According to a report from The Los Angeles Times, thousands of illegal listings in Los Angeles are still up on Airbnb despite a new law that went into effect in November 2019. The regulation requires short term rentals to be primary residences and be registered with the city.

The LA Times found that in early June nearly 5,000 Airbnb listings in LA did not have registration numbers, while the city estimated about 6,000 Airbnb listings or about 42% of active listings on all platforms in LA.

The city said that rental listings have declined by 62% since the law went into effect. Many have complied after getting warning letters.

The enforcement entails warning letters and citations to hosts with initial fines of $500 as well as additional fines of $500 per day. The city’s enforcement has lagged. It has identified about 2,600 properties across all platforms that are still in violation with most in the Hollywood, Venice and downtown areas.

The city has focused on hosts and have not gone after online platforms because the burden of proof is higher for platforms, to show they “knew or ignored” that their hosts were not complying.

The LA Times reported that last year Airbnb agreed to remove “categorically ineligible” listings identified by the city, but “Airbnb did not have to remove any others until it rolled out a new system to facilitate sharing data with the city and removing illegal listings.” The system would “put enforcement tools in the hands of the city.”

Of note, Airbnb said the system was ready in June, but the city has dragged its feet. “The city abruptly put it on hold: Planning officials said Mayor Eric Garcetti’s office told them to hold off until the department had prepared on its financial effects.”

Certainly with Los Angeles facing a potentially large budget deficit exacerbated by Covid-19, they need revenue from any possible source and getting rid of illegal rentals would curtail revenues.

As we reported in March, Los Angeles was already ‘concerned’ about shortfall from short term rental revenues with the new regulation. It collected $62.7 million from short term rental transient occupancy tax (TOT) in the 2018-2019 fiscal year.

Cities feel immense pressure to balance the competing interests of constituents, but at the end of the day the need of the local economy trumps. The pandemic has put many cities around the world in a dire financial state. It has caused them to re-evaluate their stance on short term rentals. As we wrote last week, Catalonia has reversed its hardline approach on short term rentals and are now in favor of home-sharing.

This is a dilemma that many U.S. and European cities are reckoning with.

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Categories: Regulations