Under current law in New York City, it is illegal to rent apartments for less than periods of 30 days in multi-unit buildings. Airbnb, the increasingly popular vacation rental platform, is accused of causing a surge in rental prices and limiting unit availability.
The Hotel Trades Council and McGill University in Montreal conducted this research that indicates Airbnb rentals have increased the annual costs of rent by approximately $780. Their findings further suggest that between 7,000 and 13,500 rental units have been removed from availability in the market in the past several years. City officials are beginning to levy large fines on those using Airbnb for short-term rentals that reduce the inventory of residences and unfairly take business from the region's hotels.
Chelsea Landlord Case
The Mayor's Special Enforcement Office has brought a lawsuit against the landlord of a four-story walk-up apartment building on West 15th Street for essentially running an unlicensed, nine-unit hotel. Despite fines and other efforts to stop the owner from these rental practices in the rent-stabilized apartments, the owner has persisted. In 2014, it was believed that two of the units were being rented short-term, which apparently increased over time to approximately six units, as existing tenants moved.
Legislation & Penalties
Legislation was recently passed by Governor Andrew Cuomo to fine persons or organizations $7,500 if found advertising rental property illegally through Airbnb or other similar sources. Thus far, New York City officials have sued 11 owners for illegal hotel operation activities. In 2017, a landlord paid $1.2 million to settle his case, the largest of its kind. Another case was settled for $1 million after an owner was found to be illegally renting dozens of units. Some penalties have also been for building and fire violations. Even after issuing 139 fines, the city struggles to enforce the law.
Airbnb claims the Hotel Trades Council and McGill University report was largely exaggerated, particularly regarding the number of rental units estimated to have been made unavailable in the market. It contends that many Airbnb rentals involve tenants making extra money on the rental when out of town. Josh Meltzer, a company spokesman, explains Airbnb is not opposed to legislation regarding home-sharing and that hosts can list only one property for rent on the site. The company released its own report showing rentals in the New York market brought in 2 million people and an estimated $3.5 billion in financial activity.
Proposed legislation in Albany limits this type of rental hosting exclusively to one's primary home.
“Illegal hotels” are still listed throughout many internet sites. The city's website offers a simple way for residents to report illegal short-term rentals, like those converting apartments into vacation units or hotel-type housing. You can also report advertising for the same.