Airbnb Now Legal and Regulated in San Francisco
- Oct 31, 2014 | Gail Cole
Airbnb uses an online platform to connect people with room to spare with travelers looking for a place to stay. Hosts rent out rooms, and in some cases entire apartments and homes, on a short-term basis. Created in 2007 by two men were having trouble affording their San Francisco rent, Airbnb now has hosts in 192 countries and has booked more than 10,000,000 nights.
Until now, short term rentals have not been legal in San Francisco, the birthplace of Airbnb. Yet city officials recognized the need for flexibility in this center of American innovation, where the sharing economy was born. The company and city worked together to legitimize the industry, and on October 1, 2014, Airbnb started collecting the 14% San Francisco hotel tax from visitors.
Now San Francisco Mayor Edwin M. Lee has signed a new Short-Term Residential Rentals Ordinance, which creates City’s regulation on sharable housing. In announcing the news, the mayor spoke of a need to modernize laws:
“As the birthplace of the emerging, more sustainable sharing economy, San Francisco must be at the forefront of nurturing and regulating its growth by modernizing our laws and confronting emerging policy issues and concerns. Today I am proud to sign this landmark piece of legislation, developed over two years by Board President David Chiu working with diverse stakeholders, that regulates homesharing. Now, San Franciscans who just want to share their home with occasional visitors will have a clear set of rules and restrictions to earn extra money to make ends meet and enjoy a better quality of life in our City for themselves and their families. With this balanced, responsible ordinance in place, San Francisco residents can share their homes and we can enforce against bad actors to protect the public and collect taxes on this new activity, which will bring millions of dollars in new revenue to the City for affordable housing and other services.”
The new legislation is an attempt to balance more extreme reactions to short-term rentals. In Malibu, short term rentals are permitted “as of right.” In New York, they are completely banned.
San Franciscans who think this gives them a carte blanche are advised to read the fine print. The legislation:
- Reinforces the prohibition against the conversion of residential housing into full-time de-facto hotels.
- Allows only primary residents living in an apartment to rent short-term on a limited basis to help supplement their housing costs.
Residents must live in the unit as their primary residence for no less than three-quarters of the year. Secondary or vacation homes lacking permanent residents may not be used for short-term rentals.
David Chiu, President of the San Francisco Board of Supervisors, crafted the legislation to allow permanent residents “limited flexibility…to earn the additional income they need to help pay their rent and every day bills….” At the same time, he is cracking down on “hotelization,” whereby residential housing is converted into “full-time de-facto hotels.” This leads to a reduction in housing and an increase in rent and housing prices. It also exacerbates the “City’s affordability crisis.”
Residents interested in providing short-term rentals must register with the City’s Department of Building Inspection and be granted permission by the San Francisco Planning Department. Hosts must apply for the privilege of renting rooms and, once approved, they are required to:
- Pay transient occupancy taxes.
- Report the duration of short-term stays annually.
- Abide by all city laws, including rent control laws.
Under the new legislation, Airbnb and similar hosts may only rent out rooms/homes for up to 90 days per calendar year unless they also occupy the space. Hosting platforms are required to “notify their users of the City’s short-term rental laws as well as collect and remit transient occupancy tax.”
Airbnb has been battling with various state and local governments since mid-2012, when a New York host was fined by the city. Some cities take issue with short-term rentals, which are essentially businesses, in residential zones. And then there is the little matter of taxes. Many hosts were ignoring applicable hotel, tourist, and sales taxes; and everyone knows how ignored taxes ignite the ire of state and local governments.
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