This is the first story in a Berkeleyside series on housing. Read the second story on rental rate increases here.
In late January, Daniel Moore came home to his apartment in a 12-unit complex on College Avenue to find there was a new keypad lock on the front gate.
Moore, who had been living at 3100 College for 12 years, didn’t have the combination to the keypad. He was locked out of his own building.
That was just the first of a series of mysterious changes to the apartment complex, alterations that his landlords never told him about. Suddenly, washer and dryer units were installed on every landing. New couches appeared in the hallways.
Then Moore started hearing loud noises from the unit above him. It appeared as if a family of five had moved in suddenly and the kids were stomping on the new stone kitchen floor. That family moved out, but was replaced by others, people who stayed up until 3 a.m.
It turns out that three units in Moore’s rent-controlled building had been converted into short-term rentals through online rental company Airbnb.
“Airbnb has replaced our quiet environment with noise, anxiety and the nuisance of a steady flow of transients who have no investment in living here,” Moore wrote in a letter he sent to the City Council and the Berkeley Rent Stabilization Board.”
The conversion of apartments into a short-term rentals, where guests come and go, is part of a trend that is sweeping Berkeley. While renting out apartments to anyone for less than 14 days is prohibited under Berkeley law, hundreds of homeowners are renting out rooms, suites, whole houses, cottages — even a tent and a yurt — according to listings posted on Airbnb, VRBO (Vacation Rentals by Owner), Home Away and other short-term rental websites.
People can find a bed in an apartment of UC Berkeley students for as little as $26 a night, or a house in the hills with a pool for $700 a night. There were 1,162 different units for rent in Berkeley in April, according to a city staff report.
The sudden influx of short-term rentals, coupled with a shortage of housing, has become a huge issue in the Bay Area as the technology boom has lured thousands of well-paid people to the region. Rents have risen and evictions have increased. While the issue has been most acute in San Francisco, Berkeley is now feeling its effects.
Tenant activists, as well as the Rent Stabilization Board, are concerned that short-term rentals are contributing to a housing crisis. They are not overly worried about the casual hosts who rent a bed or a room in a home they live in. They are most troubled by property owners who remove units with kitchens from the market, thereby decreasing Berkeley’s housing supply. There are about 400 rent-controlled units now being used only as short-term rentals, according to the Rent Stabilization Board.
“Renting units primarily as vacation rentals is contributing to the housing crisis,” the Rent Board told the City Council in a letter sent in April.
“Whole units that could be rented to people who live and work here should not be rented to tourists,” said Katherine Harr, speaking as a member of the Berkeley Tenants Union. (She is also on the Rent Board, but was not speaking in that capacity).
City officials have noted that those renting for less than 14 days are not paying any taxes on their properties, even though Berkeley’s bed-and-breakfast establishments must do so.
Property owners who rent out for short terms often stand to make a substantial amount of money, certainly more than if they rented month to month. For example, Moore and his wife Yenli pay $1,785 a month for their 850-square foot space on the second floor of a building within easy walking distance of the shops in the Elmwood. The building’s owners, Jack L. and Margaret C. Phillips, are renting out three apartments in that complex on Airbnb for $125 a night, meaning they can earn as much as $3,750 a month if they rent the units every day for 30 days.
That’s not the only property they are renting out on a short-term basis. They are also renting other units at 2616 Parker St., 2619 Regent St., and 2435 Virginia St., as well as 3100 College Ave., according to information gathered by the Berkeley Tenants Union. In total, they are offering 11 spaces for rent on Airbnb. They do not reside in any of the properties. Collectively, the Phillips’s Airbnb listings have an earning potential of $35,790 a month.
The Berkeley Tenants Union has identified at least eight other commercial hosts in Berkeley who are renting out multiple units in Berkeley and may be removing what was once permanent rental housing from the market.
Read more real-estate stories on Berkeleyside.
For example, Claude Zamanian, a realtor and contractor in San Francisco, lists 13 units in five separate rent-controlled properties. They have the potential to bring in $41,670 a month, according to the BTU.
And Marina Ekman and Adelina Esquerra have a single-family home at 2928 Ellsworth, not subject to rent control, that they have split into nine separate units available for rental. The owners of an Oxford fourplex near the UC Berkeley campus, which has kitchens and could be used for long-term housing, is also listed for short-term housing on Home Away, according to the BTU. There is also a woman named Esperanza C. Garcia who has nine units for rent in Berkeley, according to the Berkeley Tenants Union.
