BAM Key Details:
- New York City officials have started enforcing strict new regulations against short-term rentals, potentially resulting in the removal of tens of thousands of illegal listings from Airbnb and other platforms.
- Airbnb is calling the new rules a “de facto ban” of their platform, and short-term rental owners say the new policy will hurt families trying to make ends meet—as well as families looking for lower-cost accommodations in NYC.
- Realtor.com has added an Airbnb integration to its platform to enable homeowners to determine the amount of short-term rental income they could earn with their home.
As of last Tuesday, New York City officials started enforcing strict new regulations on short term rentals (STRs). And hosts who’ve been making bank by renting out their homes are crying foul.
In defense of its decision, city officials argue that the rapid increase in STRs has aggravated New York City’s housing shortage. After all, with a large majority of homeowners locked into low mortgage rates, many are choosing to rent out their homes rather than sell them. And STR owners renting that space to tourists and short-term visitors instead of their fellow New Yorkers makes it more difficult for residents to find affordable housing.
Airbnb argues that the new regulations amount to a “de facto ban” on their platform. Other critics suspect the new rules are there to appease the hotel industry and that, ultimately, visitors will pay the price when lower-cost accommodations are no longer available.
The move will likely result in the removal of tens of thousands of short-term rental listings from Airbnb and other platforms. This is the latest and possibly most aggressive development in the ongoing feud between large cities and home-sharing companies.
Local Law 18
The measure known as Local Law 18—passed in January of this year—requires homeowners to register with the city government if they want to rent out space in their homes for less than 30 days per booking.
Airbnb and some local rental hosts filed separate lawsuits against the city to block the enforcement of the rules outlined in Local Law 18. Last month, those suits were dismissed.
According to NYC law, short-term rental hosts can have no more than two paying guests at a time—effectively ruling out families (as well as party groups).
Not only that but hosts must be physically present during their guests’ stay. In fact, they have to prove to the city that they still reside in the building. So, anyone looking to rent out their entire home or apartment will no longer be able to simply list it on Airbnb. They can only say they have bedrooms available in the home they are currently living in.
That also means anyone hoping to rent an entire apartment or home on Airbnb, VRBO, etc. to have all to themselves is out of luck. The homeowner will have to be physically present with them throughout their entire stay.
To enforce the rules, Airbnb and other short-term rental platforms are no longer allowed to process rental applications for unregistered hosts. As of last week (the first week of the new rules being enforced), few have successfully registered.
New York City officials say they’ve approved just under 300 of the over 3,800 applications they’ve received from hopeful short-term rental owners.
New York City’s new short-term rental rules are a blow to its tourism economy and the thousands of New Yorkers and small businesses in the outer boroughs who rely on home sharing and tourism dollars to help make ends meet. The city is sending a clear message to millions of potential visitors who will now have fewer accommodation options when they visit New York City: you are not welcome.
Support for the new rules
The intent behind these new rules is to put an end to the “free-for-all” with NYC residents and landlords renting out their apartments nightly or by the week to tourists or anyone coming to town for short stays.
Supporters of NYC’s aggressive new stance have been pushing for tighter regulation of short-term rental platforms in New York and other metros, especially with homes in short supply. Fewer people are putting their homes on the market because, to them, it makes more financial sense to rent them out instead. And with the popularity of NYC as a tourist attraction, area homeowners may have found short-term renters easier to find and more lucrative than renters looking for a place to call home.
Meanwhile, residents living near short-term rentals have complained that these dwellings are disruptive to local communities, especially when the short-term renters come to party (loudly) and leave chaos in their wake.
Apartment dwellers have seen strangers in their hallways who show little regard for their neighbors and who leave their rented space worse off than they found it.
On the other side of the issue, short-term rental hosts argue that the new crackdown in NYC will only hurt families trying to make ends meet by renting out their homes.
Talk about timing
Just when Realtor.com added Airbnb host estimates to their platform to make it easier for homeowners to determine the rental income they could earn (based on actual data—not homeowner opinion), NYC’s new regulations rule out the idea of renting out an entire home.
Mausam Bhatt, Chief Product Officer for Realtor.com®, makes a strong case for the new addition, particularly since 60% of surveyed homeowners indicated they would consider renting out their home if they opted to buy or rent a home somewhere else.
Short-term rentals are a great way to help with some of the costs of homeownership – renting out their house for a couple days or weeks out of the year when it’s not in use could generate extra income that can be put toward the mortgage, maintenance, or even help cover the cost of a vacation. By arming homeowners with information about how much they could potentially make by renting a room or their whole home on Airbnb, Realtor.com® is helping them better understand their options and in turn make more informed decisions about their home.
NYC homeowners who would like to take advantage of this feature will now have to take their city’s new regulations into account. And for those who have already been renting out their homes—or parts of it—these new regulations feel personal.
It’s one thing to require homeowners to register with their city government before renting out part of their home for less than 30 days. The other rules—keeping the number of renters to a maximum of two at a time and requiring the host to be physically present in the home they’re renting—will make it much harder for homeowners in NYC to justify keeping their homes and renting them out rather than selling them and putting more homes on the market.
Or they might just switch to a long-term rental model, providing more options for area renters.
Either way, that may be exactly what the city is hoping for.
Takeaways for real estate agents
If you’re not serving the New York City area, you can certainly share the information on Realtor.com®’s new Airbnb integration with area homeowners who are torn between selling their home and renting it out. Sharing the news about NYC’s regulations could also serve as a helpful heads-up as they’re not the only city favoring restrictions on short-term rentals.
This information falls under helping homeowners in your area understand their options as clearly as possible so they don’t miss out on an opportunity that would ultimately serve them better.
