The City Council adopted strict new laws on short-term rentals on May 31 that would allow homeowners to rent out spare bedrooms, but not their backyard cottages.
The new rules also make it clear that owners of multi-unit apartment buildings cannot rent their apartments for less than 14 days. Hundreds of these kinds of units are listed for rent on short-term rental sites like Airbnb, Home Away, FlipKey, Craig’s List, SabbaticalHomes.com and VRBO. Many believe that those kinds of rentals have contributed to the housing shortage.
“We’ve gone years letting large landlords take entire buildings and a sizable number of rental units off the market,” said City Councilman Kriss Worthington.… “We need to start enforcement on large landowners who are constantly breaking the law and raking in lots of money… We need to stop that as fast as we can.”
City officials are hoping that the new law gives it mechanisms to prosecute property owners who are illegally renting out units.
“The proposed ordinance defines a short-term rental, the approvals required to operate a short-term rental, where short-term rentals can be operated, and which city approvals are required to operate a short-term rental,” Matthai Chakko, a spokesman for the city, said in an email. “It also outlines a number of penalties. The new ordinance gives us well-defined tools. By having a clear path of regulation, there’s now a clear path for enforcement. For example, violators can now be pursued for not obtaining a zoning certificate, not obtaining a business license and not obtaining land use approval. Each of those can be subject to penalties.”
But other cities have passed laws regulating short-term rentals that property owners have blatantly disregarded, and a number of council members expressed concern that enforcement would be difficult.
San Francisco, for example, requires property owners to register their units. Yet only 1,647 property owners have done so out of an estimated 9,448 short-term rentals in the city, according to a report prepared by the budget and legislative analyst office of the Board of Supervisors. Since some property owners have more than one listing, the report estimated a non-compliance rate of 76.6% of owners. In addition, 57.4% of those listings were for un-hosted entire homes, even though the city passed a law in February 2015 severely limiting those kinds of rentals to 90 days, according to the report. At least 26% of those rental properties were rented out for more than 90 days in violation of the law, according to the report.
On Monday, a frustrated Board of Supervisors passed a law requiring sites like Airbnb to make sure that each rental has a valid San Francisco registration number. The hosting sites could face fines as high as $1,000 a day if they don’t comply. Airbnb has said it might take the matter to court.
The new Berkeley law also asks that hosting sites list the unit’s business license on the ad so that the legality of the unit can be more easily tracked. But Mayor Tom Bates pointed out that most hosting sites have ignored similar requirements made by other cities.
Airbnb sent out an email this morning to its Berkeley hosts telling them to email the City Council about the law. The company pointed out that city officials will take up the matter on a second reading on June 14 so there is still time to influence the shape of the ordinance.
“Last week, the Berkeley City Council voted in favor of a new ordinance that will make it complicated and difficult for people to share their homes on platforms like Airbnb,” according to the Airbnb email. “It will require our host community to go through a confusing and onerous registration process. And it will ban hosts from using extra space in their homes such as a garden apartment or in-law unit, denying many hosts the ability to make ends meet with extra room in their house.”
The email continues: “The good news is Berkeley has a chance to do it right the first time. The city council votes again on June 14. With so much at stake, our community needs to make sure our voices are heard and that we change this ordinance for the better.”
Berkeley has not yet issued any citations for illegal short-term rentals since the laws regulating them were not yet developed. This has frustrated the Berkeley Tenants Union, as well as a number of renters who have seen their apartment complexes turned into virtual hotels. In April 2015, the Rent Stabilization Board did a report that estimated that 400 rent-controlled units had been converted to short-term rentals.
Daniel Moore, whose plight Berkeleyside documented in May 2015, submitted information to code enforcement in August about his 12-unit rent-controlled building on College Avenue. The property’s owners, Jack L. and Margaret C. Phillips, are renting out numerous units throughout Berkeley, according to information gathered by the Berkeley Tenants Union. The city has not acted on Moore’s complaints and units in his building continue to be used as short-term rentals, he said in a recent letter to the City Council.
“The complaints we reviewed did not meet the threshold of proof required of a government agency,” said Chakko.
The new law will give Berkeley numerous avenues to address illegal short-term rentals, although the city has not yet decided if it will hire additional staff to investigate. The process will be complaint-driven, said Chakko. Property owners can be fined for not obtaining the proper licenses or for creating a nuisance, he said. Fines could range from $300 to $5,000.
The new law requires:
- Only homeowners living in a house or apartment can rent rooms out. “This has to be the primary residence of the person in order to use it for short-term rentals,” Carol Johnson, the acting planning department director, told the council. “You cannot be an absentee landlord accumulating numerous properties in the city of Berkeley and then be able to operate a de facto hotel.”
- If homeowners are at home, they can rent rooms for an unlimited number of nights.
- If homeowners are not physically present in the house, the maximum number of nights they can rent out rooms is 90.
- Tenant hosts must have written permission from the owners of their units that they have the right to rent out rooms.
- Accessory Dwelling Units, like backyard cottages, cannot be used as short-term rentals.
- Below market rate apartments cannot be used as short-term rentals.
- A property containing a ‘no-fault’ eviction (meaning the landlord decides not to renew a lease) cannot do a short-term rental for five years.
- All those renting out rooms must obtain two permits from Berkeley. They must get “land use approval via a Zoning Certificate” from the Planning Department, which generally costs around $180, according to Chakko. In addition, they need to get a business license, which costs around $77 for most properties, from the Finance Department. When renewing, property owners must pay a tax on their earnings, which is currently $10.81 per $1,000 of income, according to Chakko. (There are two competing ballot measures on the November ballot to increase this tax. One would increase the tax to $15.10 per $1,000 of income, the other would raise it to $28.80).
- The property owner must also pay a transient occupancy tax, which is 12% of the room rate, said Chakko.
- The host must pay an additional “enforcement fee.” The rate has not yet been determined but it will be a percentage of the rent.
- Only bedrooms can be rented out. Libraries, playrooms, living rooms, dining rooms cannot be used as short-term rentals.
Prior to June 2015, all rentals shorter than 14 days were illegal in Berkeley. That month, faced with an increase in the number of homes listed on hosting sites, the council established parameters for a new law and then asked the Planning Commission and Housing Advisory Council to weigh in. Those two commissions held public hearings about the issue and both submitted suggestions to the City Council. The Planning Commission staff forwarded those suggestions to the council, as well as its own recommendations, which would have allowed the rental of accessory dwelling units such as backyard cottages. The Rent Stabilization Board also made some suggestions about the proposed law.
The council voted 7-1, with Bates dissenting, to prohibit the use of ADUs for short-term rentals.
“I didn’t vote for adding ADUs thinking they would be hotel rooms,” said City Councilwoman Linda Maio.
The vote on the council to adopt the new law was unanimous.
Berkeley council approves short-term rental proposal (06.25.15)
Op-ed: Home sharing in Berkeley is a vital income source that serves entire community (06.05.15)
Rental rates skyrocket, causing headaches for students and those on middle incomes (05.28.15)
Short-term rentals are squeezing out Berkeley renters (05.25.15)
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