One on One with Craig Batley
By Gina Dostler
Burr White Realty is one of the leading property rental managers in Newport Beach. With summer around the corner, broker Craig Batley gears up to match vacationers to his portfolio of 1,500 rentals.
Q: Can any Newport Beach homeowner rent out their property for a short-term rental?
A: It depends. Most homeowner associations do not allow short-term rentals. And since 1992 the city has passed regulations that prohibit new short-term rental permits in R1 zones (single-unit residential). Those that had permits previously in this zone were grandfathered in. Short-term rentals are allowed in R2 (two-unit residential) zones such as duplexes on a single legal lot. And since 1992, Newport has been regulating short-term through a hotel tax. Short term rentals of 30 days or less are subject to a hotel tax. There are approximately 1,068 short-term rentals in Newport and the bulk of them are on the peninsula.
Q: How many rentals do you make during summer? Winter?
A: Primetime renting for summer occurs during June, July and August where we say about 80% of our activity occurs. About half of our vacation rentals are offered as furnished winter rentals and are rented out for up to nine months. Lots of people come to this area such as busy nurses with a new job and don’t know where to live, newly single people, employees new to the area and want to live by the beach, local residents remodeling their home, and some who simply winter in Newport and rent the same place over again throughout the years. And then there are a lot of places that are family owned and stay vacant and used maybe two or three months out of the year by a member of the family.
Q: How does the city handle the rental influx?
A: The peninsula has the highest density of living in Orange County. And the way the city of Newport Beach has handled this fact is what makes it so distinct form other cities with short-term rental. The city does an excellent job of policing and no other city has in place stringent noise violation codes and heavy fines like Newport.
Q: Such as?
A: One is the Disturbance Advisement Card (DAC), where no person can allow a large gathering to happen on the private property that threatens the public peace, health, safety or general welfare of the neighborhood or surrounding community. The other is the Loud and Unruly Gathering Ordinance (LUGO), which means a gathering of eight or more persons at a residential unit where loud or unruly conduct occurs. If cited, the police post the residence with a black and white notice that cannot be removed and no other disturbance must take place within 90 days or heavy fines are assessed. They increase their police workforce whenever necessary and work with surrounding businesses and residents to help keep things in check.
Q: How do you handle problem tenants and those that sub-lease?
A: We have very strict conduct codes written into our contracts and expect all our guests to be good neighbors, obey city noise ordinances and adhere to occupancy limits. Short-term renters are viewed as a guest-proprietor relationship and must adhere to specific contractual obligations when occupying the premises. Therefore, if any violation of the contract has occurred, guests can be kicked-out immediately. Long-term renters are viewed as a tenant-landlord relationship, where the tenant has certain rights and protection as defined by state statue. Regarding sub-leasing, anyone entering into a long-term lease is normally prevented from sub-leasing without written authorization from the landlord. Short-term rental contracts do not allow sub-leasing and if a guest attempts to sub-let all occupants are subject to immediate eviction. I’ve been in the leasing business for over 40 years, 20 of those years in the vacation rental business and out of approximately 15,000 contracts, unauthorized subletting has only occurred twice.
Q: Are short-term rentals the cause of disturbances residents are fed-up about?
A: Long-term residents at the peninsula are well aware that vacationers have been renting in this area for decades. Yes, it’s true nobody wants a vacation rental next to them. But here’s a fact: Newport Beach sees 9 million people visit their city during the summer. Yet less than 30,000 people make up vacation rentals on the peninsula, which are mostly families with kids. The reality of it is the long-term tenants actually cause 90 percent of the violations that occur on the peninsula during the winter months, which tend to be mostly populated by college students.
Q: How has Airbnb affected rentals?
A: Airbnb skirts all the taxes and permits that regulate and helps support the city. And people who rent out their space 30 days or less without a permit are doing so illegally, especially if they are not located in an R2 zone or their homeowner’s association forbids it. The impact it has on the hotel industry in Newport is currently minimal. But it has affected the area with an added, although un-permitted, inventory of vacation rentals.
Q: What’s your solution?
A: My suggestion is to also allow a short-term lodging permit that requires a certain code of conduct commitment from the owner to obey city codes, and if violated the permit is cancelled.
CONTACT INFORMATION
Craig Batley
Burr White Realty
2901 Newport Blvd.
Newport Beach, California 92663
Phone: (866) 920-6089
www.BurrWhite.com
