Downey Short Term Rental Regulation: A Guide For Airbnb Hosts

What are short term rental (Airbnb, VRBO) regulations in Downey, California?

As of now, Downey does not have specific regulations for short term rentals like Airbnb and VRBO in place. The city ordinances do not directly address these types of rentals12.

However, there is a ballot initiative, Measure D, that would expand Downey's existing 9% transient occupancy tax (TOT) to also apply to short term rentals5. If passed in November 2022, hosts would be required to collect and remit this tax.

While a short term rental license is not currently required in Downey, hosts would still need to follow some state level requirements around safety, taxes, and anti-discrimination laws4.

Zoning allowances would also need to be confirmed depending on property type and location4. For example, some neighborhoods may prohibit short term rentals or have restrictions around multi-family buildings.

Overall, Downey seems to take an open stance towards short term rentals given the lack of regulations. Hosts are currently operating listings without issues12. However, new policies could be adopted in the future if community concerns arise over these rentals.

Starting a Short Term Rental Business in Downey

Downey presents an interesting opportunity for those looking to start a short term rental business. As of now, the city does not have regulations specific to rentals on platforms like Airbnb and VRBO. This provides flexibility for hosts to operate without restrictive licensing or zoning hurdles.

However, the open regulatory environment may change in the future. There is currently a ballot initiative, Measure D, that proposes expanding Downey's existing 9% Transient Occupancy Tax (TOT) to also apply to short term rentals. If passed, hosts would need to collect and remit this tax from guests. While this would add a compliance requirement, the measure could also officially legitimize these rentals.

For hosts wanting to get started now, the process largely mirrors opening any type of small business. Key steps include:

• Researching locations, permit needs, and zoning allowances for different property types
• Preparing and furnishing the rental space to be comfortable, safe, and legally compliant
• Creating professional listings with high-quality photos to attract guest bookings
• Implementing smart pricing strategies, cancellation policies, house rules, and other best practices
• Managing reservations, payments, cleaning, maintenance, taxes, and communication

Additionally, hosts should consult a tax professional to understand state and local requirements. Insurance may also be necessary to protect against liability risks.

While the city itself does not regulate short term rentals yet, following general business compliance and hospitality industry standards is wise. This helps lay the groundwork should formal regulations emerge. It also leads to higher guest satisfaction and income potential regardless of what the future holds.

The openness in Downey allows entrepreneurial hosts to tap into short term rental demand without excessive red tape. But paying close attention to local policy changes and adapting accordingly will be key to sustainable success.

Short Term Rental Licensing Requirement in Downey

As of January 2024, the city of Downey does not have an official licensing or registration requirement for hosts seeking to operate short term rental properties. This means that unlike some highly-regulated cities, Downey hosts are not obligated to formally register units listed on platforms like Airbnb and VRBO with the local government before welcoming guests.

However, the lack of red tape makes Downey an attractive location for aspiring hosts looking to enter the market. Without burdensome paperwork, fees, inspections and more to comply with, it's faster and simpler to get started renting out a spare room, backyard cottage or investment property on a short term basis.

But it's still smart to do research beforehand. While the city itself does not currently mandate any permits or licenses for vacation rentals, hosts must abide by rules set at the state level around safety, taxes, anti-discrimination laws and insurance requirements. Checking on zoning allowances based on neighborhood and property type is also advised. Additionally, keeping up with any new local ordinances passed over time is recommended.

Required Documents for Downey Short Term Rentals

While the city of Downey does not require hosts to obtain a special license or permit to operate a short term rental property, hosts should still ensure they have the proper documentation in place for tax compliance, guest safety, and smooth operations.

Rental Agreements

Having a thorough rental or lease agreement for all guests to review and sign is highly recommended. This agreement should clearly outline rental terms and conditions, cancellation and refund policies, checkout procedures, and rules of the property. Setting clear expectations upfront can help avoid disputes.

Tax Registration

Hosts are responsible for collecting and remitting Downey's 9% Transient Occupancy Tax (TOT) on all bookings under 30 days. Registration for TOT collection and reporting may be required even without a permit. Keep detailed records of taxes collected and paid.

Insurance Considerations

Check that your homeowners or rental insurance policy allows for short term rentals. Supplemental coverage like host protection insurance can cover damages beyond regular policy limits.

Safety and Inspection Compliance

While the city does not inspect short term rentals, ensure all fire, carbon monoxide, and other safety measures are in working order. Perform a self-inspection using a rental property checklist.

Zoning Research

Not all neighborhoods allow short term rentals. Check Downey's zoning code for any restrictions based on property type or location. Confirm you can legally operate the rental.

Downey Short Term Rental Taxes

As a short term rental host in Downey, having a solid grasp of the transient occupancy tax (TOT) requirements is essential to remain compliant.

