Short-term rental abuse occurs when opportunistic commercial ventures use online platforms such as Airbnb, VRBO, and Homeaway run multi-million dollar short-term rental businesses (See report for NY and Los Angeles, Addendum to LA report). These commercial users game the "home sharing" system: they operate short-term rentals vacant of owners, solely occupied by transient renters. Here are short term rental abuse trends happening across Los Angeles right now:
1) Independent property management companies convert entire rent-controlled properties and other long-term housing into short-term rentals.
Rent controlled properties exist to provide affordable housing options for families of all income levels, and to enable the families that already live there to remain. To such families, they are a blessing; to commercial short-term rental operators, they are an enticing business opportunity. These companies offer landlords well over market value (at least 20% more than their asking price) for a rent-controlled property, then advertise that property as a short-term rental. Families who need the long-term affordable housing lose it, and residential neighborhoods lose those families.
Management companies also obtain "master leases" from apartment owners that give them permission to sublet apartments. These commercialized management entities then work around the thirty day legal minimum for rentals by offering thirty day leases and then prorating the rent to reflect a short-term stay.
2) Individuals convert affordable housing using Airbnb, VRBO, and other online platforms.
Individuals run the same sort of unethical business as the property management companies: they simply operate independently through sites like VRBO and Airbnb to turn affordable housing into a high-volume short-term rental business in a residential neighborhood.
3) Real estate companies market their units directly to commercial short-term rental operators who convert them into short-term rentals. These companies and individuals can and will pay more for a desirable property that they hope to convert. Historic and older properties under rent control are particularly vulnerable to this scheme.
4) Tenants are being harassed and intimidated by unscrupulous landlords who wish to convert their Rent-Stabilized properties into short-term rentals and de facto hotels. Buy-outs are used to coerce lower income and vulnerable tenants out of their homes.
Tenants in Rent Stabilized properties are being wrongfully evicted to make way for more lucrative short-term rentals.
By unfairly terminating long-term tenancies and dedicating rental units to short-term stays, landlords evade the city's rent-control regulations and unfairly cash in on higher nightly rates. Some tenants are speaking out and fighting back.
These are just a few examples of an international, law-evading attempt to abuse the spirit of short-term rentals. The real future of online short-term rental sites is not the individual homeowner who rents out a bedroom or even his/her entire home on occasion. It’s the professional developers and property managers with multiple rentals who grab up every available property and sell rooms every night of the week.