What's in a cap?

Many of our supporters have been trying to understand why the argument over a cap in the number of nights that someone can offer their home short-term is such an important item.

This week, Inside Airbnb’s Murray Cox released data showing that affordable housing will be lost if short-term rentals are permitted for as few as 60-days per year in some Los Angeles neighborhoods. Los Angeles Alliance for a New Economy (LAANE), analyzed the data and found that across all Los Angeles neighborhoods it takes an average of just 83 nights per year to earn more on Airbnb than can be earned in a whole year of renting to a long-term renter.

“Most people following the debate around regulating this industry don’t understand the impact that the cap on days per year has on the overall housing market in Los Angeles,”  say Roy Samaan, LAANE Research & Policy Analyst.  “For the overwhelming majority of neighborhoods across LA, a 90 day cap offers a weak incentive for landlords to rent out their units on Airbnb.  However, the currently-proposed 180 day limit offers a substantial financial incentive to rent out units on Airbnb instead of long-term tenants.”

Regulators all over the world are currently working on ways to control Airbnb and other short-term rental platforms. The issue of caps has been considered and implemented in a number of cities.  Many of these cities have found the caps impossible to measure and enforce, leading to complete bans on short-term-rental activities.

“Protecting affordable housing has been the goal of regulations in a number of cities,” said Murray Cox, founder of Inside Airbnb.  “Again and again regulations have failed. New York and San Francisco, as examples, have revised their ordinances because enforcement is impossible and compliance rates are low. Based on my incentive analysis of existing Airbnb’s operating illegally in Los Angeles, it’s clear that landlords will be economically motivated to turn more affordable apartments and homes into short-term rentals, It’s vital that the city adopt short-term rental ordinances that are both enforceable and truly protect affordable housing - and that means a complete ban on entire home rentals, or a low cap with data sharing and platform accountability.”

Data for a number of Los Angeles neighborhoods is attached below. On average in Los Angeles, it takes 83 nights per year to earn more on Airbnb than can be earned in a whole year of renting to a long-term renter.

Zip Code

Neighborhood

Council District

Number of Nights Needed to Earn More on Airbnb than Renting Long Term

90291

Venice

11

83

90028

Hollywood/Thai Town

13

86

90026

Silver Lake/Echo Park

13

79

90027

Griffith Park/Los Feliz

4 & 13

79

90029

Downtown Los Angeles

14

88

90063

Boyle Hts/City Terrace

14

84

90004

Koreatown

10 & 4

78

91602

North Hollywood/ Toluca Lake

2

68

90048

Beverly Grove

5

76

90731

San Pedro

15

91

91405

Van Nuys

6

80

90065

Cypress Park

1

86

91364

Woodland Hills

3

75

90008

Baldwin Hills/Crenshaw

10

84

90018

Jefferson Park

8

87

90011

South Los Angeles

9

79



Showing 1 reaction

Please check your e-mail for a link to activate your account.
  • commented 2017-05-09 14:58:28 -0700
    Here in Ventura, vacation rentals are typically rented weekly through the four months of high demand, and then monthly through the remaining eight months. A cap of anything more than 120 days wouldn’t affect profitability at all.

    The numbers shown above are apparently based on the units being vacant when it’s not occupied by tourists. If you were to assume that these places would be rented at monthly rates instead of being left vacant, renting to a transient guest just one night per year would be more profitable than renting to permanent residents.

    The bottom line is that capping the number of allowable tourists nights might affect profitability, but caps will never make it advantageous to rent to locals.

Donate Report Short term rentals in your neighborhood

connect

get updates