Home Sharing Ordinance in Los Angeles

Home sharing has become an increasingly popular way for homeowners and renters to generate extra income by renting out their homes to short-term guests through platforms like Airbnb and VRBO. However, in a city like Los Angeles, where affordable housing is a pressing issue, this trend has prompted the local government to step in with regulations. The Home Sharing Ordinance in Los Angeles, effective since July 1, 2019, sets strict guidelines for residents who wish to participate in short-term rentals. For landlords, understanding these rules is essential, especially when dealing with tenants who may wish to use their rental property for home sharing.

What is Home Sharing in Los Angeles?

Home sharing in Los Angeles refers to the practice of renting out a portion of your home or your entire home on a short-term basis, typically through online platforms. The Home Sharing Ordinance in Los Angeles allows homeowners or tenants to legally rent out their primary residence to guests, but only if they comply with the city’s strict regulations.

For landlords, this ordinance is crucial because it directly affects how their properties can be used by tenants, especially in cases where tenants may seek to rent out their unit on a short-term basis without the landlord’s knowledge or approval.

Key Components of the Home Sharing Ordinance

The Home Sharing Ordinance establishes a legal framework to regulate short-term rentals. Below are the most critical aspects of the ordinance that landlords and tenants need to understand:

Registration Requirement

One of the main components of the Home Sharing Ordinance is the requirement for hosts to register their short-term rental with the city. Homeowners or tenants who want to offer their property for home sharing must submit an application through the city’s online portal. This registration process includes paying a filing fee, and the host must include the registration number in all advertisements.

Landlords should be aware that if a tenant wishes to engage in home sharing, they must have approval from the city and meet specific conditions, which include gaining landlord consent if the tenant is not the property owner. Unauthorized home sharing could result in penalties or fines for both the host and the landlord.

Primary Residence Requirement

Under the ordinance, only a person’s primary residence can be rented out for short-term stays. To qualify as a primary residence, the host must live at the property for more than six months of the year. This provision prevents investors from purchasing multiple properties for the sole purpose of short-term rentals, which can impact housing availability and prices in Los Angeles.

This primary residence rule benefits landlords, as it limits tenants from turning rental properties into full-time short-term rental units, helping to maintain stable occupancy and long-term lease agreements.

Rent Stabilization Ordinance (RSO) Exclusion

Properties that fall under the Rent Stabilization Ordinance (RSO), which applies to most rental properties built before 1978, cannot be used for home sharing. The RSO protects tenants from excessive rent increases and unjust evictions. Allowing short-term rentals in RSO properties could undermine the ordinance’s intent to preserve affordable housing in Los Angeles.

Landlords of RSO properties should be aware of this restriction, as any unauthorized short-term rentals in these properties could lead to significant legal and financial repercussions.

How Home Sharing Affects Landlords

While home sharing may seem like a win-win for both tenants and property owners, the reality is more complex. Landlords must carefully navigate the potential benefits and drawbacks of home sharing on their properties.

Increased Wear and Tear

Short-term rentals typically involve a high turnover of guests, leading to increased wear and tear on the property. This can result in higher maintenance costs and the need for more frequent repairs. If tenants are using the rental property for home sharing without proper oversight, the landlord may find themselves responsible for damage caused by short-term guests.

Liability and Insurance Concerns

Another significant concern for landlords is liability. Most standard landlord insurance policies do not cover damage caused by short-term guests. If a tenant is operating a home share without the landlord’s knowledge or approval, the landlord could be left liable for property damage or personal injury claims that arise from short-term guest stays.

Renters Engaging in Home Sharing

The Home Sharing Ordinance stipulates that tenants who want to engage in home sharing must have written approval from their landlord. If a tenant is found operating a short-term rental without landlord consent, the landlord has grounds to terminate the lease. However, landlords should be proactive by including specific clauses in rental agreements that either prohibit or regulate home sharing.

Enforcement and Penalties

Enforcement of the Home Sharing Ordinance in Los Angeles is strict, with the city imposing fines and penalties on those who do not comply. If a tenant violates the ordinance, landlords can also face fines if they fail to take action. To protect themselves, landlords should monitor their properties for unauthorized home sharing activities and address any violations promptly.

The Impact of Home Sharing on the Los Angeles Housing Market

The rise of short-term rentals has had a mixed impact on the housing market in Los Angeles. On the one hand, home sharing can provide extra income for residents struggling with high living costs. On the other hand, the growth of short-term rentals has been linked to a reduction in long-term rental availability, contributing to the city’s affordable housing crisis.

The Home Sharing Ordinance in Los Angeles aims to strike a balance between allowing residents to participate in home sharing while preventing the practice from exacerbating housing shortages. By limiting short-term rentals to primary residences and excluding rent-controlled properties, the ordinance seeks to ensure that home sharing does not further reduce the availability of affordable housing.

Pros and Cons of Home Sharing for Landlords

For landlords, home sharing presents both opportunities and challenges.

Pros:

1. Increased Income: If landlords allow home sharing, they may be able to negotiate higher rents with tenants who plan to use the property for short-term rentals.
2. Short-Term Vacancy Solutions: For landlords who may have properties vacant for short periods, home sharing offers a way to generate income during those vacancies.

Cons:

1. Increased Maintenance Costs: Frequent turnover of short-term guests can lead to more wear and tear, requiring landlords to invest more in property upkeep.
2. Liability Risks: Landlords must ensure they have adequate insurance coverage for any damage or accidents involving short-term guests, which can be costly.
3. Regulatory Compliance: The administrative burden of ensuring compliance with city regulations and enforcing lease agreements regarding home sharing can be a challenge for landlords.

The Home Sharing Ordinance in Los Angeles was designed to regulate short-term rentals while addressing the city’s affordable housing crisis. For landlords, understanding the rules surrounding home sharing is essential to ensure compliance and protect their properties. By maintaining clear communication with tenants, setting specific policies regarding home sharing in rental agreements, and staying informed about local regulations, landlords can mitigate risks while navigating this evolving landscape.

Ultimately, the home sharing in Los Angeles regulation offers a framework that protects tenants and landlords alike, ensuring that short-term rentals operate within legal boundaries while safeguarding the city’s housing stock.