Navigating Short-Term Rental Regulations in 3 Major U.S. Cities: A Comprehensive Guide

The rise of platforms like Airbnb has fundamentally transformed the hospitality landscape, offering travelers unique and memorable lodging experiences while enabling homeowners to earn additional income through short-term rentals (STRs). However, the surge in STRs has prompted many cities to implement regulations to balance these benefits with the needs and concerns of the surrounding community. For hosts, property managers, and guests, a thorough understanding and adherence to these regulations are crucial for their short-term rental experience especially if they are located near one of these major cities. By familiarizing themselves with these regulations, owners can avoid potential fines and contribute positively to their neighborhoods and guests. This blog delves into the specific rules governing short-term rentals in cities like New York City (NYC), Los Angeles (L.A.), and San Francisco, highlighting common themes and their importance for property managers and guests alike.

New York City

New York City’s Multiple Dwelling Law strictly regulates short-term rentals (STRs), prohibiting rentals of apartment buildings with three or more units for less than 30 days unless the host is present. Entire apartment rentals are mainly banned, except in owner-occupied one- or two-family homes for less than 30 days. In 2023, Local Law 18, or the Short-Term Rental Registration Law, was implemented, requiring hosts to register with the city and barring platforms like Airbnb and VRBO from processing transactions for unregistered rentals. These regulations have led to intensified enforcement, a significant reduction in illegal listings, and an increase in long-term rentals.

Key Regulations:

• Registration Requirement: Hosts must register their STR properties with the city and comply with specific safety and maintenance standards.
• Primary Residence Mandate: Only primary residences can be rented short-term, and the host must be present during the guest’s stay.
• Occupancy Limits: No more than two guests are allowed per bedroom/short-term rental, and the total number of guests must not exceed a specific limit, depending on the dwelling size.
• Building Restrictions: Certain building types prohibit short-term rentals, such as public housing or rent-controlled units.

2. Los Angeles

Los Angeles is another one of the cities that has implemented regulations to manage the growth of short-term rentals (STRs) while addressing housing concerns. The Home-Sharing Ordinance requires hosts to register with the city and limits short-term rentals to their primary residence. It also sets restrictions on the number of rental days per year and enforces penalties for non-compliance. Recent developments include increased fines for landlords involved in rent gouging, with penalties reaching up to $50,000 per violation, highlighting the city’s commitment to protecting residents from exploitative rental practices.

Key Regulations:

• Home-Sharing Registration: Hosts must register with the city and obtain a home-sharing permit, which hosts must renew annually.
• Primary Residence Requirement: The host can only use their primary residence as a short-term rental if the host resides for more than six months per year.
• Extended Home-Sharing: Short-term rental hosts can typically rent their primary residence for up to 120 days per year. However, to rent beyond 120 days, hosts must apply for Extended Home-Sharing registration, which requires meeting additional criteria and obtaining approval from the city.
• Enforcement and Penalties: The city has established fines for hosts who operate without proper registration or violate other STR regulations. These fines range significantly depending on the violation. Hosts must maintain and provide written logs of all home-sharing activities for easy enforcement.

3. San Francisco

San Francisco’s short-term rental regulations prioritize housing availability and neighborhood character by allowing only primary residences to be listed. Hosts must live in their properties for a set number of nights annually, preventing the conversion of long-term homes into short-term rentals and fostering vibrant communities. Also, hosts must maintain liability insurance of at least $500,000, ensuring protection for both parties and promoting responsible renting practices.

Key Regulations:

• Registration Requirement: Hosts must register with the Office of Short-Term Rentals (OSTR) and obtain a Short-Term Residential Rental or Business Certificate, which the host must renew annually.
• Primary Residence Definition: It must be the host’s primary residence and occupied by the host at least 275 nights per year.
• Rental Limits: Unhosted rentals (where the host is not present) are limited to a maximum of 90 nights per year.
• Quarterly Reporting: Hosts are required to submit quarterly reports detailing their STR activity to the OSTR. This requirement instructs hosts to report on all short-term stays that have occurred during three months.
• Transient Occupancy Tax: Any host renting to guests for fewer than 30 days must charge a 14% Transient Occupancy Tax on the total rental amount received.
• Insurance Compliance: Hosts are required to maintain liability insurance and ensure their property complies with building codes.

Common Themes Across Cities

Across these three major cities, several common themes emerge:

• Primary Residence Requirement: Many cities mandate that only primary residences can be used for short-term rentals to prevent the depletion of housing stock.
• Registration and Permitting: Hosts are often required to register their properties with the city and obtain permits or certificates to operate legally.
• Occupancy and Rental Duration: Cities frequently limit the number of guests and the number of nights a guest can rent a property to balance tourism with residential needs and to ensure housing availability for long-term residents.
• Insurance Requirements: Hosts may need to carry liability insurance to protect against potential risks associated with short-term rentals.
• Safety and Compliance Standards: Ensuring properties meet safety and building codes is a common requirement to protect guests and maintain community standards.

Reasons Behind These Regulations

The variation in short-term rental (STR) regulations across cities arises from unique local challenges and priorities, particularly regarding housing affordability, neighborhood preservation, and health and safety oversight. High-demand cities and markets like San Francisco and New York City have strict rules to protect affordable housing and prevent displacement, as converting residential units into short-term rentals exacerbates housing shortages. Additionally, communities focus on maintaining their character and minimizing disturbances, leading to guest numbers and rental frequency restrictions. The complexity of ensuring cleanliness and safety in STRs further motivates cities to adopt stringent regulations that facilitate better monitoring and control, as the lack of ability to regulate and control the cleanliness of STRs raises concerns about public health and sanitation standards.

Implications for Property Managers and Guests

Understanding and adhering to local regulations in various cities is essential for property managers and guests in the short-term rental (STR) market to avoid fines and legal complications. Compliance involves staying updated on requirements such as registration processes, occupancy limits, and safety standards. Many cities, including Los Angeles, San Francisco, and Portland, have implemented strict measures to ensure that STRs operate legally, with platforms like Portland’s online permit application system helping to remove unpermitted listings. New Orleans also enforces regulations requiring property owners to live on-site and restrict rentals to one per block. Guests can enjoy peace of mind and contribute to a balanced economic and community environment by booking with compliant hosts.

InnStyle’s Input

Those at InnStyle are always happy to answer questions. Spring is just around the corner, and InnStyle is delighted to help furbish the rental market. Staff are always available to answer your questions, so please call InnStyle and speak to one of their account managers. InnStyle can be reached at 267-354-6020. Their website is https://www.innstyle.com/.