Airbnb and HomeAway have agreed to dismiss their legal challenge of San Francisco’s new short-term rental law which restricts units that haven’t been registered with San Francisco’s Office of Short-Term Rentals from being listed on their sites and to provide a mechanism for easily verifying said registrations.

The requirements of the settlement include:

  • Residents looking to list a rental on Airbnb or HomeAway will have to input their city Office of Short-Term Rental registration number (or application pending status) to post a listing
  • Airbnb and HomeAway will be able to use a “pass-through registration” system on their sites that sends individuals’ registration application information directly to the Office of Short-Term Rentals for consideration, simplifying the process for hosts
  • Airbnb and HomeAway will provide the city’s Office of Short-Term Rentals with a monthly list of all San Francisco listings with sufficient information to allow the city to verify that the unit is in fact registered
  • Airbnb and HomeAway will cancel future stays and deactivate listings after receiving notice from the city of an invalid registration

While there are currently 2,100 registered short-term rental hosts in San Francisco, there are listings for over 8,000 units in San Francisco on Airbnb alone. And as we first reported earlier the year, complaints related to illegal Airbnb-ing in San Francisco doubled in 2016 and again in the first quarter of 2017.

The settlement, over which the U.S. District Court will retain jurisdiction, is contingent upon endorsement by San Francisco’s Board of Supervisors.

Assuming it’s endorsed, Airbnb and HomeAway will have 120 days to implement a control requiring all new hosts to be registered with the city before posting a rental to their sites.  A culling of unregistered hosts with existing listings will be phased in over several months “to ensure a smooth transition for both hosts and city enforcement staff,” with listings linked to suspected bad actors among the first ones required to come into compliance.  And within eight (8) months, all units listed on the sites will be required to either be registered or removed.

Comments from “Plugged-In” Readers

  1. Posted by Skeeter

    Does the City have a list of registered short-term rental hosts? I didn’t see one on the website of the Office of Short-Term Rentals.

  2. Posted by fogmachine

    Makes sense to me – do commerce, pay tax, don’t annoy the neighbors.

  3. Posted by Jake

    soon a few ~$100/hr programmeroids can quickly make work what a posse of ~$400/hr lawyeroids long contended was too onerous.

  4. Posted by anon

    “Airbnb and HomeAway will cancel future stays and deactivate listings after receiving notice from the city of an invalid registration”

    If (a big if) the city actually follow through with enforcement, this should dramatically reduce the numbers of airbnb hosts. And will result in a lot of pissed off airbnb guests whose reservations are canceled.

    • Posted by another anon

      I really don’t feel bad for anyone whose planned illegal activity is cancelled.

      • Posted by third anon

        When you plan a vacation anywhere outside of the Bay Area, do you do your due diligence and make sure that the place your staying at (be it a bed and breakfast, hotel, motel, etc.) has all of the necessary licenses and permits to operate as such? Are you aware of all of the *different* rules, city by city, state by state, and country by country that regulate these businesses? Or do you operate in good faith that these companies, moms-and-pops, etc. are in fact functioning within the laws set forth by their municipality?

  5. Posted by Adam

    Technology often outpaces the regulators, but they always catch up in the end. Just the latest chapter in an age-old story.

  6. Posted by Just My Opinion

    Private residences should not be allowed to be turned into lodging establishments where the owner is collecting revenue. Registered or not. I think it violates zoning and can/does change the entire nature of neighborhoods, and certainly multi-unit buildings. I know it helps some people make ends meet, but so do many other businesses that are not meant to be operated out of a residence.

    • Posted by that_dude

      glad you’re not the majority of people who believe other wise.

  7. Posted by DanRH

    Ok, so help me here but this does seem to improve the situation, no? Now, if a complaint comes in, it wouldn’t be difficult for SF to look at the data Airbnb/Homeaway provides to figure out if said complaint is valid. It’s all about that SF Reg#…true?

    I don’t see anything about policing the yearly cap…but if the data that Airbnb/Homeaway provides, it would seem to be easy to parse it out and see how many nights a particular Reg# has rented…and if it’s above the yearly cap or not.

    Like Jake said, probably some $100/hr programmers creating an appropriate program to suck in the data and parse it out, and you have a monthly view of every Reg #’s activity.

    • Posted by no_ vally

      Both Airbnb and VRBO/Homeaway/Expedia (all same parent) have perfect data regarding customer stays/nights because both now require property owners to turn over cash management/payments in order to be listed on the site. VRBO offered some degree of cover until last year b/c they functioned as more of a listing site…but when it became clear ABnB had the better business model (and valuation), they abandoned the old approach and fully embraced the “screw the property owners, abandon the subscription model, take a cut of the margins, control the customer, force everyone to conform to the new reality.”

