Law passes making Airbnb legal in San Francisco

Landlords have to pay hotel taxes, and can only rent out spaces for 90 days a year

Financial trends and news by Steven Loeb
October 8, 2014
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San Francisco, and the entire Bay Area in general, has a major crisis going on when it comes to affordable housing. With the rise of the tech scene, property values have skyrocketed, and so has rent. San Francisco is the fifth most expensive place to live in the entire United States, with an average rent of $2,925 a month. It's really hard for someone not making a big salary to live here. 

That is why the prospect of Airbnb being made legal in the city has caused some amount of controversy, with the fear being that it could open the floodgates for landlords to take properties off the market, and make the housing situation even more severe than it already is.

The so-called "Airbnb law" was passed by The San Francisco Board of Supervisors on Tuesday, clearing the way for the company to legally operate, but it at least contained some caveats that will stop landlords from possibly indulging in some of the worst practices.

The measure, which was passed by a vote of 7-4, reversed a law that had previously barred residential rentals of less than 30 days, something had been put in place to protect renters from landlords kicking them out. That law had made the company, which is based in San Francisco, technically illegal in its home city.

While the new law did make rentals of less than 30 days legal in San Francisco, it also subjects landlords to new restrictions and taxes. 

Not only do hosts have to register with the city, but they also have to pay hotel taxes. Each listing has to carry $500,000 in liability insurance, and they have to pay a fee toward the Planning Department so that they can send inspectors to make sure the guidelines are being followed. 

The most important new rule, though: rentals are limited to only 90 days out the year, meaning landlords cannot turn their rental properties into de facto hotels. The new law takes effect in February 2015.

"The legislation that moved forward tonight will give regular people the right to share the home in which they live and make it fair to share in San Francisco," Airbnb said in a statement. "This vote was a great victory for San Franciscans who want to share their home and the city they love. We look forward to working with everyone as we move forward."

Airbnb has been a major disruptor to the hotel business and therefore, has come under attack in numerous cities, including New York, where the Attorney General subpoenaed Airbnb last year over illegal listings. A judge threw out that subpoena in May, but the fight is hard from over.

Since its founding in 2008, Airbnb has served more than 11 million total guests. In now operates in over 34,000 cities in 192 countries and has over 600,000 listings around the world.

Despite the previous laws Airbnb was already operating in San Francisco, with roughly 5,000 listings.

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