Short term rentals are more popular than ever, at least among vacationers and tourists.
It’s had a less-than-desirable impact on the Santa Rosa rental market, however, and it requires some investigation and analysis. Airbnbs and short term homes for rent can help owners earn a lot of money on a per-night basis. However, these vacation homes have hurt the existing inventory, made it more difficult (and expensive) for permanent Santa Rosa residents to find affordable and attractive housing, and even raised some public health concerned around wildfires, capacity, and neighborhood safety.
An ordinance went into effect limiting the number of short term vacation homes that are permitted in Santa Rosa.
We’re taking a closer look at the impact of Airbnbs on the Santa Rosa rental market and what that means to you, as a real estate investor. We’re also exploring the laws in Santa Rosa around these types of rentals, both the ordinance that went into effect in 2021, and the new limits that were placed on short term rentals in an emergency ordinance passed late last year.
Airbnbs in Santa Rosa: Positive Impacts
Tourism is a huge business in California, and it’s a big part of the local economy. Property owners have found that they can earn a lot of money renting out properties in the short term to people who are visiting the area and would prefer the space and privacy that a home has versus a hotel.
This has been lucrative for short term rental property owners. If you have a home for rent on a nightly basis, you can make more than $100 per night, and there’s a good chance your property will be occupied for a majority of the year.
On another positive note, the popularity of these short term rentals has driven up demand for all kinds of rental housing in Santa Rosa. Property owners are earning more in rent, whether they’re renting out their properties in Airbnb or as long term residential leases.
These properties can contribute to the job market in Santa Rosa as well. Cleaners are needed between every guest. Maintenance is often required, and the properties have to have furnishings and linens. When Santa Rosa can provide a great place for visitors to stay, those guests are more likely to spend money in the city.
Airbnbs in Santa Rosa: Negative Impacts
These short term rentals, unfortunately, can be disruptive to neighborhoods and communities. With new people constantly coming and going, it’s difficult to feel safe. There is also noise to deal with; Airbnb hosts can stipulate that parties and large gatherings are not allowed, but that doesn’t mean their guests are going to comply.
There also are serious and systemic effects on the Santa Rosa housing market that are difficult to ignore. Short-term rentals reduce the overall supply of homes in a market that’s already struggling to provide enough housing for residents who need it. The abundance of short term and vacation rentals have created some inflationary pressure, sending rental rates much higher.
Members of the Santa Rosa community are generally opposed to unregulated Airbnb properties, and a number of rules and restrictions have been put into place to maintain some kind of balance between economic benefits and dwindling quality of life. While banning short term rentals and Airbnbs outright hardly seems like an answer, the city is trying to meet the needs of its property owners and real estate investors as well as the people who live here year-round.
Santa Rosa Short Term Rentals: Laws Around Airbnbs
In 2022, Santa Rosa’s city council applied a limit to the number of short term rentals within the city at 198. This is the maximum number of non-hosted short term rentals that are allowed (non-hosted meaning that the owner does not live at the property, too). This was passed via emergency ordinance in a vote of 5-2. The council passed this measure even after implementing some regulations a year earlier, in response to concerns about the impact that vacation rental properties were having on housing inventory, wildfire issues, and neighborhood noise and disturbances. It also prohibits new permit applications from being approved until more permanent measures are decided upon.
The cap at 198 was added to the city’s existing regulations around short term rentals, which went into effect in 2021. This law provides for a number of regulations that many people in Santa Rosa would argue do not go far enough. Right now, owners of short term rental properties must:
- Obtain a short term rental permit that’s issued by the City of Santa Rosa. Without this permit, a property owner cannot offer, rent, or advertise a vacation rental. Permits have a fee of $1,200. They are valid for a period of one year, and they must be renewed annually. These short term rental permits are not transferable to other owners.
- A local contact must be identified as the person responsible for anything that goes on at the property or with the short term guests. Many short term rental property owners live out of the area, which is another source of contention for people who oppose the growing vacation rental industry in Santa Rosa. This law requires that the local point of contact be available by phone 24 hours a day and seven days a week when the property is being occupied. This person will be responsible for responding to complaints within half an hour. Issues must be resolved within 45 minutes of the complaint being made.
- Non-hosted short term rental properties are not permitted to be within 1,000 feet of another non-hosted short term rental. Property lines must be clearly marked. When one owner receives a short term rental permit on a street, the city officials will notify all neighbors within 600 feet of that property’s line that the short term rental exists and that others may not be approved within the 1,000-foot radius.
It’s also necessary for short-term rental properties and their owners to understand and comply with building and safety codes locally and statewide. They must follow all local rules regarding parking, occupancy, noise restrictions, fire safety, events, and evacuation notifications.
Taxes and Short Term Rentals in Santa Rosa
One of the benefits to short term rentals is tax revenue.
While the impact on the local housing market may have some residents vexed, there’s no doubt that short term rental properties contribute to the economy by collecting more taxes from owners and guests.
All Santa Rosa short term rental property owners are required to register with the city tax collector. Anyone renting out a property in the short term must get a transient occupancy tax (TOT) account number. Hosts are required to collect the tax from guests and pay it directly to the city.
Property owners must keep records of the amount of TOT they’ve paid for three years and share those numbers with the city upon request. Short term rental property owners are also required to pay Business Improvement Area (BIA) assessments.
This has been a source of some confusion for owners as well as tenants. Short term rental platforms such as Airbnb and Vrbo will collect lodging taxes on behalf of their hosts in other states and even in other California cities. However, they do not collect those taxes for owners in Santa Rosa. This leaves rental property owners responsible for collecting the tax and remaining in compliance with TOT.
The penalties for avoiding the requirements around short term rentals or breaking the law start at $500 for the first violation and go up to $2,000 with subsequent violations. Property owners may also face the revocation of their short-term rental permit if there’s a third violation within one year.
The Future of Short Term Rentals on the Santa Rosa Rental Market
What will happen next? It’s hard to know, but we can tell you that the laws are not likely to get any more lax. If anything, new restrictions will be put into place and the limit on short term rentals will be made permanent.
It’s also worth noting that Santa Rosa is not the only community struggling with the impact of these vacation rentals on their larger real estate market. New rules and fees and licensing requirements are showing up in a lot of different places. We are seeing a lot of moratoriums on new short term rental permits, limits being put in place, and strict requirements on how a property owner operates their Airbnb.
If you’re not sure what this means for you, talk to us. Whether you’re renting out a short term property in Santa Rosa or a long term lease, you want to be sure you understand what’s required of you legally. Making expensive legal mistakes is easier than you might imagine.
We’re helping investors and landlords across the entire spectrum of rental properties in Santa Rosa. If you need more information or have any questions, please contact us at Prestige Real Estate & Property Management. We manage homes in Sonoma County, including Santa Rosa, Windsor, Sebastopol, Petaluma, and Rohnert Park.
