Illegal Short-Term Rentals Can be Nightmare for Neighbors | NBC Bay Area
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Illegal Short-Term Rentals Can be Nightmare for Neighbors

San Francisco officials say short-term rental platforms such as Airbnb are not doing enough to enforce the rules

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    NEWSLETTERS

    When Kuno and Jessica Copeland’s neighbor moved out of their quiet San Francisco neighborhood, they had no idea their life was about to be turned completely upside down. (Published Monday, May 23, 2016)

    When Kuno and Jessica Copeland’s neighbor moved out of their quiet San Francisco neighborhood, they had no idea their life was about to be turned completely upside down.

    Within the first week, they noticed crowds of people coming and going from the house next door, sometimes hanging out on the sidewalk drinking and smoking. They said strangers carrying luggage, shuttled in by a constant stream of Uber cars, would mistakenly ring their doorbell late at night.

    Then they noticed the lock on their neighbor’s door had been replaced with an electronic key pad.

    “I think after the first couple of days when about 15 to 20 people showed up, we put the pieces together and realized this isn’t a tenant situation, this is an Airbnb situation,” Kuno Copeland said.

    The Copeland’s suspicions were confirmed when they found a listing on Airbnb advertising the home as a crash pad for travelers. Overnight, the 930 square foot home next door had been turned into a hostel where guests could stay for $33 a night. Even the garage was being rented out.

    The situation was unnerving, Copeland said, especially since they had a newborn baby at home.

    Listings and reviews posted on Airbnb say the small three bedroom house could accommodate up to 20 guests and showed photos of bunk beds stacked side by side. “There are only two bathrooms for about 20 people at max capacity and has a high turnover rate,” one guest wrote in a review.

    “30 bucks a night and they pack ‘em in tight,” Copeland said. “I can’t believe that many people would be in a room this small.”

    An NBC Bay Area investigation into the illegal use of short-term rental platforms found dozens of other ads for hostel-like accommodations on websites such as Airbnb, VRBO and Craigslist. Many appeared to be in violation of the city’s short-term rental laws, which state homeowners and tenants are only permitted to rent out their primary residence and only for a maximum of 90 days a year unless the homeowner or tenant is also present. In addition, each host must register their short-term rental with the city’s Office of Short-Term Rentals.

    The laws are designed to prevent homeowners from turning rental properties into unlicensed hotels or hostels. While some of the advertised units reviewed by NBC Bay Area were properly registered with the city, many had the telltale signs of an illegal hotel: no registration, beds crammed into as many rooms as possible, and no signs of a permanent resident.

    NBC Bay Area went undercover to a short-term rental to see what a potentially illegal hotel looked like on the inside. Our crew rented a bunk bed at a 9th Avenue apartment for $42 a night. Inside, they found 14 beds packed into a three bedroom apartment and no signs it was someone’s primary home. At full occupancy, the owner could potentially make more than $17,000 a month listing the three bedroom apartment as a short-term rental.

    Critics say the rise in these illegal hotels and hostels is exacerbating San Francisco’s affordable housing crisis by taking rental units off the market. In many cases, landlords can make double or triple what they can charge a tenant in rent by advertising their home on a short-term rental platform instead.

    “What I’m particularly concerned about is the loss of affordable housing,” San Francisco Supervisor Aaron Peskin said. “Pennsylvania State University and the City’s own Budget and Legislative Analyst both estimate some 2,000 units of permanently affordable housing have been removed by unscrupulous players and turned into illegal twenty-four-seven, 365-days-a-year hotels.”

    Peskin said the City estimates more than 75% of all short term rental units are not legally registered with the City.

    But a top executive at Airbnb, the most popular home sharing platform on the market, said he’s skeptical the service is having a significant impact on the cost of housing in San Francisco. The company doesn’t deny that most listings are unregistered, but cites a survey of the Airbnb community that found 85% of users say they rent out their primary residence “to make ends meet,” which doesn’t impact the stock of available rental units.

    “The city’s objective of the law is to make sure you’re not taking long term rentals off the market, that you’re not running ‘illegal hotels,’” said Chris Lehane, Director of Global Affairs for Airbnb. “Any objective analysis of the Airbnb hosts and what our platform looks like makes it abundantly clear that this is overwhelmingly everyday people using the houses that they live in on an occasional basis. That’s what it is and that’s very consistent with the point of the law.”

    Lehane said Airbnb has been vigilant about removing listings from users who appear to have multiple listings. The company has taken down nearly 200 properties in 2016, he said.

