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Redwood City Short Term Rental Regulation: A Guide For Airbnb Hosts

Redwood City, California

Starting a Short Term Rental Business in Redwood City

Redwood City adopted new regulations for short term rentals that went into effect on May 1, 2019. Short term rentals are generally defined as lodging or overnight stays lasting less than 30 consecutive days in a residential dwelling, most commonly offered through platforms like Airbnb, VRBO and HomeAway.

The new rules aim to allow homeowners to offer legal short-term rentals and enable the city to collect related fees and taxes, while preserving housing stock, limiting commercial activities in residential areas, and reducing negative impacts on neighborhoods. Key provisions include:

  • Short-term rentals are only allowed in primary residences where the owner lives full-time. Second homes or investment properties cannot be used as short-term rentals.
  • There is no limit on hosted rentals where the owner remains on-site during the guest's stay.
  • Unhosted rentals (where the host is not present) are limited to 120 days per calendar year.
  • Rentals cannot be used for events like weddings or corporate retreats.
  • Hosts must designate a local contact to respond to complaints when absent.
  • On-site parking must be provided for guests.
  • Accessory Dwelling Units (ADUs) cannot be used as short-term rentals.

Property owners needed to bring their short-term rentals into compliance with these regulations by the May 1, 2019 effective date. The city will review the ordinance in 2020, a year after it takes effect, for possible revisions.The short-term rental ordinance was adopted after a lengthy public outreach and engagement process that began in 2017. The city held community meetings, conducted surveys, and consulted with various stakeholder groups to gather input on the proposed regulations.

Key issues that emerged during the public feedback process included concerns about the impact of short-term rentals on housing availability and affordability, neighborhood character, parking, and noise. There were also differing views on how restrictive the regulations should be and whether short-term rentals should be allowed at all in residential areas.

The city attempted to strike a balance with the final ordinance by allowing short-term rentals in primary residences with certain limitations and operating requirements. The 120-day annual cap on unhosted rentals and ban on using ADUs as vacation rentals were seen as compromises to preserve long-term rental housing.

Short Term Rental Licensing Requirement in Redwood City

Under the new rules, short-term rental operators in Redwood City are required to register with the city, obtain a business license, and collect the city's 12% Transient Occupancy Tax (TOT) from guests.

The TOT collected from short-term rentals will be dedicated to Redwood City's Affordable Housing Fund to support programs and new housing units for low-income residents. The city estimates this could generate around $400,000 annually for affordable housing.

To register a short-term rental, hosts need to submit a Transient Guest House Application to the City Clerk's office by May 31st each year. The application requires proof of TOT registration with the city. Hosts also need to obtain a business license from the city for $50 per year.

Short-term rental permits must be renewed annually and are subject to review. The permit application fee is $250 per year. Permits are tied to the owner and property and are non-transferable.The city may deny a short-term rental permit application for several reasons, including:

  • The property is not the owner's primary residence
  • The rental would violate zoning, building, fire or health and safety codes
  • The owner has had a short-term rental permit revoked in the past year
  • There are any outstanding code violations or unpaid fines related to the property
  • Incomplete or inaccurate information on the application

If a permit is denied, the applicant can file an appeal with the Community Development Department within 10 days. The appeal will be heard by a designated hearing officer.

Required Documents for Redwood City Short Term Rentals

To apply for a short-term rental permit in Redwood City, hosts must submit the following to the City Clerk:

  • Transient Guest House Application
  • Proof of Transient Occupancy Tax (TOT) registration
  • Business license
  • Drawings showing the floor plan and parking locations
  • Designation of a local contact person to respond to complaints
  • $250 annual permit fee

The city also requires short-term rentals to carry a minimum of $1 million in liability insurance. Proof of insurance may need to be submitted with the permit application.

Once issued, the short-term rental permit must be prominently displayed inside the rental unit along with the following information:

  • The name and contact information of the local person designated to respond to complaints
  • The maximum number of overnight guests allowed (2 per bedroom plus 2, up to 10 total)
  • The maximum number of vehicles allowed and location of on-site parking
  • Trash collection schedule and guidelines
  • The city's noise ordinance and quiet hours (10pm to 8am)
  • Instructions on the 120-day unhosted rental cap and how to track and report rental nights

The city encourages hosts to also provide guests with a "good neighbor" guide that includes these details as well as other helpful information like emergency contact numbers, WiFi instructions, and local attractions and amenities.

Redwood City Short Term Rental Taxes

Redwood City levies a 12% Transient Occupancy Tax (TOT) on short-term rentals. Hosts are responsible for collecting this tax from guests and remitting it to the city on a monthly basis.

The tax is paid by the guest to the host at the time rent is paid. If rent is paid in installments, a proportionate share of the tax is paid with each installment. While Airbnb collects lodging taxes for hosts in some California cities, it does not currently have an agreement to do so in Redwood City, so hosts are responsible for this.

To enable tax collection, hosts need to register for a TOT certificate with the city. This involves submitting a Transient Occupancy Account Update Form and obtaining an account number. Hosts can then add the 12% TOT as a custom tax to their online listings.

Hosts are required to file TOT returns and remit taxes to the city on a monthly basis. This can be done online through the city's tax portal. Failure to collect and remit TOT can result in fines and penalties.

The 12% TOT applies to all rent charged to guests, including cleaning fees. However, refundable security deposits are not subject to the tax. Hosts need to keep accurate records of all short-term rental income and tax collected for at least 3 years.

In addition to TOT, short-term rental income is subject to federal and state income taxes. Hosts will need to report their rental income on their tax returns and may be able to deduct certain expenses like mortgage interest, property taxes, insurance, and maintenance costs.

