame as a sought-after vacation spot is undeniable, and the numbers speak volumes. In 2022 alone, the city warmly embraced a staggering 46.2 million visitors, a mix of 41.9 million domestic and 4.3 million international guests. So, if you're contemplating a short-term rental venture, riding the Airbnb wave in Los Angeles could be your ticket to a sunny and prosperous investment journey.

Short-Term Rental Overview in Los Angeles

As of 2024, Airbnb continues to thrive in Los Angeles, showcasing robust user and market growth. Hosts in the city are charging higher rates, contributing to increased profits. According to Statista as of November 2023, Los Angeles had 44 thousand Airbnb listings, making it the city with the most Airbnb listings.

Despite fluctuations, Airbnb rentals in Los Angeles have been a consistent feature, contributing to the city's dynamic hospitality landscape.

According to AirDNA Airbnb and Vrbo data for short-term rentals statistics for Los Angeles reveals insightful statistics,

• Occupancy Rate 29%

• ADR $147.7

• Annual Revenue 10.3K

• RevPAR $77.1

• Market score 79

These statistics indicate that Los Angeles' vacation rental market is vibrant and lucrative.

Top 5 Reasons to Start an Airbnb in Los Angeles

High in demand

Hollywood events, theme parks and beaches draw millions of tourists every year, creating a constant need for accommodations.

Earnings that are lucrative

Rents in the city are high, so a well-furnished house in a high-demand area can make you a lot of money.

Neighborhoods that cater to tourists

Areas like Hollywood, Santa Monica and Downtown LA are popular among tourists, making them ideal locations for Airbnb properties.

A solid legal framework

Los Angeles has clear regulations for short-term rentals, providing hosts with a stable and legal environment. Compliance with city regulations ensures a hassle-free hosting experience.

A culturally diverse city

The city's rich cultural events, festivals and entertainment options contribute to year-round bookings. Example: Hosting during major events like the Oscars or music festivals can boost occupancy.

The Los Angeles City Council's Crackdown: 2023 Initiative

As of November 2023, the Los Angeles City Council unanimously advanced a new law to regulate short-term rentals further. This initiative, driven by concerns over illegal short-term rentals, mandates that owners of both short-term rentals and hotels obtain permits to operate. The unanimous support for this law reflects the city's commitment to tightening the reins on the short-term rental market and ensuring compliance with established regulations.

Los Angeles Home-Sharing Ordinance

The City Council adopted the Home-Sharing Ordinance (CF 14-1635-S2) in December of 2018.

The legislation limits short-term rentals to one's primary residence to keep homes from being turned into rental properties. To comply with the Home-Sharing Ordinance, hosts must register with the City and advertise their registration number on all ads.

All hosts have to sign up online and follow all the requirements.

Short-Term Rental Regulations in Los Angeles

Host registration requirements

If you host for 30 days or more at a time, you do not have to register to publish your listing.

If you host for 1 to 29 days at a time, you are required to add a home-sharing permit prior to publishing your listing.

Step 1

Obtain a home-sharing permit from the City of Los Angeles.

Step 2

Once you receive your home sharing permit, add the number to your Airbnb listing.

Qualifications for Short-term Rental Registration in Los Angeles

• Locate your address on the map to see if it is within the boundaries of the City of Los Angeles.

• The City of Los Angeles's short-term rental ordinance does not apply if your address is within a white parcel.

• Non-primary residents are not eligible to register.

• Primary residences that are rental units subject to affordable housing covenants, rent stabilization, and/or income restricted under City, State or Federal law are ineligible to register.

• Verify the "Rent Stabilization Ordinance" and "Ellis Act Property" flags under Housing on ZIMAS.

• Your listing is exempt if you host a hotel, motel, transient occupancy residential structure, or bed and breakfast, but you still have to claim an exemption from Airbnb.

Registration Process

Registration can be done online or in person at the Los Angeles Planning Department. Depending on how many applications, it might take several weeks for a registration number to be issued.

Who can register?

• Only primary residences qualify for registration.
• Registered listings are limited to hosting for a maximum of 120 days per calendar year.

