Demographics of Short Term Rental (STR) hosts in Los Angeles:

Home Sharing and its impact on housing in L.A. & The Proposed Ordinance and its potential impact on Home Sharers

Demographic Groups

Retired and low income home owners:  These folks use the opportunity of sites like Airbnb to offset rent and other living expenses not met on pensions or limited salaries. They may rent out one or more rooms, all year or less frequently. They rely on whatever they can bring in in order to make do.  This group, along with low income renters,  should be the most protected and yet they are the most endangered by the limits of the proposed ordinance. To protect this group:

  • allow them to rent out more than one room
  • allow them to maintain more than one listing  
  • do not limit the number of days they can offer their homes on the STR (short term rental) market as long as the listing is their primary residence and hosts are in the residence when they have guests, and
  • do not limit the other otherwise legal,  income producing uses of the home.   
  • Allow whole house listings for periods of time when residents are out of town or otherwise not on the premises. This would be one instance where a  limit of the number of days a year a whole house listing is available makes sense:  to assure that a landlord isn’t doing an end run around rent control. (Any number of days less than a full year would work to achieve this goal.)

Low income renters: Even under rent control, rents in L.A, are too damn high. Rent control only protects established tenants. New tenants pay market rates and with limitations on how much  and how often landlords can raise rents, there exists a disincentive to skip rent increases. It takes years for the rental costs to go below market rate. Some folks rent out space on their sofas or stay with friends or in their cars and rent out their studio or one bedroom apartments from time to time.  

To protect this group

  • make landlords enforce their own leases (the portion of the ordinance that requires landlord permission could lead to extortion, abuse and coercion),
  • don’t include these listings in the ban on home sharing in RSO (rent controlled)  properties, as long as the listing is their primary residence and hosts are in the residence when they have guests.  This would be another instance where a  limit of the number of days a year a whole house listing is available makes sense.

The listings of these hosts (low income homeowners and renters)  not only do not decrease rental unit stock, but by providing money to help meet rent and mortgage, prevent more people from displacement and from having to look for rental housing in the already limited low income rental market.

Mom and Pop landlords in RSO buildings: These landlords  live on the property and own no other properties, renting out their RSO units to long term tenants and rooms in their own unit to STR guests. These homeowners should be rewarded with the option to  home share in their own unit, as a means of offsetting the costs of maintaining the other units and keeping rents low.  The city has not done enough to support mom and pops, who often have deep and long term relationships with tenants and a commitment to low rents and they are part of the community.

Bicoastal Angelinos: This is a big issue and demographic among STR hosts in this city, with many people “in the industry”,  gone on assignment for so much of the year.  Especially for people trying to get established in the industry, extra income from renting out their homes when they aren’t in town can be very important. These hosts do not have the option of renting out their space to long term tenants, as they need a home to return to, but they also need to offset living and housing expenses both when they are away and when they are in town.   These listings also have no impact on low income rental availability.

Luxury Homes, Vacation Homes: These listings have the most to offer the city in the form of tax revenue. Their existence of the market also has no bearing on affordable rental options, as low income renters cannot afford these homes anyway.  

Multiple Listing Agents of whole house, whole apartment  listings, or multiple listings of rooms in various apartments: This group consists of landlords who have turned their apartment buildings into hotels and have either not re-rented apartments to new tenants when tenants have moved out, or have applied aggressive techniques or violated Ellis Act eviction policies to transition the apartments into a hotel.  These are the only short term rentals contributing to the loss of affordable housing and rental stock. Writing the ordinance  that would eliminate this abuse of the sharing economy  would be simple and would be highly supported and welcomed by most of the city’s populace.  The LAHD already exists to regulate these landlords and the system of anonymous reporting could be more widely publicized to hold these listers accountable. These types of listings should not be allowed under any circumstances. The only exception to this rule would be management companies who serve individual homeowners sharing their primary residences. Documentation and verification should be provided to assure that management companies of individual listings are not abusing the system and eliminating housing.

