"Shareable housing" is causing apartments to vanish from SF's rental market — yet popular, profitable sites like Airbnb violate local laws
Annette Fajardo has made clients out of people like James. She started her business, SF Holiday Rentals, just after the first dot-com boom, when she began managing short-term rentals in the homes of her friends. When she had nine properties in her roster, the business became a full-time job.
Over the last decade, demand for her management services has increased so much that she says she's now "very picky about who she works with."
Fajardo currently manages more than 40 furnished units that guests can book on her own website, as well as Airbnb, Roomorama, VRBO, HomeAway, Trip Advisor, and Craigslist. Her clients are all owners offering full homes or apartments and all the units she manages have been permanently withdrawn from the long-term rental market.
Quite often, her guests stay for a month or longer. Some are international tourists, but the majority are new corporate transplants to San Francisco. The demand for units like hers keeps growing: She gets 100 inquiries on her properties each day, about half from Airbnb.
"There's always been corporate furnished rentals," Fajardo told us in the dining room of a Castro flat that she lists for $350 per night on Airbnb. "That market has always been there. It's just that there's so much more business now. We got Google, Apple — you've got the busses running here all the time. I get Google people all the time and they spend big bucks."
And she's been through it all — battles with the tax collector in three municipalities, catastrophic fires in two properties, fraudulent guests, drunk guests, pornographers, and, worst of all, meddlesome neighbors.
"Your neighbors are a problem," Fajardo emphasized. "In the Castro, you have to do a 30 night minimum cause the neighbors fink on you." And when they do, the Planning Department can step in. They "send a letter stating the residential code and to cease and desist. If you don't stop less than 30 night rentals, then they can fine you."
COMPLEX LAWS, SIMPLE SITE
City tax and zoning laws ban apartment rentals of less than 30 days, labeling it "illegal hotelling." Dwellings in residential areas repurposed as tourist housing have, in the eyes of the Planning Department, essentially been commercialized without proper permitting or payment of the TOT.
Rentals for more than 30 days aren't regulated as commercial properties, but the tenants in those homes have rights under the 1979 rent ordinance, which protects any tenant who, according to Rent Board spokesperson Robert Collins, "pays rent and inhabits a unit for two days. You don't have to sign a lease to be a tenant — you just have to pay rent and occupy the unit."
This presents a number of challenges to both tenant- and owner-hosts. Tenants who gouge tourists on nightly rates are often in violation of a rent ordinance ban on "charging upon additional occupancy more than the rent that the tenant pays to the owner," explained Collins.
Tenants who rent out their apartment for a few days can even lose their rights to reclaim their homes. Collins cited multiple cases where subletters refused to leave and returning tenants had little legal recourse because "they would not have a just cause to evict the subtenant because, if they've rented the entire unit, they aren't themselves a resident in the unit."
Owners who offer their units on Airbnb assume the same risk of unwanted, long-term guests. But they hedge against it by charging exorbitant nightly, weekly, and even monthly rates. On the off chance that a guest does demand a lasting lease, Fajardo reasons, "if I'm getting $5,500 a month for a two-bedroom, you can stay for the next 10 years."