Laguna Beach, California, is a coastal paradise renowned for its pristine beaches, vibrant arts community, and charming small-town atmosphere. This idyllic setting makes it a prime destination for tourists, fueling a robust market for short-term rentals (STRs) through platforms like Airbnb and Vrbo. However, operating a short-term rental in Laguna Beach is far from straightforward. The city has implemented stringent regulations to balance the needs of residents, visitors, and the local housing market. This blog post dives deep into the current Laguna Beach Short-Term Rental Regulations as of April 2025, offering a comprehensive guide for property owners, investors, and potential hosts looking to navigate this complex landscape.
The Evolution of Short-Term Rental Regulations in Laguna Beach
Laguna Beach has grappled with short-term rental regulations for decades, with significant updates shaping the current framework. The city’s Short-Term Lodging (STL) Ordinance, codified in Chapter 25.23 of the Municipal Code, was adopted by the City Council and certified by the California Coastal Commission in 2020. This ordinance reflects a compromise between providing visitor accommodations and preserving the quality of life in residential neighborhoods. The regulations aim to address concerns such as noise, parking, and the loss of long-term housing stock, which have been contentious issues in this tourist-heavy community.
The journey to the current rules began in the 1990s, with discussions intensifying in the 2010s as platforms like Airbnb surged in popularity. In 2016, Laguna Beach imposed a moratorium on new STR permits, followed by a 2019 ordinance that banned new short-term rentals in residential zones. After extensive negotiations with the California Coastal Commission, which prioritizes public coastal access, the city finalized its regulations in 2020, capping the total number of STRs and restricting their locations. These rules continue to evolve, with the city required to report back to the Coastal Commission every three years to assess the impact on housing and affordability.
Key Regulations for Short-Term Rentals
To operate a short-term rental in Laguna Beach, hosts must comply with a detailed set of rules. Below is a breakdown of the key regulations as of March 2025, based on the latest available information from the city’s Municipal Code and related sources.
1. Zoning Restrictions
One of the most significant changes in recent years is the ban on new short-term rentals in residential zones (R-1, R-2, and R-3). This restriction, approved in October 2020, responds to resident complaints about noise, parking, and the “touristification” of neighborhoods. Existing STRs in residential zones with permits issued before the ban are grandfathered in as legally nonconforming units and may continue to operate. The permit runs with the land, not the owner, meaning it transfers with property ownership.
Short-term rentals are now permitted in specific commercial and mixed-use zones, including:
-
LB/P, C-N, C-1, and CH-M zoning districts.
-
CBD-1, CBD-2, CBD Central Bluffs, CBD Office, and CBD Visitor Commercial Districts in the Downtown Specific Plan.
-
SLV zoning district, subject to a Conditional Use Permit (CUP).
In these zones, STRs require an Administrative Use Permit (AUP) or, in some cases, a Conditional Use Permit. No more than 20% of units in a multi-unit building in permitted zones can be converted to STRs, and buildings with five or fewer units are limited to one STR unit.
2. Citywide Cap on STRs
Laguna Beach has capped the total number of short-term rental units at 300, with an additional allowance for up to 165 home-sharing units (where the owner or tenant remains on-site during the rental). As of 2020, 117 units were already permitted, including 79 in residential zones and 38 in commercial zones. This cap ensures that STRs do not overwhelm the housing market or disrupt the community’s character.
3. Permitting and Licensing Requirements
Operating an STR requires both a City Business License and an Administrative Use Permit or Conditional Use Permit. Hosts must display these permit numbers on all online advertisements, such as Airbnb or Vrbo listings. The permitting process involves submitting:
-
A site plan and floor plan showing the layout, trash storage, and parking areas.
-
Evidence of a safety inspection by the Laguna Beach Fire Department.
-
Proof of liability insurance (minimum $500,000) to cover injuries, damages, or losses associated with the STR.
-
A “Good Neighbor” brochure acknowledgment, outlining rules of conduct for guests.
-
Details on the rental’s availability (days, weeks, or months) and minimum stay length.
Permits are valid for three years and can be renewed if the host complies with regulations and maintains a tax account in good standing. Hotels, motels, or properties exclusively hosting long-term stays (30 nights or more) are exempt from these requirements.
4. Occupancy and Operational Rules
To minimize neighborhood disruptions, the city enforces strict occupancy and operational guidelines:
-
Occupancy Limits: Overnight occupancy is capped at two people per bedroom. Additional daytime guests (between 7:00 a.m. and 10:00 p.m.) are allowed, with a maximum of two guests per bedroom and a total of 20 guests for properties with five or more bedrooms.
-
Local Contact Person: A designated contact must be available 24/7 and able to respond within 60 minutes to address complaints or issues.
