If you’re considering purchasing an investment property to use for Vacation Rentals or Airbnb or you already own a short-term rental in San Diego County, you will want to pay close attention to San Diego counties sweeping short term rental reform scheduled to take affect in July of 2022.
What Exactly Are San Diego’s New Short Term Rental Regulations Going Into Affect In July of 2022?
The new legislation passed in April of 2021 is expected to decrease the number of short-term rentals in San Diego County by roughly 30%. The primary goals of the new short-term rental regulations are to…
1. Reduce the number of Full-Home rental units County wide.
2. Enforcement of fines for rule violations.
3. Require a minimum of 2-night stays for short-term rentals throughout San Diego County.
Many interest groups with diametrically opposing views have done their best to shape the San Diego County short-term rental regulations with “Save San Diego Neighborhoods” a concerned homeowners group arguing the legislation should ban short term rentals outright, and John Choi the Senior Public Policy Manager for AIRBNB arguing the new law goes to far.
The new law will limit Full-Home short term rental permits issued to approximately 1% of the total number of available housing units in San Diego County working out to around 5,400 units in total. A lottery system will be used to determine which short-term rental operators receive permits and City Councilmember Raul Campillo say the lottery will need to prioritize responsible rental host and penalize host with rule violations, fines, and complaints.
What Are The Exceptions To San Diego’s New Short Term Rental Regulations In 2022?
Exceptions to the new regulations include:
1. Homes that are rented for less than 20 days a year are exempt from the 1% permit cap.
2. Homes where the rental host lives on-site are exempt from the 1% permit cap.
3. Short-term rental permits for Mission Beach which has a long history of vacation rentals will be limited to 30% of the available housing units or roughly 1,100 short-term rentals in the beach area. The California Coastal Commission must approve the new rules before they take effect and has the authority to reject the rules outright.
What does the proposed fee structure look like under the new short term regulations?
1. $1000 per year for host renting their home 20 or more days per year.
2. $100 per year for host renting their home less than 20 days per year.
The revenue generated from the approximately 5,400 permits will equal $5.4 million dollars annually with the cost to regulate the program estimated at $4.3 million dollars. The short-term rental program will generate approximately $1.3 million dollars profit for San Diego County annually and approximately $2.4 million dollars profit in Mission Beach. However, the Office of the Independent Budget Analysis estimates less short-term rentals reduce the annual revenues from the city’s Transient Occupancy Tax or what’s referred to as the hotel tax, from $7.3 million to $4.4 million. That’s a loss of $2.9 million! Leaving the city with a $500,000 budget deficit.
What is the history of San Diego’s Short Term Rental Restriction Fight:
The attempt to regulate and ban San Diego’s short-term rentals began in earnest in 2015 when the grassroots organization Save San Diego’s Neighborhoods was formed and began lobbying the city council and mayor’s office for enforcement and restrictions on all short-term rentals.
In 2018 Expedia and Airbnb lobbied and successfully blocked a city council referendum preventing short-term rentals of second homes.
In February of 2021 the San Diego City Council was able to pass a compromised bill regulating short term rentals with a vote of 8 to 1.
While Save San Diego Neighborhoods was lobbying for a complete ban of all short-term rentals throughout San Diego arguing that the practice is already illegal under San Diego Municipal Codes 131.0112 and 131.0422, Airbnb and Expedia were lobbying for short-term rental permits for up to 1.25% of the available housing units. In the end the 1% rental restriction wasn’t what either side were hoping for out of the new legislation, however, City Council President Jennifer Campbell said she believes the regulations were “crafted what’s best for the city after considering many perspectives”
How to submit an application for a short-term rental permit in San Diego County:
According to the City Treasurer’s website If you rent your property or a portion of your property to a guest(s) on a short-term basis, you are subject to the San Diego Municipal Code requirements and must first obtain a Transient Occupancy Registration Certificate.
Applications for a Transient Occupancy Registration Certificate may be submitted:
- Online through the Transient Occupancy Registration System
- Via email by submission of a completed Application for Transient Occupancy Registration Certificate to the Office of the City Treasurer at: email@example.com
- By mailing a completed Application for Transient Occupancy Registration Certificate to:
Office of the City Treasurer
Attn: TOT/TMD Desk
PO Box 122289
San Diego, CA 92112-2289
Big Picture Takeaways from the 2022 San Diego County Short-Term Rental Ordinance:
- Makes a yearly assessment of the program’s effectiveness and fairness.
- Creates a Good Neighbor Policy to enforce strict guidelines, set up fines for violations, and a license revocation process.
- Requires the availability for a local contact to respond within one hour to disturbances at the home.
- Exempts all home-sharing room rentals when the owners occupy the home.
- Allows a 30% exception for the Mission Beach community for up to 1,100 licenses.
- Full home short-term rentals capped at 1% of the entire city’s housing units allowing approximately 5,400 licenses for the rest of San Diego.
- Only allows one short-term rental license per person.
In summary the new short-term rental regulations have left a lot of people unhappy on both sides of the issue, from homeowners, and the hotel industry, to Airbnb, Expedia, and local restaurants. The fight is far from over, and legal challenges to the new regulations are expected. The California Coastal Commission has requested more information on the new regulations and has until April of 2023 to certify the vacation rental rules. So, there will be more to follow and we will all need to pay close attention as this fight over San Diego’s vacation rental industry continues to play out.