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City officials approved new rules governing rental units that prevent landlords from offering leases less than a year in length.

The adopted ordinance states leases must be longer than 365 days and rental housing units cannot be furnished. Advertising any lease of a residential rental unit that does not comply with these requirements is also prohibited and violators will be subject to fines and penalties, according to the new ordinance, which was adopted by City Council Tuesday night.

The practice of entities renting out units between 31 and 365 days is defined as medium-term leases, and city staff believes it removes valuable rental housing from the housing market.

Medium-term housing could also affect neighborhood stability and result in high monthly price points, which could limit the affordability of rental housing, staff said during Tuesday’s meeting. “The provision of a one-year lease offer helps to minimize potential high turnover of residential units, provides stability for tenants, and ensures the preservation of a permanent residential housing stock.”

Mayor Kevin McKeown said it makes sense for the city to limit the leasing of unfurnished rentals because they make it way too easy for someone to rent a furnished unit to somebody who’s only here for a short period of time.

“As has been pointed out in discussion already tonight,” there are firms who may look to evade the regulations council is looking to institute, McKeown said. “But I think we, tonight as a council, have to look back to what we did five years ago with the vacation rentals. Everybody told us what we were doing was too hard, too strict and too burdensome. But the reality is we saved an awful lot of units in this town from being used for two or three-night stays by people who are here as tourists. I think it’s time we take this issue just as seriously…”

In addition to length minimums, the new ordinance requires all units be rented to “natural persons” as opposed to corporations and all tenants must use the units as their permanent residence.

“Housing activists presented a compelling case for prohibiting commercial uses of Santa Monica housing that were displacing real residents, and the Council set clear rules that end the abuses,” McKeown said later in the week. “Our ordinance protects rental houses, apartments, and condos for families and others who intend to make Santa Monica their permanent home and contribute to our neighborhoods. With no more rentals to corporations, and no more short-term furnished leases, the Council took a definitive stand that Santa Monica housing is for people and for building community.”