    Yet some city officials say Airbnb and other short-term rental platforms aren’t doing enough to curb bad actors. The Office of Short-Term Rentals sent letters to the major players in the industry, including Airbnb, asking for more assistance enforcing the City’s laws. The letter asked the companies to identify hosts with multiple listings, require hosts to list their registration number, and deactivate listings that are not occupied by a permanent San Francisco resident. However, the agency said the platforms have done little to cooperate.

    Peskin and fellow supervisor David Campos co-authored legislation in April that would mandate platforms to help police their own sites. Without that cooperation, they say enforcement is nearly impossible. The legislation would make hosting platforms verify hosts are registered with the City before they could list their home on the website. Platforms could face penalties of up to $1,000 a day for any unregistered listings.

    “The hosting platforms have perfect access to all of this information,” Peskin said. “They know which individuals are renting out multiple units. They can block them from their website. They can share that information with the City so that we can return these thousands of units back to our rental market and help bring down rent in San Francisco.”

    Airbnb says all of those unregistered users are signs the City’s registration process is overly complicated and time consuming, not evidence of unscrupulous actors trying to cheat the system.

    “It’s incredibly complex,” Lehane said. “It makes going to the DMV the equivalent of a walk in the park. For the average person, it takes 30 days to do it.”

    Lehane said the complicated registration process makes it burdensome on users who depend on the platform to avoid evictions and foreclosures. He also questioned whether it was appropriate for a private sector company to act as an enforcement arm of the government.

    “Philosophically we don’t necessarily believe that we should be an enforcement agency,” Lehane said. “Can we work with the City if we have a simpler process to make sure the City has the tools and access it needs? Absolutely.”

    But Peskin and Campos call it corporate accountability, which they say short-term rental platforms are spending big bucks to avoid.

    “These are incredibly powerful players,” Peskin said. “When Supervisor Campos and I introduced legislation, the next day Airbnb made over a quarter of a million in political campaign contributions to individuals who will support their efforts and thwart our laws.”

    Airbnb disputes the timing. A spokesman said these records show the company filed contributions on April 22 to initiatives to support parks and healthcare reform. 

    But records from the SF Ethics committee show the contributions were recorded with its office April 25-28. Supervisor Peskin’s Office also confirmed Airbnb was aware of the proposal several days before it was officially introduced on April 27.

    On the periphery of the battle between San Francisco and short-term rental platforms are residents like the Copelands, who feel the impact when these illegal hotel opens up shop next door. They’re frustrated with both the City and the hosting platforms for not doing enough to enforce the law.

    “I think some of the bigger tech firms including Airbnb are lobbying the City and their leadership in a way that maybe doesn’t protect or serve the best interests of their constituents,” Kuno Copeland said. “One of the major issues is what happens when people are left behind.”

    Both the Copelands’ neighbor and the owner of the 9th Avenue apartment declined to comment for the story.

    Airbnb says they have suspended both listings while they investigate.

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    When Kuno and Jessica Copeland’s neighbor moved out of their quiet San Francisco neighborhood, they had no idea their life was about to be turned completely upside down. 

    Within the first week, they noticed crowds of people coming and going from the house next door, sometimes hanging out on the sidewalk drinking and smoking. They said strangers carrying luggage, shuttled in by a constant stream of Uber cars, would mistakenly ring their doorbell late at night.

    Then they noticed the lock on their neighbor’s door had been replaced with an electronic key pad. 

    “I think after the first couple of days when about 15 to 20 people showed up, we put the pieces together and realized this isn’t a tenant situation, this is an Airbnb situation,” Kuno Copeland said. 

    The Copeland’s suspicions were confirmed when they found a listing on Airbnb advertising the home as a crash pad for travelers. Overnight, the 930 square foot home next door had been turned into a hostel where guests could stay for $33 a night. Even the garage was being rented out.

    The situation was unnerving, Copeland said, especially since they had a newborn baby at home.

    Listings and reviews posted on Airbnb say the small three bedroom house could accommodate up to 20 guests and showed photos of bunk beds stacked side by side. “There are only two bathrooms for about 20 people at max capacity and has a high turnover rate,” one guest wrote in a review.

    “30 bucks a night and they pack ‘em in tight,” Copeland said. “I can’t believe that many people would be in a room this small.”

    An NBC Bay Area investigation into the illegal use of short-term rental platforms found dozens of other ads for hostel-like accommodations on websites such as Airbnb, VRBO and Craigslist. Many appeared to be in violation of the city’s short-term rental laws, which state homeowners and tenants are only permitted to rent out their primary residence and only for a maximum of 90 days a year unless the homeowner or tenant is also present. In addition, each host must register their short term rental with the city’s Office of Short Term Rentals.

    The laws are designed to prevent homeowners from turning rental properties into unlicensed hotels or hostels.  While some of the advertised units reviewed by NBC Bay Area were properly registered with the city, many had the telltale signs of an illegal hotel: no registration, beds crammed into as many rooms as possible, and no signs of a permanent resident.

