Santa Monica Moves Decisively Against Short-Term Rentals
SANTA MONICA, CA – In a landmark decision aimed at reclaiming scarce housing units and addressing a deepening affordability crisis, the Santa Monica City Council on February 15, 2025, passed one of the nation’s most restrictive ordinances governing short-term rentals. The measure, approved by a decisive 6-1 vote, effectively bans most vacation rentals in residential zones unless the primary resident remains on-site during the guest’s stay.
The new law targets platforms like Airbnb and VRBO, prohibiting non-owner-occupied short-term rentals across all residential districts. This marks a significant escalation in the city’s efforts to regulate the burgeoning vacation rental market, which officials contend has significantly eroded the available long-term housing stock.
The Details of the Ordinance
The core of the newly enacted ordinance is the stringent requirement for owner occupancy. Under the ban, residents in single-family homes, duplexes, and multi-unit buildings can only rent out a portion of their property for short periods (typically defined as stays less than 30 days) if they are living on the premises concurrently with their guests. Renting out an entire unit or a separate, unattached dwelling unit on the property while the owner is away is now explicitly prohibited in all residential zones.
The ordinance includes provisions for enforcement, outlining potential penalties for violations, which could range from significant fines to legal action. City staff have been tasked with developing a robust enforcement mechanism to ensure compliance across the city’s residential neighborhoods.
Proponents Champion Housing Recovery
The push for the strict ban was championed by Mayor Emily Carter and a coalition of housing advocates and resident groups. Proponents argue the measure is a critical, necessary step to mitigate the negative impacts of the short-term rental industry on Santa Monica’s housing market.
Mayor Carter stated the policy is “absolutely critical” to her administration’s goal of converting an estimated 800 units currently operating as de facto hotel rooms back into long-term residential housing stock. These units, previously available to residents, have been increasingly utilized for lucrative short-term rentals, exacerbating the city’s severe housing shortage and driving up rental costs.
“Our priority must be housing our residents,” Mayor Carter said following the vote. “For too long, our residential neighborhoods have seen units removed from the long-term market, turning homes into businesses for visitors. This ordinance sends a clear message: housing is for people who live and work here, not for speculative investment in the tourism market when it removes essential housing.”
Advocates supporting the ban cited studies suggesting a direct correlation between the proliferation of short-term rentals and rising rents and declining housing availability in tourist destinations. They argued that while tourism is vital to Santa Monica’s economy, it should not come at the expense of residents’ ability to find and afford housing.
Industry Opposition and Economic Concerns
The decision was met with strong opposition from representatives of the tourism industry and property owners who utilize platforms like Airbnb and VRBO. The Santa Monica Hotel Association, a prominent voice against the ban, warned of significant negative economic consequences.
According to the association, the measure could reduce visitor lodging capacity in Santa Monica by as much as 15%. This reduction, they argue, is not easily absorbed by existing hotels, especially during peak tourist seasons, potentially leading to fewer visitors overall.
Tourism industry representatives also projected that the ban could cost the city millions of dollars annually in lost tourism revenue, including transient occupancy taxes (TOT), sales taxes, and spending at local businesses by visitors who might now choose to stay elsewhere.
A spokesperson for the Santa Monica Hotel Association expressed disappointment with the council’s decision, stating, “While we understand the city’s concerns about housing, this blanket ban goes too far. It unfairly impacts residents who rely on short-term rentals for income and cripples a significant portion of our city’s lodging capacity. We fear this will have a chilling effect on tourism and hurt local businesses that depend on visitor spending.”
Property owners who rent out units voiced concerns about losing supplemental income that helps cover mortgage payments and property taxes in an expensive city like Santa Monica. They argued that responsible short-term rentals can be managed without negatively impacting neighborhoods.
Broader Context and Future Implications
Santa Monica’s move places it among a growing number of cities globally that are implementing strict regulations on short-term rentals to address housing crises and neighborhood concerns. Cities like New York, San Francisco, and others have grappled with similar issues, implementing various levels of restrictions, though Santa Monica’s owner-occupancy requirement for all residential zones is among the most stringent enacted by a major U.S. city.
The implementation and enforcement of the new ordinance will be closely watched. The success of the ban in significantly increasing the long-term housing supply remains to be seen, as does its ultimate economic impact on the city’s vital tourism sector. Legal challenges from affected property owners or rental platforms are also potential developments in the wake of this decisive legislative action.
The ordinance is expected to take effect following final procedural steps, though the exact date for full enforcement is pending. The city council’s vote on February 15, 2025, signals a clear policy shift, prioritizing residential housing needs over the expansion of the non-owner-occupied short-term rental market within city limits.