Esquerra did not respond to an email asking her to comment on her Airbnb units. Berkeleyside tried to find contact information for the Phillipses and Zamanian and the other owners, but was unsuccessful.
City enforcement is lacking
Despite the prohibition against renting for less than 14 days, Berkeley officials do not appear to be cracking down on the problem, and may even be confused by what the law actually says.
David Pruess and his wife (who asked that her name not be used), and their young daughter, live in a duplex near the North Berkeley BART station. For two years, another couple lived upstairs from them. They became good friends, often had dinner together, worked in the garden together, and had keys to one another’s apartments. Since the duplex only had one thermostat – in the upstairs apartment – that informal arrangement was critical to the Preuss’ comfort.
The upstairs neighbors moved out in mid-December and the landlord converted the unit to a short-term rental in January. Since then, a succession of people has moved in and out of the unit, said Pruess. The experience has been dreadful, particularly since there is a newborn in the house and no one is getting much sleep. Some of Airbnb renters had jet lag and were up at all hours making noise. Others smoked cigarettes, which is illegal in Berkeley. Some had parties. Users have thrown trash into the yard, (Pruess’ lease specifies that he has to keep the yard clean), filled recycling bins with garbage, and turned off the heat, making the Pruess’ below-grade apartment too cold for the baby.
The worst experience was when a family from China came to stay. The parents picked oranges from Pruess’ tree and gave them to their toddler, who proceeded to pelt the chickens in the yard. When Pruess complained in sign language (the renters did not speak English), the family just laughed in his face, he said.
“You think you are living in a residential zone and all of a sudden there is a hotel above you,” said Pruess. “Not only that, but a hotel without any employees. Our landlord lives in another city. He wasn’t there to mitigate whatever problems there might be, or handle things, or be aware of things.”
Pruess isn’t even sure where his landlord, Peter Louie, lives. He thinks it is San Francisco, but all he has is a post office box address for him. The couple writes rent checks to Radiant Services, a property management company.
The posting on Airbnb lists the unit upstairs from Pruess as “The Farmhouse,” and says the host is a man named Lorenzo, although some of the guest comments mention dealing with a Peter. Pruess does not know who “Lorenzo” is, but he also rents out a studio near Dolores Park in San Francisco, according to Airbnb. That unit was recently the subject of a story on ABC News that said a Peter Louie evicted the tenant to convert the apartment into an Airbnb unit.
Berkeleyside contacted Peter Louie’s attorney, David Semel, who said he does not represent any of Louie’s Berkeley properties. Berkeleyside could not find contact information for Louie.
Confusion over legality of short-term rentals
Pruess contacted the Rent Board with a series of questions in January, and a staff member mistakenly told him that short-term rentals were legal so there was nothing he could do. He also attended a clinic at the East Bay Community Law Center and was told the same thing.
Pruess then tried pleading with his landlord, who agreed to put a rug in the upstairs unit, but declined to stop renting out the apartment on Airbnb.
Pruess then heard that the Rent Board had created an ad-hoc committee on short-term rentals. He contacted them and its members told him what his landlord was doing was illegal.
Pruess went to Berkeley’s code enforcement division to explore filing a complaint against his landlord.
“I talked to code enforcement once. They said the issue is proving that Airbnb is being done. You have to prove people are there less than 14 days and are paying rent for it,” said Pruess.
Pruess said he plans to file a complaint this week with Berkeley’s code enforcement division. The last straw came last week when his landlord set up a time for his wife to talk to the Pruesses. She never called, said Pruess.
Matthai Chakko, a spokesman for the city of Berkeley, would not specify what information code enforcement would need to investigate a short-term rental complaint.
“We don’t disclose what evidence or strategies we use as it could hinder enforcement,” said Chakko.
Moore also tried to reason with his landlords at 3100 College Ave., but found it difficult. They never told him the new code for the gate; he had to hunt down the building manager to get it.
It took them days to hand out the code for the keypad lock, forcing tenants to essentially break into their own front yard, said Moore. The code was not given to the mailmen or UPS drivers, and there was no working intercom to call up to the units. There are still days when Moore doesn’t get his mail because there is a new mailman doesn’t know the code and can’t get to the mailboxes.
