As of September 5, 2023, those hoping to visit ‘The City That Never Sleeps’ will be hard pressed to find short-term rental accommodations following the implementation of Local Law 18. The new regulation greatly limits the opportunities available to visitors who seek to stay at Airbnbs or Vrbos. However, New York City is not the only one to instrument new regulations, as cities and residential neighborhoods across the world place various limits on short-term rentals. The rationale behind the New York City Law focuses on protecting the City’s residents and regulating housing prices. Nonetheless, the Law will have a serious impact on booking companies, as well as tourists seeking to visit the city.
The first requirement in Local Law 18 requires that permanent residents who seek to host short-term renters register with the Mayor’s Office of Special Enforcement (OSE). If approved, the host will receive a registered number which is required to post the listing. The Law prohibits short-term rentals, less than 30 days, unless the registered host is physically present during the stay. Further, “no more than two paying guests can stay in the short-term rental at a time,” and both hosts and visitors must be allowed access to the entire unit, meaning all interior doors must remain unlocked, throughout the stay. Hosts who violate the Law “could face fines of up to $5,000 for repeat offenders, and platforms could be fined up to $1,500 for transactions involving illegal rentals.”
These regulations, which many find to be the most controversial within the Law, diminish the availability and desirability of short-term renting within the City. For example, renters become roommates with their hosts throughout the stay, which is an unsettling concept for critics of the Law, seeing as they are also required to leave the doors unlocked throughout the stay. Further, Airbnb counted approximately 38,500 “active non-hotel listings” that had been booked as of January 1. However, as of August 28, the OSE rejected or returned all but 257 of nearly 1,000 submissions it received for non-compliance or additional information. Consequently, it appears there will be a significant drop in the availability of listings for those seeking to visit the City. The law also effectively bars families from renting a unit, as only two paying guests can stay in the dwelling during the visit, leaving expensive hotel rooms as their only option.
Airbnb said “the new rules amount to a ‘de facto ban’ on the platform.” The company filed a lawsuit in June stating “the new scheme [is] ‘extreme and oppressive’ and said it clashes with a federal law that has shielded many tech platforms from liability for content posted by its users.” However, the lawsuit was dismissed in August. The Global Policy Director for Airbnb stated New York City is sending a message to visitors, and that message is “you are not welcome.”
The City argues short-term rentals make it more expensive to live in the City by exacerbating the acute housing shortage and driving up rent. Further, residents living in buildings with short-term rentals “have complained that transient guests bring a greater risk of crime, excessive noise and cleanliness problems.” There is also significant influence from the hotel industry who have long fought the expansion of booking platforms. Across the globe, cities who have instituted similar restrictions for short-term rentals have cited congruous reasoning for their implementation, like fears of displacing residents. Cities have employed several different approaches to regulating short-term rentals, such as limits on the number of days a property can be rented out per year or barring rental properties altogether. However, a question remains on how effective the regulation will be. For example, Barcelona requires hosts to obtain licenses to rent their properties, yet an estimated thirty percent of properties listed in the city, as of this past June, were illegal and posted with fake license numbers. A further, “[twenty-five percent] of hosts claimed they were exempt from the requirement.”
Ultimately, only time will tell as to how effective the regulations are and the impact it will have on tourism rates in New York City. However, with less availability for accommodations, the tourism industry, apart from hotels, will likely feel the consequences of fewer visitors. Despite an initial setback in its legal proceedings, Airbnb states it will continue to “find a path forward with the city.” Nonetheless, it appears to be an uphill battle for booking platforms and hosts, alike.
Kaitlyn Piechnik is a second-year student at Wake Forest University School of Law who recently joined the editorial staff of the Journal of Business and Intellectual Property Law. Prior to law school, she earned her bachelor’s degree from Union College (NY). Upon graduation, Kaitlyn plans to practice in Washington, D.C.
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