      So both ABnB and VRBO have full and perfect information relating to rents paid, nights stayed, by whom, where, etc. Since ABnB has functioned under the same model (with perfect information on all aspects of customer stays) since inception, it’s mind boggling they were allowed to operate in the tax shadows as long as they did.

  8. Posted by Eddy

    Would be interesting to study the impact on Airbnb pricing and hotel pricing if airbnb supply is constrained. Hotels are always super expensive during peak nights here. I assume airbnb prices will go up as well during peak nights.

    • Posted by nopa_sf

      Of course they do. Just check the Dreamforce dates.

    • Posted by anon2

      “Hotels are always super expensive during peak nights here.”

      That’s actually a great win-win sweet spot for these home-sharing services. Extra room capacity during a few peak periods reduces “surge” pricing, but yet these peak periods are infrequent enough that you don’t have neighbors up in arms about an ad-hoc hotel next door. A little less so for business based peak periods given some corporate travel policies frown on these services.

  9. Posted by Sabbie

    I’ll bet we see a drop in SF rental rates 3-6 months after implementation.

    • Posted by Government Shrinkage

      I’ll take that bet.

      • Posted by ijustworkhere

        You’re on!
        (There will be a drop anyway because rental rates are falling)

  10. Posted by mimi

    I know many people who Air BnB their apartments without their landlords knowing. I wonder how they will be impacted. Will the building owners be informed if someone registers a property they own? Am really curious…

    • Posted by Carlson

      Landlords are informed today if a tenant attempts to register. If the landlord notifies the Office of Short-term Rentals that she objects, the registration is denied.

  11. Posted by SFRealist

    This is great news for hotel chains.

    • Posted by anon

      I suspect that is who was pulling the strings behind all this.

    • Posted by Sabbie

      While the hotel lobby (no pun intended) are definitely throwing big money at this issue, hotels are doing just fine even with the rise of Airbnb as you can see by these charts. And “hotel industry revenues across the U.S. reached $199 billion in 2016, an increase of nearly $9 billion over 2015. Net profits, also a record, stood at $76 billion, a 2 percent increase (per available room) compared with 2015.” It is interesting to note however that things have seemed to have leveled off sharply within SF the past year (seasonally adjusted) possibly due to the general tech slowdown.

      The real beneficiary is likely to be the beat down SF renter. If even 25% of the 6,000 scofflaw units are brought back to the long term rental market, that would represent an inventory increase of 33% based on the number of SF rental listings on Craigslist today. This coming at the same time as tens of thousands of new construction units.

      • Posted by BHG

        It would be crazy to put a unit on the market in SF. You lose control over your place.

        • Posted by Sabbie

          Only for certain properties. SFR and condos and post 1979 construction don’t have rent control, for example.

          But if you were counting on Airbnb income, or have become used to it, and now it gets taken away, you might have to go long term. You could try corporate rental but is there really enough demand out there?

          And I don’t feel sorry for those people, because they knew it was a grey area when they bought, and they also knew on some level they were hurting the local rental market, and they could easily have bought a non rent control property here or in another city, but instead they got a discount. And also, since 1979 there have been millions of people falling over each other to pay top dollar for SF rent control properties. So clearly the upside is very much intact, although some people will always want more.

          Edit: I was wrong about hotel activity dropping off, looks like the chart stops at November.

        • Posted by Rillion

          I’d love to rent out my condo but due to the HOA rules I cannot. Instead I will have to sell it when I move out of the city rather than rent it out, which might be in the next month.

  12. Posted by Josh

    Does anyone know how the short-term regulation impacts people who want to rent both for both short-term and over-30-day stays? I know the limit is 90 days per year for short term, but can you also rent to someone for a 2 or three month period in addition to those 90 short term days?

    • Posted by nopa_sf

      Regulations are tricky to say the least. They tell you that you cannot rent for shorter terms than 30 days unless you have a permit, but then deny you the permit on the basis of you renting for longer than 30 days – thus the place not being your primary residence.

  13. Posted by Lori

    This is a bummer for renters who want to have roommates short-term. I know people who have lived in their residences and had temporary roommates to bring in extra income for bills, trips, etc., without ever leaving their place unattended. It’s also going to affect business travelers who book at the last minute and can’t get a hotel reservation, and other people who need more than a hotel room but less than a long lease.

    • Posted by Jake

      It’s only a ‘bummer’ if they illegally have roommates short-term. This settlement will help protect the legal short-term rentals from competition from illegal rentals. Same for hotel owners and developers. It also will help protect the short-term renters from booking with an illegal host. And it should lessen SF’s costs to enforce the laws. A win, win, win, win, all around; except for those wanting to violate the related laws.

      • Posted by SFRealist

        Also a loss for visitors to SF

        • Posted by Jake

          How so? What would a visitor lose, other than a reduced likelihood of being booked illegally?

