Short Term Rental or Long Term Lease? What Hermosa and Manhattan Beach Owners Need to Know in 2026

Published July 15, 2026

Manhattan Beach still bans short term rentals outside its Coastal Zone, and Hermosa Beach limits them to 212 eligible properties with only a handful permitted. Here is the real math before you convert.

In 2026, the honest answer for most Hermosa and Manhattan Beach owners is that you probably cannot legally run a short term rental at all. Manhattan Beach bans short term vacation rentals outside its narrow Coastal Zone, and its council rejected a temporary World Cup era expansion on a 3 to 2 vote in January 2026. Hermosa Beach caps its pilot program at 212 eligible non conforming properties, and as of recent city reporting only a handful had actually obtained a permit.\n\n## Why the legal answer matters more than the yield spreadsheet\n\nWe get this question a lot from owners who see Strand front comps and assume a nightly rate strategy is the obvious move. Before you run any revenue comparison, you need to know whether short term rental is even on the table for your specific address, because in both cities the zoning answer, not the market answer, usually decides this for you.\n\n### Manhattan Beach: allowed only in a narrow strip\n\nUnder Manhattan Beach's municipal code, short term vacation rentals are permitted only within the city's Coastal Zone; the rest of the city is off limits regardless of how strong the demand looks. The city's Transient Occupancy Tax on any short term stay is 14 percent, effective July 1, 2023. In January 2026, with an eye on World Cup visitor demand, the City Council considered a temporary, limited expansion of short term rentals citywide. It voted 3 to 2 against it, so the existing Coastal Zone only rule stands. If your property sits outside that zone, converting to nightly rental is not a strategy question, it is a compliance problem.\n\n### Hermosa Beach: a pilot program with a hard cap and a compliance deadline\n\nHermosa Beach runs a different model: a pilot program limited to 212 specific non conforming residential properties scattered through downtown, Pacific Coast Highway, and Aviation Boulevard, plus certain commercial districts under a 2019 ordinance. The program has been extended multiple times, most recently by Ordinance ORD-25-1489 in September 2025, and now runs through October 25, 2027. Operators must register, hold a city business license, and pay an annual permit fee (confirm the current amount on the city's fee schedule), and the city's Transient Occupancy Tax is 14 percent, raised from 12 percent by voters via Measure H in November 2019. Notably, city reporting has indicated that only a small fraction of the 212 eligible properties, single digits, have actually gone through the permitting process, which tells you the cap is not the binding constraint for most owners; the paperwork and compliance overhead is. The city has also pushed a registration and back tax compliance push, with a deadline of August 1, 2026 for STVR operators to register and pay any owed Transient Occupancy Tax in exchange for having retroactive interest and penalties waived.\n\n## If you are legally eligible, what actually drives the decision\n\nAssuming your property qualifies in one of these cities, the real comparison is not "nightly rate times 365." It is nightly rate times realistic occupancy, minus the 14 percent TOT, minus platform fees, minus cleaning and turnover costs, minus furnishing and higher insurance, minus your own time or a property manager's cut, compared against a stabilized long term lease with none of that overhead and far less regulatory exposure. Vacation rental marketing sites will show you gross revenue ranges that look dramatically higher than long term rent. Gross revenue is not net yield, and we have seen owners chase a headline number and end up with a mid teens percentage occupancy rate once World Cup season passes and the shoulder months hit.\n\n## What this means for you\n\nBefore you convert a long term rental to short term, confirm three things in this order: whether your specific parcel is zoned for it, whether a permit slot is actually available (Hermosa's cap is nearly full on paper but has room in practice), and whether the net numbers, after the 14 percent TOT and real operating costs, actually beat a well priced long term lease in your building. For most owners outside the Coastal Zone in Manhattan Beach, or without one of Hermosa's 212 eligible addresses, the answer is decided before the math even starts.\n\nIf running the compliance side of this sounds like more hassle than it is worth, that is exactly the kind of thing we handle for our owners.\n\nThis is general information, not legal or tax advice. Confirm with a licensed professional before you act.\n\n## Sources\n1. Short-Term Rentals, City of Manhattan Beach\n2. Transient Occupancy Tax (TOT), City of Manhattan Beach\n3. Short-Term Vacation Rentals, City of Hermosa Beach\n4. CITY OF HERMOSA BEACH LAUNCHES TAX & REGISTRATION PORTAL FOR LOCAL SHORT-TERM VACATION RENTALS\n5. Transient Occupancy Tax, City of Hermosa Beach\n6. City plans retroactive $5 million TOT pay from STVR owners, Easy Reader & Peninsula Magazine\n\nLast verified: July 2026.

Topics: market, short term rentals, manhattan beach, hermosa beach, rental strategy

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