The City of Los Angeles could be collecting tens of millions of dollars in fines every month from illegal short term rentals, but a new report finds the city is leaving that money on the table while thousands of violations continue unchecked.

The analysis, released today by Better Neighbors LA, examines seven years of enforcement of the city’s Home Sharing Ordinance, the law adopted in 2018 to regulate platforms like Airbnb and Vrbo. The ordinance allows residents to rent out their primary residence (the home where they actually live) on a short term basis but prohibits commercial operators from converting homes into full time tourist accommodations or using rent stabilized units as vacation rentals. City departments have also proposed thirteen recommendations to strengthen enforcement of the ordinance, including stronger residency verification and new requirements for platforms to remove illegal listings. Those proposals remain pending with the City Attorney.

According to the report, violations of the existing rules are rampant. Data from the city’s monitoring contractor Granicus shows that more than half of LA’s short term rental market has been operating in violation of the ordinance for years. Despite the scale of noncompliance, enforcement has been extremely limited. The city has issued only 1,354 citations, less than 0.2% of the violations identified.

That gap between violations and enforcement is what drives the report’s central finding. If the city had fully enforced the ordinance since 2019, Los Angeles could theoretically have issued roughly $5.2 billion in citations for violations. Advocates behind the analysis acknowledge the estimate is largely illustrative. If the law had been enforced from the beginning, many operators would likely have stopped violating it rather than accumulate years of penalties. But the estimate underscores the scale of illegal activity and the enormous gap between what the law allows and what the city actually enforces.

Even if the city only began enforcing the law today, it could generate between $40 million and $50 million per month in fines, which far exceeds the roughly $34 million LA collects annually from the transient occupancy tax on short term rentals. In other words, enforcing the law on the books would generate far more revenue than the city receives from taxing the industry.

For housing advocates, the issue is not just about lost revenue. Illegal short term rentals also remove housing from the long term market. Every home converted into a full time short term rental represents a unit that is no longer available to people who live and work in Los Angeles. In a city already facing severe housing shortages and rising rents, even a relatively small number of units shifting to tourist use can tighten supply and push prices higher.

Illegal rentals can also undermine tenant protections. The city’s ordinance prohibits short term rentals in rent stabilized housing and other protected units because allowing those homes to function as vacation rentals would erode the city’s affordable housing stock. Yet many illegal listings already operate in regulated buildings, weakening those protections in practice. And at least one City Councilmember has floated the idea of legalizing that behavior. Emails obtained through a public records request show that staff in Councilmember Traci Park’s office discussed the possibility of changing the law to allow short term rentals in rent controlled buildings, effectively legalizing a practice the ordinance was designed to prevent.

At the very moment advocates are calling for stronger enforcement of the existing law, short term rental companies are mounting an intense lobbying push in the opposite direction, pressing the city to loosen its rules and allow vacation rentals in the run up to the 2026 World Cup and the 2028 Olympics on the argument that Southern California could face a lodging shortage during the mega events. The companies’ lobbying has taken a variety of forms, often structured in ways that obscure the company’s role.

For example, you may have seen signs and flyers around Westside neighborhoods over the past year urging residents to “Save Our Services.” The campaign presented itself as a grassroots effort to protect city programs from budget cuts, but it was funded and organized by Airbnb as part of a lobbying push to weaken the city’s home sharing rules and allow vacation rentals. Capitalizing on fears of budget cuts in the middle of the city’s budget crisis, the company reportedly spent about $3 million on canvassing, flyers, and outreach to promote the effort. Supporters of the proposal argue that loosening short term rental regulations would generate more than $200 million annually for city services. But the new report suggests the city could bring in far more revenue simply by enforcing the law already on the books, without sacrificing desperately needed long term housing.

In another example, the company made a $570,000 donation to an immigrant nonprofit through a behested payment requested by the office of Councilmember Traci Park. The contribution gave Airbnb an opportunity to build goodwill at City Hall while it was lobbying to loosen the home sharing ordinance. At the same time, the donation allowed Park to highlight support for immigrant communities despite heavy criticism of her record on immigration issues.

The policy debate is unfolding as Airbnb faces a major lawsuit from the City of Los Angeles over alleged price gouging during the 2025 wildfires. In July 2025, the City Attorney sued the company, alleging the platform allowed illegal price increases on thousands of listings following the January fires, when displaced residents were searching for temporary housing.