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Saturday, March 2, 2024

Guesthouses and boarding houses to be affected by stricter regulations

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As the city of Los Angeles tightens regulations on short-term accommodations and rentals, Korean American-owned guesthouses and boarding houses are likely to be affected.

On November 28, the Los Angeles City Council passed a draft ordinance requiring short-term rental operators and businesses such as Airbnb, motels, and guesthouses to obtain a police permit.

While there are no specifics on how the ordinance will be implemented, based on police permit requirements in other industries, it is likely that short-term rental operators will be restricted from obtaining a permit if they have a criminal record, or if there are frequent crime reports at their address.

The problem is that getting a police permit typically involves a criminal background check and an upfront cost of several hundred dollars, which industry insiders say can put pressure on operators because they are more easily monitored by police.

“For Korean American-owned short-term accommodations, whose guests are mainly travelers, interns, and students, drugs, alcohol parties, and other criminal activities are rarely a concern,” said Sooik Kim, owner of LA Gagopa Guest House. “If the city asks for a permit, I’ll get it, but I’m thinking, ‘Why?’ On the other hand, the Los Angeles Housing Department hasn’t been checking for lodging permits since three years ago, so I don’t know if they’ll check for police permits,” he said, questioning the utility of the new ordinance.

“In LA, it’s not uncommon for people to run short-term rentals by illegally converting their homes, and there are actually a lot of incidents and accidents,” said Steven Kim, owner of Pioneer Realty Group. “Korean guests often overlook it, but if guests of other ethnicities are aware of the regulations and call the police, it will be a big problem for unauthorized businesses if it’s confirmed that they don’t have a police permit.”

Industry experts say that “once the ordinance is fully enforced, if a police report is filed against an address, it could affect the operation of the accommodation,” so it’s important to be wary of complaints from neighbors about small issues such as noise.

“It’s a double-edged sword,” said Jason Kwak, a real estate agent at First Team Real Estate, adding, “(The police permit) will put a lot of pressure on operators. There is room for tax savings when filing taxes, but if you are found to be operating without a permit, you may face greater penalties, so there is a lot of risk,” he said.

He added, “The majority of people, especially in the hospitality industry, do not have permits. Based on the current trend, it is likely that short-term rentals will be further regulated in the future, so it is necessary to be careful.”

BY SUAH JANG, JUNHAN PARK [jang.suah@koreadaily.com]