Airbnb Hosting in San Francisco: The legal requirements

If you're one of the thousands of renters in San Francisco who want to become Airbnb Hosts in 2020, don't be dismayed if you've heard that the City of San Francisco makes hosting hard. It doesn't, but the steps covered at the City at San Francisco's Office of Short-Term Rentals site are not the easiest to understand or follow. And since Airbnb is subject to a 2017 court order, Airbnb makes sure your SF listing complies with those requirements.

Big picture, you need pay the city a little money, and as a renter, you need to get your landlord's approval before you pay the city any money. The city will inform the owner of your property that you have applied for a Short-Term Rental Registration by mailing them a notice.

So, getting that approval first is the key to unlocking your future as a registered Airbnb Host. How do you get landlord approval you ask?; we'll cover that in a few minutes.

Sorry to rain on your parade if you thought becoming an Airbnb host was just going to drop thousands of dollars into your bank account. That will happen if you treat being an Airbnb host in San Francisco like the business it is; but like every business, there are costs.

So let first demystify the legal requirements.

Airbnb Hosting as a business

Being an Airbnb Host is a business, and as such in San Francisco, you'll need a city license for that. Specifically, you need what's called a Business Registration Certificate. This Certificate means you've registered with the city's Treasurer & Tax Collector's office, which you can do online for $95 for your first calendar year.

For that fee, you get three things: a Business Account Number , the opportunity to pay city short-term rental taxes (automatically handled by Airbnb), and the ability to go on to the next step, registering with the OSTR (Office of Short-Term Rentals).

The OSTR Step

The next step is getting the City's Office of Short-Term Rentals to approve you as a Host. That means paying them a $250 nonrefundable fee. If they approve you, you're good to go for two years. If they don't approve you, you're out $250 and your landlord will have gotten an official notice that someone in your building wants to be a Airbnb Host.

The application process is pretty painless: fill in this form online, download their pdf form and mail it in. Or get an appointment and visit their office. The form itself is just over one page.

What OSTR will be doing for that $250 nonrefundable fee is checking city records to make sure:

Your address is not in The Presidio, Fort Mason, or on Treasure Island,
You're not trying to host from your dormitory room,
The building you are in is zoned for Residential use, not commercial or Industrial,
Your landlord isn't trying to change your apartment into a condo,
The sleeping quarters that you're trying to host? It's not a treehouse or the back of your car (weird, but true).

Then, OSTR will be checking that you have at least $500,000 of property liability insurance. If you're going though Airbnb, relax. Airbnb's Host Guarantee has this covered.

But wait, there's more eligibility requirements before you get that all-important OSTR approval.

You have to actually live in the apartment you are trying to do Airbnb from.
While you can host as many nights as you want if you are in your home, if you're not, you're limited to 90 nights a year, and OSTR will be checking Airbnb listings.
One last thing to check before spending your $250: make sure your building doesn't have any Housing or Planning Code complaints filed on it. You can check this online at the San Francisco Property Information Map. (Plug in your address, then look under the section labelled "Complaints".)

Now while OSTR does not actually require you have written proof that you have your landlord's permission to Airbnb your apartment, they do note in their online docs that:

Please be aware that the owner of your unit will receive a letter from the Office of Short-Term Rentals with notification of your intent to be a host. We encourage you to review your lease and receive permission from your property owner prior to applying.

So now we come back to what really is the first step in this whole process: getting your landlord's approval.

Getting your landlord's approval

Nearly every rental or lease agreement you'll see as a San Francisco tenant is going to either say outright you can't do short-term rentals without written approval, or you can't sublet, which can be viewed as what you do doing short-term rentals without written approval.

With OSTR notifying your landlord, there's basically no way to get around this, and letting that OSTR notice be the first time your landlord hears about this is definitely not a smart move. Your landlord is going to have to be in on the deal, and guess what? They're going to want a piece of the short-term rental money you make. After all, it is their property.

The key to getting this done is taking a businesslike approach from the start. You can do it yourself, or you can use an online service that will make the approach for you: that's what Letulet does.

You go on Letulet's site, set your first offer to your landlord as a percentage of what you will actually make from Airbnb. This is the smart, businesslike way of offering them an inducement - you don't agree to raising your rent, you pay them from what you actually make. Letulet will email your landlord a professionally done proposal, backed by all the information they need assurances on so they feel good about the deal.

Then in exchange for their digital signature on Letulet's lawyer-vetted agreement allowing you to Airbnb, they automatically get the agreed percentage from your bank account the day after Airbnb pays you.

Think of Letulet like a liaison between you and your landlord, facilitating a business-like arrangement between both of you.

The costs of doing (Airbnb) business

So you will pay whatever you and your landlord agree is their percentage of what you make, normally around 15% to 20% to you landlord, and the Letulet's Processing of 4.5% for making the deal happen and handling the payments from your bank account to your landlord's account. Not bad, considering what you can make as a San Francisco Airbnb Host.

The good news is by professionally negotiating with your landlord, you give them a real financial incentive to green light this. Letulet can make a professional presentation on your behalf, covering and answering your landlord's concerns. Letulet is an interested, but unbiased, third-party service that ensures they will get every cent owed to them - and not a penny more.

Letulet looks out for your interests, and your landlords in other ways too. Letulet helps you define House Rules, an important part of making Airbnb work for you, your guests, and your landlord.

Becoming an Airbnb host is definitely more complicated in San Francisco than in other cities that have not - yet - created their own regulations and requirements. First getting a business license, then a permit from the Office of Short-Term Rentals is the cost of doing Airbnb hosting in San Francisco.

But it's not a hard process, and you can get through it. Just keep in mind the most important step before you plunk down your $341 should happen before you start on the paperwork, and that's getting your landlord onboard with you hosting. Letulet makes it easy for you to get that all-important landlord addendum by being a third party service that will ensure your landlord gets their cut too - but not one penny more.