In Santa Monica's continued war against it's tech focused future, the battle against AirBnB holds particular importance because Santa Monica is Los Angeles' ground zero for how the city will handle tomorrow's influx of new residents. Last week, Santa Monica's city council approved an AirBnB law which completely ignores the issues facing tenants and landlords who use the service.
The law is one of the most restrictive short term rental laws in the nation. AirBnB listings will now only be allowed for homeowners. In effect, the city council has potentially created a coup at the cost of landlords and tenants.
Below are our top 4 reasons why Santa Monica's law, which will reduce the reported 1,700 listings to just 400, misses the mark.
1. Homeowners don't need as much help.
Santa Monica's newest restrictions show an anti-tennant streak that ignores the reason why landlords and tenants rent on AirBnB: namely, the need for extra money. SaMo's location by the beach makes it one of the most popular tourist destinations in town, while it's beaches make living a premium. That demand coupled with Santa Monica's recent blows to it's own rent control laws have made rents skyrocket. And if you've noticed, wages have not exactly followed the same trend.
By contrast, homeownership in Santa Monica is much more closed off, where prices at the bottom of the most recent recession still out of reach for many wannabe buyers. In the ensuing years, demand has only increased along prices. Santa Monica needs to face that the fiscal challenges for homeowners are just different than the ones faced by renters.
Tenants who rent out apartments on AirBnB are usually trying to make their rent. Taking away potential revenue just because they can't afford a condo is just unfair.
2. Santa Monica needs more development.
One of the reasons Santa Monica is so popular is because the amount of supply in Santa Monica, which has been tightly regulated for years, is well below the constant demand level. Tourist often find all hotel rooms vacant in both Santa Monica and the area around it, despite most hotel rooms costing around twice as much as an AirBnB listing. Despite a continued housing crisis for wannabe tenants and a crunch for hotel rooms, the city council has done next to nothing to alleviate the problem.
3. Homeowners will now be make a fortune off the site.
Perhaps the most unsettling development, Santa Monica's homeowners will not just benefit from reduced supply, but benefit extremely. Santa Monica is one of the most popular neighborhoods in the entire world for AirBnB, and it's continued prominence allowed AirBnB landlords to charge well beyond what you could in other parts of the city. With almost 75 percent of listings about to come off the market and no new supply of vacation units coming, it's very likely the sky may be the limit for what a homeowner can charge when Santa Monica's hotels get booked up.
This is a gross misrepresentation of AirBnB's original goal to provide income for city dwellers, and the potential for investors to buy, flip and then rent out may price more buyers out of Santa Monica's already pricey housing market. That is a complete net negative.
4. What Santa Monica needs is registration and a cap on listings.
While landlords in Santa Monica abusing the system is to blame for the new law, a different law altogether would've fixed the problem without potentially creating the ones I outlined above. If Santa Monica is truly interested in protecting rental prices, than what is needed is not a ban on rental units becoming AirBnB listings, but a compromise which would allow landlords to reap benefits without turning apartment buildings into hotels.
That compromise would be to simply have landlords register with a hard cap for the number of listings they can have, with a very high fee associated for violation. Such a resolution would allow landlords to reap benefits of short term rentals without the need to mass evict tenants. Most importantly, it would protect tenants that have become landlords out of necessity and rig the game in their favor, which is a win for the people who are often the biggest victims of Santa Monica's housing crisis.