The benefits of Home Sharing are huge. 

Home Sharing

  • Offsets rent and mortgage by providing supplemental income to meet housing and living expenses.
  • Provides employment for hosts in their own homes– an actual cottage industry
  • Provides employment in the larger community
  • Supports local small businesses in neighborhoods that might not benefit otherwise from the tourist industry.  (No one comes to L.A. to go to the corner panaderia or the local taco truck.)
  • Provides needed revenue in the form of the hotel tax, a heavy tax for small businesses already paying property taxes and income taxes, but one that many hosts have been paying for some time (voluntarily),  and one many would willingly pay for the continued opportunity to remain as STR hosts.
  • Provides access to areas of the city financially out of reach to most working people. A weekend in a canyon house or a week at the beach may be affordable where as purchasing housing in those areas remains prohibitive

Problems in the  ordinance

According to the Planning Department, the draft ordinance was the result of a request from City Council to come up with a plan that would

    • Be based in the primary residence of the host
    • Collect TOT
    • Protect rent stabilized housing

Instead, the planning department devised a complex criteria that would make it nearly impossible and unviable for renters and homeowners to offer short term rentals anywhere within the city of Los Angeles. If the purpose of this proposed ordinance was to destroy home sharing without explicitly doing so, then the proposal is expertly and perfectly drafted.

The limitations within the proposal that would prohibit the use of the property for otherwise legal uses, along with the extreme limitations on the number of listings within a primary residence, number of days hosting is allowed and the number of groups of guests, creates a very hostile environment for anyone working from their home, attempting to keep, and afford our housing.  

The areas of gravest concern are:

  • The 90 (or 180 or 200 or any number of….) day limit
  • The single listing limit
  • The one set of guests limit
  • The prohibition on other services and non-residential uses

For most host, home sharing for 90 days equals less than $9000 of gross income. This does not even cover property costs, let alone pay salaries, mortgages or rent.  No business model exists that would so severely limit the business.  To then tax and regulate this business like a hotel  is preposterous. All this noise about $9000?

STR hosts may have more than one available room in their home, especially after children have grown up and moved out. Some hosts may list entire homes when they are on vacation or when working away from home;  listing their homes either as a room in a house or  as a whole unit.

In this economy where housing prices are exceptionally high and employment options limited,  Home sharing offsets housing costs and provides employment to hundreds of people who might otherwise not be able to afford living in Los Angeles or may be excluded from the mainstream workforce. Individual initiative should be encouraged and the sharing economy has arisen to meet a very important need.  In addition to providing employment for hosts, many hosts employ support staff. Hosts would not be able to maintain full employment of staff, increasing limited part time employment.

The proposed ordinance, in addition to limiting the scope of short term rentals to less than a living wage, would prohibit other in home employment options. People working from our homes are more likely to be home sharers.  It’s a perfect and natural match. — renting out the space as a film location to the film industry (with or without STR guests present); seeing clients in a private place or separate area on the premises; art, writing, crafts or photography studios; any number of home offices where people do business in their homes.  To not allow hosts to diversify our income sources while limiting the number of days and the number of rooms we can be in business  is one of the more draconian measures in this ordinance. As written it is not clear if this prohibition would apply to times when no guests are present, or to auxiliary buildings, but present or not, it is severe and irrationally punitive.

While NIMBY homeowners in beach and mountain communities oppose  home sharing, as well as other public access to the natural environment surrounding Los Angeles, their concern about party houses warrants some attention. The 90 day, one listing, one set of guests model will encourage “party houses” especially  where social groups may want to stay in a larger home. Renting out to smaller groups of individual and family travelers is much less disruptive.  The only consistent business model the 90 day limitation allows for is weekend availability.  Instead, renting out rooms to individuals and small groups  during the week as well as weekends, offering more than one listing to more than one group, for shorter periods of time, encouraging listings in primary residences when hosts are home, encourages families and people on business to use STRs, creates and supports communities and families living in L.A.

 

 

 





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