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Vacation Rentals Regulated

by Robert Bialkin

‘Vacation Rental’ is a term used for a residential property that is leased short-term, usually by the day or week to a tourist or visitor. Like a hotel, the visitor usually books their stay through a website such as VRBO or Airbnb, which takes a fee from the owner for listing the rental and handling the payments. But unlike a hotel, some owners may not properly charge tourist taxes, carry insurance, or comply with local regulations. Most probably do. 

I first noticed the effect of vacation rentals in the Russian River area, where home values started steadily increasing as a result of this sharing economy. Those little 2 bedroom 1 bath homes that could only be rented for $1,100 per month because of their distance from Santa Rosa could now fetch up to $5,000 per month if properly marketed and booked up because of their close proximity to the vacation area.

San Francisco experienced this same phenomenon on a much larger scale. The City quickly put regulations in place to protect local long-term renters who saw available housing disappear. The option for landlords to choose vacation rental income also pushed regular rents higher to make up for this opportunity cost. San Francisco now has limits on the number of days out of the year a person can rent their home to short-term visitors. They also created a registry so owners could comply with the new regulations such as insurance minimums and charging hotel taxes.

Senator Mike McGuire recently introduced SB - 593, a bill that according to his website aims to reinforce local ordinances by requiring vacation rental companies such as VRBO and Airbnb to disclose to Cities and Counties the same information required by hotels to ensure owners are complying with local regulations and charging tourist taxes. That includes the address of the rental, number of nights rented, and amount paid by the visitor. Citing privacy concerns, opponents are pushing for a change in the bill requiring the disclosed information to remain confidential. The bill has much support, and is headed to the Senate floor. 

Robert Bialkin is an attorney (CalBar 265854) and REALTOR® (CalBRE 01958883) and broker associate with W Real Estate (CalBRE 01795950). He welcomes your real estate questions.