If you’ve lived in the San Diego area over the last 10 years, you know that Airbnb and other short-term rentals have been both good and bad for the area because, they’ve attracted thousands of visitors to SD, but the short-term rental market here has largely been unregulated.

Thankfully, the local short-term rental market is set to change as San Diego’s short-term rental law has finally been approved.

How will the new laws work? In this article, we will answer this question, and provide you with insight into how San Diego’s short-term rental law will affect the vacation rental market here in the years to come.

Fewer Short-Term and More Long-Term Rentals

Recent reports show that there are at least 12,300 short-term rentals in the City of San Diego; once the new rental laws are enforced that amount will drop to 5,400 short-term rentals or 1% of the city’s housing stock.

San Diego’s short-term rental law is going to target ‘whole home rentals’ that owners frequently list on websites like Airbnb, where it’s not uncommon for these rentals, especially if they are located along the coastal zone, to rent for an average of $306 per night.

In San Diego’s beach communities, neighborhoods like Mission Beach are going to be limiting short-term rentals to 1,100 rentals, or 30% of their housing stock.

San Diego Transient Occupancy Tax

As per the short-term rental ordinance, owners who rent out their houses as vacation rentals will be responsible for paying taxes on that income as well.

Currently, the tax rate in the City of San Diego is 10.50% of earnings, and taxes are expected to be remitted monthly, or no later than the final day of the next month.

Owners will also be responsible for applying for a business permit as well which will show that they are operating a vacation rental in the City of San Diego.

Permits Will Be Chosen Via Lottery System

Not all short-term rental owners in the area are excited about the changes because they will have to apply for the permits via the city’s vacation rental lottery process that’s expected to begin this fall for spring/summer 2023.

If the city receives more applications than licenses that are available, an application will be considered based on the city’s new ‘good actor’ system.

This means that they will be specifically looking at criteria like:

·      Has the owner paid their Transient Occupancy Tax?

·      Recent booking activity at the property – Must be able to show 90 days per calendar year.

·      The owner must have less than three ‘verifiable’ complaints.

The city is hopeful that its new priority weight system will help them screen and place the most qualified short-term rentals and promote safe and livable neighborhoods while reducing crime.

More Stability for Neighborhoods

Authored by Jennifer Campbell, a City Council Member for San Diego’s District 2, believes the law will bring stability to neighborhoods and eliminate “party houses” that websites like Airbnb and VRBO are infamous for promoting.

This new law will keep neighborhoods safe and livable by capping short-term rentals and finally create the robust enforcement arm needed to hold nuisance properties accountable.

– Jennifer Campbell, District 2, San Diego City Council

The permits that Landlords will be able to apply for are part of a tiered system that will allow them to apply for permits based on if they rent rooms in their home, or their whole home, for more than 20 days per year.

·      Part-time licenses will be available for owners who rent their homes for fewer than 20 days per year.

·      Home sharing licenses will also be available for owners who rent out rooms in their homes for less than 20 days per year.

The City of San Diego is just getting started with enforcing its short new term rental law so don’t expect major changes yet because now that it’s finally approved, the new law isn’t going to be enforced until 2023.

Contact Golden West Management

At GoldenWest Management we specialize in managing multifamily and single-family longer-term rentals in the SD area.

If you’re thinking about converting your rentals into long-term rental properties, we invite you to contact us to learn more about our property management services and how we can help you.

Contact us today by calling (866) 545-5303 or click here to connect with us online.