The TOT rate in Downey is currently 9%. This applies to all short term rental stays under 30 consecutive days, and is paid by guests on top of the rental fees. As the host, you must collect this 9% TOT from guests and remit it to the city on a quarterly basis1.

However, Downey residents voted in November 2022 to increase the TOT rate from 9% to 13% through Measure D, which is expected to take effect in early 20231. This would raise approximately $950,000 more in annual TOT revenue.As an STR host, you will be responsible for collecting and paying whichever TOT rate is current.

Carefully track TOT owed in a separate account, pay on time each quarter, and stay updated on any changes to stay compliant. Remit TOT payments and forms to the Downey Finance Department.

California Wide Short Term Rental Rules

While cities and counties in California may have their own local short term rental ordinances, there are also some statewide regulations that as a host you need to follow regardless of location. I want to clearly lay out these rules so you can ensure your rental property remains fully compliant.

Collecting and remitting state occupancy taxes is mandatory for all STR hosts under CA state law. You must charge guests a 12% occupancy tax rate on all bookings under 30 days. This includes reservations made through platforms like Airbnb or VRBO. As the host, you are liable for paying these taxes quarterly to the California Department of Tax and Fee Administration.

California has strict anti-discrimination laws that apply to short term rental hosts. You cannot refuse a guest based on protected characteristics like race, religion, nationality, disability status, and others. Make sure your rental policies and pricing do not discriminate.There are also safety and insurance requirements for STRs mandated by the state. For example, you must have smoke detectors, carbon monoxide alarms, fire extinguishers, and evacuation routes. Your home insurance policy may need to cover short term rentals specifically.

Does Downey Strictly Enforce STR Rules?

As it stands today, Downey does not have official short term rental regulations on the books. This means there are currently no specific rules for hosts to violate or the city to enforce. However, the lack of clear guidelines creates ambiguity for hosts looking to operate legally.

While short term rental listings seem prevalent, the city could eventually pass ordinances to exercise more control over these rentals. For example, requiring registration, licensing, taxes, zoning allowances, or banning them altogether.

If regulations are adopted, it is likely Downey would ramp up enforcement through fines, fees, suspensions, or other penalties. Though it is unclear how aggressive they would be. Nearby cities like Santa Ana have tried issuing cease and desist letters to hosts, showing a strict approach.

Overall, Downey's current stance seems neutral to positive towards short term rentals. The city is not actively cracking down, though also provides no clear protections or allowances. As a host, proceeding with caution and checking for any new rules is advised in case the tide shifts towards stricter enforcement. Staying informed on city council meetings and planning commission decisions can provide insight into future policy direction.

How to Start a Short Term Rental Business in Downey

As an entrepreneur and prospective host looking to start a short term rental business in Downey, having an actionable game plan is key to getting up and running successfully. Here is a straightforward 7 step process:

Research the market. Study rental demand in different Downey neighborhoods. Analyze competitors and average occupancy rates/nightly prices to estimate potential revenues.

Secure financing. Calculate upfront and operating costs for things like property purchase/rent, renovations, furnishings, cleaning, taxes, and management software. Get funding lined up through savings, loans, investors, etc.

Find the right property. Look for a condo, apartment or single-family home that allows short term rentals. Ensure correct zoning for transient guests.

Prepare the space. Outfit your rental for comfort, safety and appeal. Stock with amenities guests expect. Create house rules and emergency protocols.

Build your listing. Craft a compelling listing with professional photos and detailed description to highlight the property's best features.

Manage bookings and marketing. Use Airbnb, Vrbo and other platforms to advertise vacancies and screen guests. Optimize pricing strategies.

Deliver 5-star hospitality. Greet guests, oversee check-ins/outs, handle issues promptly, collect payments, clean thoroughly between visitors.

With the right property, hosting skills and commitment to customer service, your Downey short term rental can provide a lucrative income stream. Staying organized and following this blueprint will lead to airbnb success.

Who to Contact About Short Term Rental Regulations and Zoning

To learn about any updates to short term rental rules and confirm zoning allowances, contact:Downey Planning Department
Phone: (562) 904-7154
Email: planning@downeyca.org

What Do Airbnb Hosts Think About Downey Regulations?

As an emerging market for short term rentals, Downey offers hosts relatively few restrictions compared to many cities in California. With no permit requirements, licensing rules, or regulations focused specifically on hosted homes or Airbnbs, hosts enjoy flexibility.

However, the lack of an official framework also leads some hosts to have questions and uncertainty. On forums like Reddit and BiggerPockets, conversations focus on topics like:

• Understanding when and if new regulations could be passed
• Interpreting zoning codes that were written before the rise of home sharing
• Paying transient occupancy taxes that apply to hotels to avoid audits
• Ensuring proper safety features and insurance for legal protection

While Downey hosts appreciate the Airbnb-friendly approach currently taken by the city, some express wanting more formal guidance to operate their businesses responsibly. Monitoring city council meetings and building relationships with local policymakers is recommended by experienced hosts.