Los Angeles landlords using Airbnb can make a year's income in 60 days, fuelling fears of housing crisis, says report

A new report from Inside Airbnb and the Los Angeles Alliance for a New Economy fuells fears that lucrative short-term lets are depriving the city of longer term lease, fuelling a housing crisis

Frazer Harrison/Getty

The Airbnb boom means some landlords in Los Angeles can make more money letting their homes for two months than they can with a traditional year-long lease, according to a new report.

It is the latest example of the way in which peer-to-peer services are disrupting longstanding commercial models and comes in a city which is trying to cap the use of Airbnb for fear short-term lets are contributing to a housing crisis.

According to a data analysis by Inside Airbnb and the Los Angeles Alliance for a New Economy (LAANE), a landlord can earn the equivalent of a full-year’s rent in an average 83 days of renting through the peer-to-peer rental site. In some parts of Los Angeles, it takes as little as 60 days.

The data comes as major cities in the US, such as New York and San Francisco, struggle with how to regulate peer-to-peer rentals companies. Many of the fines and regulations that prohibit commercial use of the platform are difficult to enforce.

Housing advocates say that the rampant commercial usage of Airbnb takes vacant rentals off the housing market, driving up the rent of available housing, and displaces lower-income residents in the process.

Currently, the Los Angeles City Council is working on legislation to cap Airbnb rentals in at 180 days per year – about six months – which critics say incentivises landlords to rent on a short-term basis instead of providing yearlong leases.

“For the overwhelming majority of neighbourhoods across LA, a 90-day cap offers a weak incentive for landlords to rent out their units on Airbnb,” said LAANE Research & Policy analyst Roy Samaan. “However, the currently-proposed 180-day limit offers a substantial financial incentive to rent out units on Airbnb instead of long-term tenants.”

Neighbourhood activists and housing advocates have pushed for stricter regulations of the platform and a shorter cap on Airbnb rentals. Allowing six-month rentals “essentially legalises hotels in residential neighbourhoods,” co-founder of Keep Neighbourhoods First, Judith Goldman, told the Los Angeles Times after the city’s Planning Commission approved the 180-day cap proposal.

She added: “This will dramatically weaken the ordinance [to regulate short-term rentals] and provide little, if no, relief to residents all over the city.”

Murray Cox, founder of Inside Airbnb and co-author of the report, said that maintaining affordable housing in cities is the goal of much of the regulation in cities across the country.

“Based on my incentive analysis of existing Airbnbs 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,” Mr Cox said in the report.

“It’s vital that the City of Los Angeles adopts 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.”

A spokesperson for Airbnb disputed the study's findings and accused Inside Airbnb and LAANE of "cherry picking" data and using "exceptionally low" rent figures and inaccurate short-term rental costs to "draw misleading conclusions" about the company.

"According to our study, a landlord would need to rent a housing unit in Los Angeles more than 177 nights a year to make it financially beneficial to convert it from a long-term rental to a short-term rental," the spokesperson said. "In fact, 80 per cent of entire home listings are rented less than 90 nights per year."

In response, Mr Cox told The Independent that the Airbnb study only uses "'market' rent figures, and completely ignores the rents being paid by renters who already have a lease, which, as you can imagine, are significantly less than apartments coming onto, or back onto, the rental market."

In July, Airbnb reached an agreement with the Los Angeles City Council to handover hotel taxes to the city collected from its hosts. The agreement stops short of fully legalising rentals for less than 30 days at a time – the city is still working on the legislation, which includes the proposed 180-day cap.

City Councilmember Mike Bonin was pleased to see that Los Angeles will earn millions of dollars for the collected taxes from Airbnb but still called for “reasonable regulations”.

“We need to let our regulations dictate how much revenue we receive,” he said, “and not let potential revenue dictate what sort of regulations we craft.”