-
Noise and Conduct: Guests must comply with the Laguna Beach Noise Ordinance and refrain from disorderly conduct, illegal drug use, or excessive alcohol consumption. No outdoor sound devices (e.g., speakers, karaoke machines) are allowed between 10:00 p.m. and 10:00 a.m. if audible from adjacent properties.
-
Trash Management: Trash must be stored out of public view and placed in proper containers for collection on scheduled days, per Chapter 7.16 of the Municipal Code.
-
Advertising: Onsite advertising signs are prohibited, and all online listings must include the business license and permit numbers.
5. Transient Occupancy Tax (TOT)
Short-term rental operators are responsible for collecting and remitting the city’s Transient Occupancy Tax. While platforms like Vrbo collect TOT on behalf of hosts, Airbnb does not, leaving the responsibility to the host. Non-compliance can result in penalties or permit revocation.
6. Home-Sharing Provisions
The ordinance allows for 165 home-sharing units, where the property owner or tenant remains on-site during the rental. These units are exempt from use permit fees, making them a more affordable option for hosts and guests. Home-sharing is seen as a way to provide lower-cost coastal access while maintaining a residential feel.
Financial Returns and Market Considerations
Despite the regulatory hurdles, short-term rentals in Laguna Beach can be highly lucrative due to the city’s popularity as a tourist destination. According to Apartments.com, the average price range for short-term rentals in Laguna Beach is between $2,768 and $3,913 per month, though nightly rates for vacation rentals can be significantly higher, especially during peak seasons. The city’s 50.2 million annual visitors (as of 2019) contribute to a $9.2 billion tourism industry, making STRs an attractive investment for those who can navigate the rules.
However, potential hosts must weigh the costs of compliance, including permitting fees, liability insurance, and property maintenance. The ban on new STRs in residential zones limits opportunities for new investors, as most available properties are in commercial zones with higher acquisition costs. Existing grandfathered units in residential areas are highly sought after, as they represent a rare opportunity to operate in prime neighborhoods.
Challenges and Community Perspectives
The regulations reflect a delicate balance between competing interests. Residents, represented by groups like Village Laguna, have long advocated for stricter rules to protect neighborhoods from noise, parking issues, and the loss of long-term housing. They argue that STRs drive up housing costs, making it harder for locals, seniors, and artists to afford living in Laguna Beach. In contrast, the California Coastal Commission emphasizes the importance of STRs for providing affordable coastal access, particularly for families who cannot afford hotels.
Enforcement has been a persistent challenge. Between 2016 and 2019, the city identified and fined or shut down 500 illegal STR units. Residents can report violations via phone, email, or online, and the city has hired code enforcement staff to monitor listings. However, some argue that the regulations are difficult to enforce, particularly in residential zones where illegal rentals persist.
Tips for Aspiring Hosts
If you’re considering operating a short-term rental in Laguna Beach, here are some practical steps to ensure compliance and success:
-
Verify Zoning Eligibility: Check your property’s zoning status on the city’s website or contact the Community Development Department at (949) 497-0713 to confirm if STRs are allowed.
-
Secure Permits and Licenses: Apply for a City Business License and an AUP or CUP, ensuring all required documentation (e.g., safety inspection, insurance) is complete.
-
Understand Tax Obligations: Register for TOT collection and clarify whether your platform (e.g., Airbnb, Vrbo) handles this on your behalf.
-
Implement Good Neighbor Practices: Provide guests with clear rules on noise, parking, and trash to minimize complaints. Designate a reliable local contact for emergencies.
-
Monitor Regulatory Updates: Stay informed about changes to the STL Ordinance, as the city must report to the Coastal Commission periodically, which could lead to new rules.
Conclusion
Operating a short-term rental in Laguna Beach offers a tantalizing opportunity to capitalize on the city’s thriving tourism market, but it comes with significant regulatory challenges. The Short-Term Lodging Ordinance, shaped by years of debate and compromise, prioritizes neighborhood preservation while allowing limited STRs in commercial zones. For property owners and investors, success hinges on understanding and complying with these rules, from zoning restrictions to permitting and operational requirements.
As Laguna Beach continues to evolve, the balance between resident needs and visitor access will remain a focal point. Whether you’re a homeowner looking to offset costs or an investor eyeing a coastal gem, thorough research and adherence to the regulations are essential. Have you considered renting out a property in Laguna Beach? Share your thoughts or experiences in the comments below—I’d love to hear your story!
Sources:
-
Laguna Beach Municipal Code, Chapter 25.23
-
City of Laguna Beach Official Website
-
The Malakai Sparks Group, March 2025
-
Orange County Register, November 2020
-
Los Angeles Times, October 2020