Primary residence criteria

• The City of Los Angeles defines a primary residence as the property where you reside for more than six months in each calendar year.
• Los Angeles ordinances prohibit individuals from applying for or obtaining more than one registration.
• Operating more than one Airbnb listing concurrently is prohibited in the City of Los Angeles.

ADU eligibility

• Only Accessory Dwelling Units (ADUs) with a certificate of occupancy issued by the Los Angeles Department of Building and Safety (LADBS) before January 1, 2017, can register.
• The registration application for the ADU must include the address of the ADU.

Renters' requirements

• Renters of their primary residence must submit a notarized affidavit signed by themselves and the property owner/landlord, granting approval for short-term rentals.
• The affidavit should be dated and include the name, address, phone number, and email for both the renter and the property owner/landlord.

Registration Cost and Process

Registration Fee

• The cost for registration is $183.

Registration step-by-step guide

Photo identification (ID)

A valid federal or state-issued photo ID, such as a driver's license, state ID card, or passport.

Documentation of Primary Residence

Two of the following documents are required, unless the address on the photo ID matches your listing location. In that case, only one of the following is needed:

• Current valid California voter's registration card or voter registration status (Tip: Access voter registration online and save as a PDF).
• Current valid California vehicle registration certificate.
• Recent health insurance bill.
• Recent vehicle insurance bill.
• Copy of a paycheck or pay stub issued in the last six months.
• Copy of a current property tax bill indicating homeowner's exemption.
• Copy of a current rental or lease agreement, including the property manager's or landlord's contact information and signature.

Ensure you have all the necessary documents for a smooth registration process.

Tax Structure for Los Angeles Short-Term Rentals

• The City of Los Angeles enforces a 14% transient occupancy tax on the total listing cost, encompassing cleaning fees, for stays lasting 30 nights or fewer. Airbnb is responsible for gathering and submitting this tax to the city. Nevertheless, hosts must regularly submit monthly returns to the Office of Finance.

• It is recommended that hosts account for the tax amounts collected and remitted by Airbnb (and any other relevant platforms) and make deductions accordingly.

If your property is located within the City of Los Angeles and is rented out to transient occupants for 30 calendar days or less, you are responsible for registering, collecting, and remitting the Transient Occupancy Tax to the City of Los Angeles.

Upon commencing business, a Transient Occupancy Tax Registration Certificate is required.

Examples of lodging businesses subject to the TOT include:

• Hotel/Motel.

• Vacation/Short-term Rentals of any kind (i.e. houses, condos, rooms, or spaces) rented directly by the owner/operator, by property management companies, or via internet travel services

• Recreational Vehicle (RV) Parks and Campgrounds

• Secondary operators (managing agent, booking agent, online sellers, agents, etc.)

Exemptions

If you qualify for an exemption based on Sec 21.7.4 of the Los Angeles Municipal code use the following form:

TOT Exemption Form

If there is a written agreement for an over 30 day stay use the following form:

TOT Over 30 Days Tax Exemption

Hosting Duration and Extended Permit

Hosts with a regular registration are limited to hosting for a maximum of 120 days each calendar year.

However, Hosts have the option to apply for an Extended Home-Sharing Permit (EHS). This special permit allows for short-term rentals throughout the entire year, totaling 365 days. Eligibility for the EHS is open to Hosts who have maintained registration for a minimum of 6 months or have accumulated 60 days of hosting.

Once issued, the Extended Home-Sharing Permit is valid for one year. To maintain this extended privilege, Hosts are required to pay an annual renewal fee of $982.

This extended permit offers flexibility for Hosts seeking a year-round hosting arrangement, provided they meet the specified criteria and comply with the associated renewal fee.

Everybody Comes to Hollywood

LA's short-term rental regulations constantly evolve to meet the market's changing demands. Staying updated ensures compliance, sustainability, and ultimately success for hosts and stakeholders in the short-term rental industry.

As Los Angeles shapes its regulatory framework, being proactive and staying informed becomes a shared responsibility, fostering harmony between city regulations and a growing short-term rental market. Informed decision-making goes beyond compliance.