The Vacation Rental Business in Los Angeles County

Many visitors to LA county are staying not in hotels, but in private apartments, homes, and residences. These short-term vacation rentals, made popular by sites like Airbnb and Homeaway, are sweeping the nation as the new way to travel. Los Angeles is quickly becoming one of the most popular destinations for Airbnb, and for good reason. Offering gorgeous bungalows on the Malibu coast, luxurious homes in Hollywood Hills, and lush apartments in the heart of downtown, it’s easy to see why it can be preferred to the typical hotel.

Malibu is one of the most desired short-term rental locations in all of greater Los Angeles, with hundreds of properties listed on the various sites. Celebrities, moguls, and international billionaires flock to the ‘Bu to spend their summers relaxing on the beach and chartering helicopters up and down the coast. The rentals range from cozy studio bungalows nestled in the mountains, to massive beach-front mansions with pools and screening rooms. On average, one night in a 1 bedroom rental comes to $250, a 2 bedroom rental is $400, and a three bedroom rental is $625.


As Airbnb has gained popularity, it has gotten its fair share of backlash from Los Angeles, Santa Monica, Malibu, and other cities around the country. Los Angeles has tightly regulated the short-term rental market, and current hosts are required to charge a 12% Transient Occupancy Tax (TOT). A transient is defined as a guest that stays 30 days or less. This TOT law also applies to hosts in Malibu. Santa Monica has their own system, requiring anyone putting a listing on Airbnb in Santa Monica to live on the property during the renter’s stay, register for a business license and collect a 14% occupancy tax from users that will be payable to the city. These are the toughest regulations on short-term rentals in the U.S.

The tax money collected on these rentals goes back to renters and hosts by supporting police, fire, roads, clean water and other resources used by both residents and visitors.


These laws have been put into affect because of the impact short-term rentals have on an already strained housing market. Landlords and tenants with multiple residences have started renting their units solely to short-term renters. Many can make more money from Airbnb rentals than from long-term rentals. Units are taken off the rental market and turned into pseudo hotels, reducing supply and contributing to growing rents.

Los Angeles is not the only U.S. city that has been wary about Airbnb. In San Francisco, homeowners who wish to lease their spaces must register them with the city and reach a number of guidelines. A new law was just passed that requires Airbnb to verify that its San Francisco hosts have registered with the city and will penalize the company with $1,000-per-day fines and misdemeanor charges if it fails to comply. Despite the law, currently 80% of SF listings on Airbnb are not registered. Airbnb is trying to get the city to ease the registration requirements for hosts, as they say it is currently too complicated. Time will tell what happens next in the Bay.


Airbnb in New York City, the nation’s most popular short-term lease destination, is also at risk. Lawmakers are trying to make it illegal to advertise rental units for short-term use. Hosts who are caught listing their units would be subject to hefty fines – $1000 per night for first time offenders. If the law passes, it would be the first such law in the country and would effectively ban Airbnb from operating in the state.

Airbnb is facing similar backlash from a number of other major US cities, including Seattle, Portland, Miami, Houston, and Boston. These cities currently ban short term rentals or make it impossible to operate: Fort Worth, Jacksonville, Kansas City, New Orleans, Santa Barbara, Fresno, Atlanta, Denver, and Oklahoma City. Many cities are also in limbo, but are still operating Airbnb for the time being.


While Airbnb continues to find it’s place in the hotel industry in the U.S. and Los Angeles, there are no penalties for guests who stay in short term rentals. So find a place you like, and give it a try! If you are interested in hosting guests in your apartment or house, be sure to read up on the specific codes for your neighborhood. Check out the Airbnb site for more details.