          • Posted by SFRealist

            It’s going to be much more expensive to stay here.

          • Posted by Jake

            another of your wholly unsubstantiated assertions. why do you even bother?

          • Posted by SFRealist

            This will reduce the supply. Is it unsubstantiated to point out that when supply is reduced, prices will rise?

          • Posted by Jake

            OK, how “much” will it reduce supply? How “much” will that increase price, if any?How “much” do you avoid how little substance and “much” exaggeration underlie your “It’s going to be much more expensive to stay here” claim?

          • Posted by SFRealist

            Hard to say exactly. But the numbers SS quoted above suggest that 5000 rooms might be removed from our marketplace. This site says there are 33,000 hotel rooms in San Francisco. That’s a decrease in supply of about 15%.

            I’d suggest that would have an effect on price. What numbers are you using?

          • Posted by Jake

            See my post below for a better cut at the data, and read the report at namelink. Many of the thousands of Airbnb listings rarely rent, unlike nearly all SF hotels. More than likely, a large portion of the listings that will get pulled are not doing much business anyway. Independent estimates of Airbnb paid rents in SF are ~90% of hotel average. Not clear at all from the data that Airbnb substantially reduces prices of hotel rooms in SF.

          • Posted by SFRealist

            If most Airbnb listings aren’t rented out anyway, then I guess Airbnb is a much smaller problem then we’ve been led to believe.

          • Posted by Jake

            well, that depends on who you believe and how sensitive you are to the manifold problems Airbnb et al create.

        • Posted by SFRealist

          Whatever problems Airbnb may cause, they’re surely much smaller in magnitude if there are 1000 rooms rented out per night than if there are 8000 rooms rented out per night.

          • Posted by Jake

            Depends on which of the whatever/many problems caused by Airbnb that you care about. Fewer reservations should mean less effective competition for hotels, but the more units taken off the long term rental market to be available for those shorter term Airbnb reservations the worse for renters in SF. Not that those would be residential renters in SF have any problems that could get the attention of the politicians or their law making. Got a prospective renter with a problem, get rid of the rental units, get rid of the problem.

          • Posted by SFRealist

            So are you arguing that SF politicians are trying to get rid of renters?

  14. Posted by Government Shrinkage

    Let’s be clear. The AirBnB thing will not make a dent in the rental prices. It’s simple logic: It has to do with the ratio of Airbnb units against the overall housing stock (8K/350K)

    It will undoubtedly make staying in SF more expensive. That is because the ratio of Airbnb units against the total number of hotel rooms is considerably higher (8K/33K)

    In other words, Airbnb has 10X the impact on hotel vacancy (and the dynamic pricing they employ) as it does on rental vacancy.

    • Posted by Jake

      You are not using very accurate ratios or data. There are ~230k rental housing units in SF, per US Census ACS 2015. FWIW, less than 10% of those get rented each year. A fairly high percentage of SF Airbnb listings are for whole units. In terms of existing SF housing stock removed from the long term rental market in the current boom/crisis, Airbnb could be a significant share, and the replacement costs and consequent impact on asking rents could be even more significant. Most likely a bigger impact than the ‘am keeping my rental unit vacant until the commies repeal rent control’ segment of existing SF housing.

      The ratio of Airbnb rentals to hotel rentals should be calculated based on occupancy, not rooms. Does Airbnb publish occupancy stats for SF? If they did would you trust them? Independent estimates vary, but the best I’ve seen put the average occupancy for SF Airbnb units in the 35-50% range. STR estimates Airbnb in SF has ~5% of the supply, but only ~3% of rentals and ~3% of revenue (pdf at namelink).

      Airbnb marketing/legal/pr/bs claims they substantially induce demand, the ‘would not have considered staying in SF, except for the wonderful place/price we found on Airbnb’ increase in demand. Part of the long glorious history of people flocking to SF to partake in our multitude of legal and illegal offerings. Hard to estimate, but probably diminishes the demand for hotel rooms in less desirable locales a bridge/bart stop away.

    • Posted by anon

      I’m guessing the impact won’t be so significant as people will just switch to alternatives to airbnb to skirt the law. There are several. I use airbnb a lot, but have also used onefinestay and wimdu. Not all list in SF, but that will change with the growing demand to sidestep airbnb. The city should go after all of them, but the reality is they can only chase so many, and you get away with things for years before the city even bothers to try.

    • Posted by Sabbie

      Bad logic. Housing stock is a poor baseline because most of it is illiquid. Look at the number of current apartment offerings, it’s about 4,500 on Craigslist. Then look at the number of unregistered Airbnb units, about 6,000. If even a fraction of those flip to long term rental, it would be a substantial percentage increase in supply.

      Given the mass migration of the middle class from SF, I’m much more concerned with rental rates than hotel rates, many of which are on the corporate dime anyways.

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