Airbnb Faces Strict Regulations in New York City

In recent developments, New York City is witnessing a significant crackdown on Airbnb and short-term rentals, with potentially thousands of listings facing removal from the market.

The Stringency of Local Law 18

Local Law 18, enacted on a recent Tuesday, has imposed stringent regulations that go beyond merely limiting Airbnb’s operations within the city, effectively approaching an outright ban for many hosts and guests. Under the new rules, all short-term rental hosts in New York City are now required to register with the city. Moreover, only hosts who reside in the property they are renting and are present when guests stay can qualify. Additionally, a restriction caps the number of guests at two.

Changing Landscape of Short-Term Rentals

The new regulations mark the end of an era characterized by sleek downtown apartments tailored for bachelorette parties, cozy family-oriented two- and three-bedroom units near museums, and the option for individuals to rent out their apartments during their weekend getaways. While Airbnb, Vrbo, and similar platforms can technically continue operating in New York, the tightness of the new rules has led Airbnb to perceive it as a “de facto ban” on its business.

The Controversy Surrounding Short-Term Rentals

Short-term rentals have been associated with issues such as noise, trash, and safety concerns, often displacing local residents from their neighborhoods. Some landlords in New York have taken advantage of the system by managing hundreds of Airbnb listings. However, many other New Yorkers who list their properties on Airbnb do so to make ends meet, either renting their homes while they’re out of town or leasing part of their duplex to offset mortgage expenses.

Airbnb’s Popularity and Economic Impact

Airbnb has also been a popular choice for some of the 66 million annual visitors seeking cost-effective and spacious alternatives to hotels. In 2022 alone, short-term rental listings generated $85 million in New York. Although the city represents a relatively small segment of Airbnb’s global market, the new regulations demonstrate how local governments can swiftly curtail short-term rentals, reducing their impact on densely populated residential areas.

Diverse Approaches Across Cities

Cities worldwide are adopting varying strategies to address the challenges posed by short-term rentals. Dallas, for instance, has restricted short-term rentals to specific neighborhoods to prevent disruptive and hazardous gatherings. Meanwhile, in other places like Quebec, Canada, and Memphis, Tennessee, licenses for short-term rentals are now required. San Francisco limits the annual duration for renting an entire residence on Airbnb to 90 days, with Amsterdam setting the limit at 30 nights per year, and Paris at 120 days. Berlin, which previously banned almost all Airbnbs, walked back its decision in 2018.

Airbnb’s Legal Battles in New York City

Airbnb’s efforts to challenge the new law in New York City have thus far been unsuccessful. The company filed a lawsuit against the city in June, but in August, a judge dismissed the case, deeming the restrictions “entirely rational.” Airbnb has not disclosed whether it intends to appeal the decision. Hosts are also actively engaging with city officials in an attempt to alter the law and preserve their ability to offer short-term stays.

Impact on Tourism and Accessibility

The stringent rules have significant implications for New York City’s tourism economy, affecting thousands of New Yorkers and small businesses in the outer boroughs that rely on home-sharing and tourism income. Airbnb expresses its willingness to collaborate with the city to develop “sensible” home-sharing regulations, although specific details of their next steps remain undisclosed.

Changing the Landscape of Short-Term Rentals

The new regulations are expected to make short-term rentals “a lot less attractive” for many people coming to New York, according to Sean Hennessey, a professor at the New York University Jonathan M. Tisch Center of Hospitality. This is particularly relevant in a city where hotel rooms are known for their small size and high prices, potentially making the city less accessible to tourists.

The Housing Situation in New York

Currently, there are more than 40,000 Airbnb listings in New York, according to Inside Airbnb, an organization that tracks platform listings. As of June, 22,434 were short-term rentals, defined as rentals available for fewer than 30 days. While this number may seem small compared to New York City’s population of 8 million people, Murray Cox, the founder of Inside Airbnb, points out that some desirable neighborhoods are disproportionately affected by short-term rentals, leading to housing shortages and higher rents. The new law could potentially alleviate these issues and make homes more accessible to local residents, which is crucial in a city facing a housing shortage that has driven up rents and homelessness rates.

Making Platforms Accountable

The successful implementation of the law highlights the potential to control short-term rentals and hold platform companies accountable. Murray Cox, a member of the Coalition Against Illegal Hotels, emphasizes that it is possible to regulate these platforms effectively.

Challenges for Small-Time Hosts

The new regulations have raised concerns among small-scale hosts who feel unfairly categorized alongside professional landlords. Margenett Moore-Roberts, for example, rents out a two-bedroom apartment in her Brooklyn brownstone while residing in another unit with her family. She insists that she doesn’t want to lease the apartment to a full-time tenant, as she values the flexibility to host family and friends or use it as a home office. Unfortunately, due to her family not occupying the second two-bedroom unit, she can no longer list it on Airbnb for stays lasting less than 30 days.

Advocating for Homeowner Rights

“Restore Homeowner Autonomy and Rights,” a group of homeowners in New York, is advocating for amendments to the regulations. They propose that owner-occupied one- and two-family homes should be allowed to register their units with the city without capacity limits. They argue that individuals like Margenett Moore-Roberts should retain the ability to rent out their units, as they do not fall into the same category as larger landlords.

Airbnb’s Response and Impact on Bookings

Airbnb has announced plans to cancel and refund reservations in unregistered accommodations starting from December 2. Reservations made until December 1 can remain in effect to mitigate the impact on hosts and guests. Guests booking and staying in unregistered rentals will not face penalties, but hosts and the platforms they advertise on could face repercussions as of September 5.

Enforcement and Regulation

As of August 14, Airbnb reported blocking unregistered stays from future bookings past September 5. However, a recent search revealed dozens of entire apartments for more than two people still available for booking beyond September 5, which should not meet New York’s registration requirements for short-term rentals. Airbnb did not comment on why these listings were still accessible, while Vrbo chose not to comment for this story, and did not respond to inquiries.

The Role of Enforcement Agencies

Christian Klossner, the Executive Director of the Office of Special Enforcement in New York City, reported that by August 28, over 3,250 short-term rental hosts had submitted applications for registration. Of these, more than 800 applications had been reviewed, with 257 registrations granted, 479 returned for additional information or corrections, and 72 denied. As of Tuesday, the office will shift its focus to collaborating with booking platforms to ensure they implement the verification system for registrations and refrain from processing unverified transactions.

Airbnb’s Global Growth Despite Challenges

Despite the growing number of cities attempting to clamp down on Airbnb rentals, the company continues to experience growth. In the second quarter of 2023 alone, Airbnb reported earnings of $2.5 billion, marking an 18 percent year-on-year increase. The platform also saw an 11 percent growth in the number of nights and experiences booked during the same period.

These developments underscore the evolving landscape of short-term rentals, with New York City serving as a prominent example of the challenges and changes faced by the industry. As regulatory measures are enacted and debated, the impact on hosts, guests, and the broader hospitality sector remains a subject of ongoing concern and discussion.

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