San Diego Short-Term Rentals Law – Impact of the ‘23 Regulations’

Paul Becker, founder of Blue Water Vacation Homes and member of the San Diego Short-Term Rental Alliance, discusses the impact of the San Diego short-term rentals law on hosts and managers, following the implementation of regulations in May 2023, especially in prime STR areas such as Mission Beach.

This post forms part of Superhog’s STR Regulations Roadmap Campaign, which shares the experiences and best practices of hosts and managers in navigating regulatory frameworks around the world. In this post, you will discover how the industry fights back and learn new insights and approaches to regulations relevant to STR markets globally.

For more details, watch the FULL interview with Paul Becker!

Short-term rental license San Diego – limitations

San Diego’s decision to limit short-term rentals to 1% of available housing stock has dramatically altered the local real estate scene.

“The city allowed short-term rentals to exist. However, they capped the number of short-term rentals at 1% of the available inventory in San Diego for whole-home short-term rentals,” says Paul.

This regulations have had a bigger impact in areas such as Mission Beach, which quickly reached its cap. This meant some longstanding operators had been locked out of licences, says Paul.

‘We accept we need some San Diego short term rental regulations’

“With the advent of Airbnb, there was a proliferation of short-term rentals in San Diego like everywhere else and the problem was a lack of enforcement of existing regulations, such as noise and other ordinances that we already had in place. Party houses and bad actors were giving us a bad name and there was a lot of pressure on the councils to do something.”

Paul believes the problems could have been solved with the enforcement of those existing regulations. Finally, the industry wanted some clarity and certainty, so after many negotiations with the council, they accepted the May 2023 regulations as proposed.

“The ordinance is not perfect. And it does affect property values in some areas. We also still don’t believe the enforcement mechanism exists to solve the problems we have with rentals in San Diego,” said Paul.

Airbnb rules San Diego – the non-transferable licence

The non-transferability of rental licenses, in particular, is an issue, impacting property values in Mission Beach, says Paul.

“If an owner who has been doing this for 10 years and who built up repeat guests and revenue streams, sells their home, their license is not transferable. The new owner can’t short-term rent. That means the value of that property is severely affected by the San Diego short term rental ordinance. And the property becomes a regular long-term rental but not many people want to live in Mission Beach long-term because it’s essentially a vacation and a college community.”

As a property management business, Blue Water Vacation Homes, also loses out when a home-owner who’d been on their books for 10 years sells their home. In the past the owner would recommend their services to the new owner. Now the company loses that inventory.

“It affects our ability to grow in the market,” says Paul. “Our strategy is to grow outside of San Diego. We’ve moved up the coast and I”m looking at other markets to ensure we don’t have all our eggs in one basket. But all these markets have a patchwork of regulations. So, this is something we’ll deal with regardless of where we go.”

Advocating for vacation rental property rights

Paul strongly advocates for property rights and emphasises the need for rational regulatory frameworks. “License transferability is really important,” he argues, highlighting the current system’s failures to protect homeowners’ interests and rights.

“We don’t feel there should be a cap on short-term rentals, as long as you’re following the rules. If you’ve registered, you’re paying taxes and a license fee and you’re a good neighbour, you should have the right to rent out your home short-term. The cap was introduced to appease our opponents and maybe the hotel lobby and for competition purposes. That goes against our property rights.”

Paul also doubts limiting the number of short-term rentals in upscale coastal communities solves housing problems in the area – an argument used by local councils – because the houses are not affordable for most.

He criticised the lack of clarity and efficiency surrounding the enforcement mechanisms of STR regulations in the area, which he considers still insufficient under the new regulations.

San Diego STR Alliance’s helps shape policy

The San Diego Short-Term Rental Alliance actively engages in dialogue with policymakers, aiming to refine and adjust the regulations.

“Like almost any industry that has lobbyists, we have to stand up and have our voices heard and be counted. There are people who would prefer, like in New York and other places, to see short-term rentals banned altogether. Hotels would love that. But if we’re not together and we’re not fighting, I see this becoming worse and worse.”

Learning from other markets

Paul advises everyone in the industry to learn lessons from what happened in other municipalities and cities, and to understand regulations are coming your way.

“Even If you already have regulations, you’ll worry about mission creep impacting your ability to operate.”

Communication between homeowners and management companies, sharing best practices and reaching out as a group to the few owners who give the industry a bad name, are important for all STR operators, says Paul.

Navigating San Diego short-term rentals law – the future

The challenges in San Diego mirror broader trends in vacation rental regulation, making this a critical time for stakeholders to actively influence policy. Paul’s insights provide a vivid depiction of the challenges and opportunities within San Diego’s rental market, offering valuable lessons for those navigating similar regulatory environments elsewhere.

San Diego short-term rentals law FAQs