Recently, Moore knocked on the door of the unit above him, which had been rented to a couple using Airbnb, and asked them to be quiet. He then told the renters that “running a hotel in our building violates the city’s ordinances, and that it would be a good idea if they inquired in the future whether their Airbnb hosts are operating in a rent-controlled building,” he told Berkeleyside in an email.
The Airbnb tenants reported the visit to the Phillipses, and Moore received a warning letter from Jack and Margaret Phillips a short time later. The landlords said that Moore’s actions violated the terms of his lease that specified that he “shall not disturb, annoy, endanger or interfere with other tenants of the building or neighbors.” The Phillipses went on to say: “This letter, which is sent by Registered E-mail, is a warning to you that: (a) your actions (described above) are a direct violation of your rental agreement; and (b) following this notice, any repeat of those – or similar – actions would be good cause for eviction.
The Phillipses have offered the Moores $7,000 to move out, he said.
“Our landlords want us out big time,” said Moore. “We are a problem for them. We complain.”
Short-term rentals are impacting business at B&Bs
Tenants are not the only ones affected by the bump in short-term rentals available in Berkeley. Proprietors of bed-and-breakfast establishments are also feeling the squeeze. Berkeley grandfathered in 12 B&B establishments when it prohibited short-term rentals in 2003. Only about eight are still operating.
Mary Harrow, who runs Mary’s Bed & Breakfast at 47 Alvarado Rd, said she has noticed a drop in the number of people inquiring about her rooms, which cost $150 a night. The decline coincided with the rise of Airbnb and other online sites, she said. Harrow said she cannot lower what she charges because she must pay city hotel taxes and provide breakfast to her customers.
Wendy Sprague, who runs the Brick Path B&B, said her business fluctuates but she cannot be sure if Airbnb is the cause. “I don’t have any way of knowing concretely,” she said. (Sprague also lists her rooms on Airbnb).
City officials are grappling with how to respond to the increase in short-term rentals. The City Council is scheduled to consider a proposal by Mayor Tom Bates and City Councilwoman Lori Droste on May 26 that will essentially legalize and tax some short-term rentals – but not in rent-controlled or other buildings that could be used for long-term housing for Berkeley residents. Under the proposed law, which will be sent to the Planning and Housing commissions for review, the units in the Moore’s building and the unit in the Pruesses’ building could not be converted to short-term rentals because the property owners don’t live in the units.
Bates’ and Droste’s proposal will allow people living in a home at least nine months of the year to rent out a bedroom as often as they like when they are home. If the hosts leave for vacation, they can only rent out their unit for a maximum of 90 days.
“If you own an apartment house and you live in Apartment 2, that’s the only one you can rent out,” Bates told Berkeleyside. “The rent-controlled places, they have vacancies and (the landlords) are renting out those vacant units as Airbnb … that would be prohibited.”
The proposed law would also require the property owner to inform neighbors of the plan, provide a local contact in case there are complaints, require a business license, and carry $500,000 in liability insurance, among other requirements.
The new law would impose a transient occupancy tax on all rentals, to be collected by the host or the rental-platform company.
Most significantly, the proposal would add a 2-3% tax on top of the transient occupancy tax. Those funds would be used to hire extra code enforcement officers to make sure property owners are following city rules, said Bates. He referred to San Francisco, which passed legislation in February restricting homeowners to only renting out their property for 90 days. But only a handful of the thousands of property owners on Airbnb, Home Away and other services have registered their properties, making enforcement difficult, said Bates. He hopes Berkeley will not encounter the same problem.
The Rent Board sent a letter to the City Council supporting the proposed measure, but cautioned that Berkeley needs a strong enforcement mechanism to ensure the system works. Jesse Townley, president of the Rent Board, also asked that the Rent Board “have a voice” in crafting local regulations.
Sid Lakireddy, the president of the Berkeley Property Owners Association, said the Bates/Droste proposal, and the letter sent by the Rent Board, is missing one huge element: the fact that tenants in rent-controlled units often rent out their apartments on Airbnb and other sites.
“It that person isn’t living there why should they be entitled to rent-controlled rent in a rent-controlled unit?” said Lakireddy. “That’s one unit staying off the market. That is one thing (the Rent Board) has completely failed to address.”
Check out some short-term rentals available in Berkeley:
- A $700-a-night house with a pool
- A $26-a-night room in an apartment with UC Berkeley students
- “The Farmhouse” mentioned in the story
- Tents and yurts for rent
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