Investing in vacation rental properties in Santa Monica isn’t easy since the city adopted a strict home-sharing ordinance back in 2015. This prohibits anyone from operating vacation rentals. 

This law was enacted to clarify the city’s long-standing prohibition on vacation rentals and to allow residents to rent out a spare room in their house. The city divides short-term rentals into two types of properties: home-sharing properties and vacation rentals. 

Home-sharing is defined as the rental of 30 consecutive days or less of one or more bedrooms in the host’s primary home while the host lives on-site during the guest’s stay. The ordinance requires hosts to apply for a home-sharing permit before participating in any rental activity, as well as collect a Transient Occupancy Tax from guests. 

The city defines vacation rentals as “The rental of 30 consecutive days or less of a home, in whole or in part, for exclusive transient use. The visitor enjoys the exclusive private use of the unit.” As we mentioned, Santa Monica prohibits anyone from operating a vacation rental in the city.