    NBC Bay Area went undercover toa short-term rental to see what a potentially illegal hotel looked like on the inside. Our crew rented a bunk bed at a 9th Avenue apartment for $42 a night. Inside, they found 14 beds packed into a three bedroom apartment and no signs it was someone’s primary home. At full occupancy, the owner could potentially make more than $17,000 a month listing the three bedroom apartment as a short-term rental.

    Critics say the rise in these illegal hotels and hostels is exacerbating San Francisco’s affordable housing crisis by taking rental units off the market. In many cases, landlords can make double or triple what they can charge a tenant in rent by placing their home on a short-term rental platform instead.

    “What I’m particularly concerned about is the loss of affordable housing,” San Francisco Supervisor Aaron Peskin said. “Pennsylvania State University and the City’s own Budget and Legislative Analyst both estimate some 2,000 units of permanently affordable housing have been removed by unscrupulous players and turned into illegal twenty-four-seven, 365-days-a-year hotels.”

    Peskin said the City estimates more than 75% of all short term rental units are not legally registered with the City.

    But a top executive at Airbnb, the most popular home sharing platform on the market, said he’s skeptical the service is having a significant impact on the cost of housing in San Francisco. The company doesn’t deny that most listings are unregistered, but cites a survey of the Airbnb community that found 85% of users say they rentout their primary residence “to make ends meet,” which doesn’t impact the stock of available rental units.

    “The city’s objective of the law is to make sure you’re not taking long term rentals off the market, that you’re not running ‘illegal hotels,’” said Chris Lehane, Director of Global Affairs for Airbnb. “Any objective analysis of the Airbnb hosts and what our platform looks like makes it abundantly clear that this is overwhelmingly everyday people using the houses that they live in on an occasional basis. That’s what it is and that’s very consistent with the point of the law.”

    Lehane said Airbnb has been vigilant about removing listings from users who appear to have multiple listings. The company has taken down nearly 200 properties in 2016, he said.

    Yet some city officials say Airbnb and other short term rental platforms aren’t doing enough to curb bad actors. The Office of Short-Term Rentals sent letters (LINK TO LETTERS) to the major players in the industry, including Airbnb, asking for more assistance enforcing the City’s laws. The letter asked the companies to identify hosts with multiple listings, require hosts to list their registration number, and deactivate listings that are not occupied by a permanent San Francisco resident. However, the agency said the platforms have done little to cooperate.

    Peskin and fellow supervisor David Campos co-authored legislation in April that would mandate platforms to help police their own sites. Without that cooperation, they say enforcement is nearly impossible. The legislation would make hosting platforms verify hosts are registered with the City before they could list their home on the website. Platforms could face penalties of up to $1,000 a day for any unregistered listings.

    “The hosting platforms have perfect access to all of this information,” Peskin said. “They know which individuals are renting out multiple units. They can block them from their website. They can share that information with the City so that we can return these thousands of units back to our rental market and help bring down rent in San Francisco.”

    Airbnb says all of those unregistered users are signs the City’s registration process is overly complicated and time consuming, not evidence of unscrupulous actors trying to cheat the system.

    “It’s incredibly complex,” Lehane said. “It makes going to the DMV the equivalent of a walk in the park. For the average person, it takes 30 days to do it.”

    Lehane said the complicated registration process makes it burdensome on users who depend on the platform to avoid evictions and foreclosures. He also questioned whether it was appropriate for a private sector company to act as an enforcement arm of the government.

    “Philosophically we don’t necessarily believe that we should be an enforcement agency,” Lehane said. “Can we work with the City if we have a simpler process to make sure the City has the tools and access it needs? Absolutely.”

    But Peskin and Campos call it corporate accountability, which they say short-term rental platforms are spending big bucks to avoid.

    “These are incredibly powerful players,” Peskin said. “When Supervisor Campos and I introduced legislation, the next day Airbnb made over a quarter of a million in political campaign contributions to individuals who will support their efforts and thwart our laws.”

    On the periphery of the battle between San Francisco and short-term rental platforms are residents like the Copelands, who feel the impact when these illegal hotel opens up shop next door. They’re frustrated with both the City and the hosting platforms for not doing enough to enforce the law.

    “I think some of the bigger tech firms including Airbnb are lobbying the City and their leadership in a way that maybe doesn’t protect or serve the best interests of their constituents,” Kuno Copeland said. “One of the major issues is what happens when people are left behind.”

    Both the Copelands’ neighbor and the owner of the 9th Avenue apartment declined to comment for the story.

    Airbnb says they have suspended both listings while they investigate.

     

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