Beware of Short-Term Vacation Rentals

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Beware of Short-Term Vacation Rentals

Have you thought about renting out, or do you currently rent out, your home in Santa Barbara as a short-term vacation rental?  If so, you should know the rules applicable to such rentals in this County.

With the rise in popularity of vacation rental apps, like Airbnb, coupled with the rise in the cost of housing, the number of Santa Barbara homeowners seeking income from these rentals has risen exponentially in the past decade.  This increase did not go unnoticed by the various jurisdictions in our County and each one has reacted a little differently.  Some are still determining how to best approach this complex issue.

If you are renting out your home on a short-term basis –fewer than 30 consecutive days – then you need to be aware that: (1) short-term rental use is not permitted in every zone and often not allowed in residential zones, and (2) you are operating a business and your local jurisdiction expects you to pay it appropriate business license and Transient Occupancy Taxes (TOT).

For example, the City of Santa Barbara has not yet created new laws or policies regarding short-term rentals.  But, it has decided its current regulations equate short-term vacation rentals with hotels and, therefore, regulates them accordingly.  Thus, within City limits, short-term rentals are only allowed in commercial zones and prohibited in all residential zones, except one.  In the R-4 Zone, or Hotel/Motel/Multiple Residential Units Zone, a homeowner can apply for a conversion permit to allow a residence to be used for short-term rental purposes.  A conversion permit is not guaranteed, however, and depending on the size and number of residences one is seeking to convert, such a permit could require Planning Commission approval.

In addition, the City is seeking to recoup business license taxes and a 12% TOT tax.  Santa Barbara has actively subpoenaed records from various vacation rental websites and has increased its enforcement budget to attempt to recover these fees from all who may owe them.

The City of Goleta took a different approach.  It adopted an ordinance designed to regulate short-term vacation rentals, but has not prohibited them in residential zones.  If you operate a short-term rental, Goleta now requires you file for a Short-Term Vacation Rental Permit.  The application requires that the homeowner have (1) a nuisance response plan, (2) disclose the use to surrounding neighbors, (3) post a small surety bond, (4) register to pay TOT tax, and (5) obtain a business license.  The application takes a few weeks to process and Goleta requires an annual review of the permit.

The County of Santa Barbara is still in the process of finalizing its Short-Term Vacation Rental Ordinance. It is highly likely that the County will ban short-term vacation rentals in most residential zones, but may allow them in agricultural zones.  The County should be taking further action on these issues later this year.

Needless to say, operating a short-term vacation rental in our community is much more complicated and costly than merely registering your home on Airbnb.  Be aware of the local laws in your area and if you receive an enforcement order or notice of violation in the mail, it is best to contact an attorney before deciding how best to respond.

Olivia K. Marr, Attorney

OMarr@BFASLaw.com

(Direct) 805.966.7199

DISCLAIMER:  This Advisor is one of a series of business, real estate, employment, estate planning and tax bulletins prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution or use of this Advisor.

By |2016-05-10T16:50:18+00:00May 10th, 2016|News, The Advisor|Comments Off on Beware of Short-Term Vacation Rentals