Redwood City-wide Short Term Rental Rules

In addition to registering, obtaining permits, and paying taxes, short-term rental hosts in Redwood City must adhere to operating standards aimed at reducing impacts on neighborhoods and preserving housing stock. This includes:

  • Only allowing rentals in primary residences, not second homes or investment properties
  • Limiting unhosted rentals to 120 nights per year, with no limit on hosted stays
  • Prohibiting use of rentals for events like weddings or retreats
  • Providing adequate on-site parking for guests
  • Having a designated local contact person to field complaints
  • Not using Accessory Dwelling Units (ADUs) as short-term rentals
  • Complying with building codes, fire codes, health and safety standards
  • Posting the short-term rental permit, local contact, and good neighbor guidelines inside the unit
  • Maintaining liability insurance of at least $1 million
  • Keeping records of rental agreements and tax documents for 3 years
  • Reporting quarterly to the city on the number and length of stays

Failure to comply with these operating requirements can result in fines, citations, permit revocation and other enforcement actions by the city. Violations are subject to an initial fine of $250, followed by $500 for a second offense and $1000 for subsequent offenses.

The city has set up a 24/7 hotline for complaints about short-term rentals and will respond to issues within 1 hour. Hosts who repeatedly violate the ordinance or cause significant problems may have their permits revoked and be prohibited from operating short-term rentals for 1-2 years.

Does Redwood City strictly enforce STR rules?

Based on discussions among hosts on forums like Bigger Pockets and Reddit, Redwood City appears to be fairly strict in enforcing its short-term rental regulations compared to some other cities. The 120-day annual cap on unhosted rentals and prohibition on using ADUs as vacation rentals are seen as limiting factors by some hosts.

However, many continue to operate legally in Redwood City by obtaining the required permits and complying with the operating rules. The city seems to be taking a balanced approach of allowing short-term rentals with reasonable restrictions to mitigate potential negative community impacts.

The city has contracted with a third-party compliance monitoring firm to help enforce the short-term rental ordinance. The company will be responsible for identifying unpermitted rentals, monitoring hosting platforms, and assisting with enforcement.

City officials have stated they will focus on bringing illegal operators into compliance rather than immediately resorting to heavy fines and penalties. However, they will take enforcement action against hosts who repeatedly violate the rules or cause major issues.

While not the most lenient market, Redwood City is still considered viable for vacation rentals with the proper licensing and approach. Effective pricing, marketing, and property management can help hosts succeed within the regulations.

How to Start a Short Term Rental Business in Redwood City

Here are the key steps to legally start a short-term rental business in Redwood City:

  • Verify your property is eligible under the city's zoning and regulations (primary residence only, no ADUs)
  • Register for a Transient Occupancy Tax (TOT) certificate with the city
  • Obtain a business license from the city for $50 per year
  • Submit a Transient Guest House Application to the City Clerk by May 31st each year.
  • Obtain $1 million liability insurance policy
  • Ensure your rental is in compliance with all operating standards (120-day unhosted cap, parking, etc.)
  • Post the STR permit, local contact info, and good neighbor guidelines inside the rental
  • Create a listing on a platform like Airbnb or VRBO and add 12% TOT as a custom tax
  • Begin hosting guests, filing monthly TOT returns, and remitting taxes to the city
  • Keep accurate records of rental agreements, income, and taxes and report quarterly to the city

Prospective short-term rental operators should carefully review Redwood City's ordinance and regulations to ensure they can meet all requirements before proceeding. The city's website has information and resources to assist hosts with the registration and permitting process.

It's also a good idea for hosts to introduce themselves to immediate neighbors and provide contact information in case any issues arise. Being proactive, responsive and respectful of neighborhood concerns can help make the short-term rental experience positive for everyone involved.

Who to contact in Redwood City about Short Term Rental Regulations and Zoning?

For questions about short-term rental permits, TOT registration, and business licenses, hosts can contact the Redwood City Clerk's office:

For inquiries related to zoning, building codes, and the short-term rental ordinance, contact the Redwood City Community Development Department:

The Code Enforcement Division handles complaints and violations related to short-term rentals. Issues can be reported through the city's online complaint form or by contacting Code Enforcement directly.

Residents can also contact the city's 24/7 short-term rental hotline to report urgent problems:

  • Phone: (650) 780-7739

For general questions about short-term rentals or to provide feedback on the program, email the city at shorttermrentals@redwoodcity.org.

What do Airbnb hosts in Redwood City on Reddit and Bigger Pockets think about local regulations?

On the Bigger Pockets forums, some Redwood City hosts have expressed frustration with the 120-day annual limit on unhosted rentals and the inability to use accessory dwelling units as short-term rentals under the city's regulations. They feel it restricts their ability to maximize rental income.

However, others appreciate that Redwood City is allowing short-term rentals with certain guardrails to protect housing stock and reduce community impacts, rather than banning them outright like some nearby cities have. Many have been able to successfully operate within the regulations and find the registration process manageable, if a bit cumbersome.

Reddit discussions suggest most Redwood City hosts are complying with the permit and tax requirements. Hosts recommend carefully tracking the 120-day cap on unhosted rentals to avoid violations. Some have had to lower their nightly rates a bit after adding the 12% TOT to their listings.

The overall sentiment seems to be that while Redwood City's short-term rental regulations do present some limitations and added costs, the city remains a viable market for vacation rentals if hosts are willing to play by the rules. Hosts who have obtained permits, paid taxes, and followed the operating standards are successfully running STRs.

Proper pricing, amenities, marketing, and guest screening can help Redwood City hosts attract bookings and earn solid returns within the regulatory framework. The key is to understand the requirements, get registered, and operate professionally and responsibly to avoid issues with the city or neighbors.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.