It was once a popular way to visit New York City: book someone else’s entire apartment for a few hundred dollars a night on a site like Airbnb, and briefly play resident in America’s most expensive metropolis.
In a city where one in three renters spend nearly half their income on rent and lines for apartment viewings snake around the block, the practice infuriated tenants struggling to find housing.
Even more so because it was mostly illegal. For many decades, New York City’s residential laws and building codes have prohibited residents from renting out their entire homes to guests for stays under 30 days. Short-term rentals have only been allowed for part of a home, and only for up to two guests, if the primary resident is also present the whole time.
That means it’s long been illegal to buy a New York apartment building to run a secret bed-and-breakfast empire, or even rent your shoebox out to tourists when you’re gone for a few days. But people did it anyway, because it was lucrative and the city rarely enforced the rules.
Hosts only got in trouble if someone reported them directly to authorities – which is what happened to Lisa Grossman, the owner of a posh Midtown Manhattan townhouse, who was penalized in 2019 for hosting short-term guests, charging them more than $2,000 a night. She suspects someone tipped off officials, who confronted the guests outside her home. “Ten minutes later, I got $10,000 in fines,” she says.
Now far more illegal hosts could get knocks on their door, thanks to the implementation of a new regulation called Local Law 18. It forces hosts to get approved by the city before they can list short-term, partial-home stays on sites like Airbnb, which means they can no longer use the platform to advertise illegal short-term, entire-home stays at all. And if Airbnb processes such a transaction, it could be forced to pay hefty fines.
Local Law 18 went into effect in September. Between August and October, the number of short-term rentals plunged 85%, according to Inside Airbnb, a housing activist group that tracks the platform’s data. Authorities agree: the law is working. But now some hosts are fighting back. As the law went into effect this year, Grossman and a few other New York City homeowners formed a lobbying group seeking to legalize short-term, entire-home rentals for one- and two-family homes (such as duplexes), and they claim Mayor Eric Adams is sympathetic to their cause.
Cities around the world are watching closely to see how the fight plays out in the largest tourism market to take action against Airbnb so far. What does it mean for residents desperate for more housing supply – and the tourists trying to visit?
Who are the hosts fighting the new law?
Grossman’s lobbying group is called Restore Homeowner Autonomy and Rights, or Rhoar, and claims a membership of 450 single- and two-family home owners. A quarter of their members have incomes of less than $75,000 a year, and half are people of color, Grossman tells the Guardian: “We’re gritty New Yorkers, and we’re middle-class.”
Rhoar recently met privately with Adams to plead for legalizing short-term, entire-home rentals for one- and two-family homes. “The general gist of the meeting was he supports us, but he can’t make these changes on his own,” Grossman says. “Basically, he was like, ‘You gotta go to the city council.’”
Grossman argues that Rhoar’s members need the extra income from short-term, entire-home rentals to stay afloat, and that these rentals allow them to maintain spare properties for their family and friends to enjoy when visiting from out of town.
But the Rhoar leader is more than scraping by; Grossman confirmed to the Guardian that her two-family townhouse is worth $5m. She lives in the top-floor unit with her family and won’t consider sharing it with guests. “I’ve got a husband and a family, and I’m definitely not going to have somebody living in our house with us,” she said. “I’m too old for that.”
Grossman said she had not applied for a short-term rental registration with the city. But as of last week she was still advertising the home’s first floor unit on the luxury booking platform Vrbo, as well as her own website, for stays as short as one week – in apparent violation of the law – charging $2,700 a night.
Grossman blamed a “glitch” in Vrbo’s system for allowing short-term bookings, despite Local Law 18. Minutes after speaking to the Guardian, her website was set to a “private site”, and the Vrbo listing disappeared shortly afterward. (Vrbo declined to comment, but a spokesperson for its parent company, Expedia, said in a statement that it “continues to work with the city and our partners to meet the law’s requirements and minimize disruption to the city’s travelers and tourism economy”.)
A spokesperson for Adams told the Guardian that the mayor would consider legislation to allow one- and two-family homeowners to rent their entire homes short-term, if the city council passed such a bill. So far, Rhoar says it’s met with 17 city councilmembers – though it’s unclear if any of them have signed on to Rhoar’s cause. (The Guardian reached out to multiple members of New York City council who work on housing issues, but all declined to comment.)
In the meantime, “our strategy is keeping much-needed permanent housing available for New Yorkers as tourism rebounds with 65 million visitors expected this year, while significantly limiting the proliferation of illegal short-term rentals”, Adams’s spokesperson said.
Michael McKee, a housing activist who helped pass Local Law 18, says allowing one- or two- family homeowners to do short-term, entire-home rentals would be a grave mistake. “We’re in the middle of a desert in terms of the affordability and availability of housing,” he says. “That’s why we are determined not to just let these one- or two- family homeowners rent to tourists instead of permanent residents.”
What does this mean for tourists?
It’s true that hotel prices have gone up in New York City – though it’s difficult to say how much has been due to Local Law 18. According to statistics by Trivago, the average room rate in New York City hit $502 this month, up 2% from the previous month and nearly 8% from a year prior.
When Zoe, a traveler from LA, decided to visit New York City recently, she was greeted with far slimmer pickings than what she remembered from a trip last year. All she found on Airbnb were rooms charging more than $300 a night, not including hidden fees. She found some budget hotels for about $200 a night, but the fees at checkout also caught her off guard.
So she posted in some Facebook groups for travelers, where she was approached by hosts offering to rent to her under the table. “I had reservations regarding safety,” she says. “One person wanted to rent out their studio, but I’d just have to crash on the couch, and it just didn’t seem worth it.” Ultimately, Zoe says, “the entire process became overwhelming” and she decided to postpone her trip.
Another recent visitor, Jahed Zaidi, also turned to social media to look for a place to stay. He got offers from former Airbnb owners to stay with them off the books, but he opted not to due to “trust issues”, he says. In the end, he managed to crash with a friend for free.
Vijay Dandapani, the head of the Hotel Association of New York City, thinks that New York City hotel prices will change “to some degree” as a result of Local Law 18. “But more hotels will be built as rates go up to meet the supply and demand gap,” he told the Guardian in an email. Overall, he called the law’s rollout “slow but fairly successful … It stops the unfair regulatory and financial arbitrage stemming from illegally renting homes as hotels.”
How is the city enforcing the rules?
“Working together with industry-leading platforms has resulted in strong compliance and a massive reduction in illegal short-term rental listings,” said Christian Klossner, the director of New York City’s office of special enforcement, the agency tasked with policing the law.
A spokesperson for the office told the Guardian that it had not yet issued hosts any of the new fines created by Local Law 18, in what’s in effect a grace period. The office didn’t say when that period would end, but hosts tell the Guardian that Airbnb has allowed them to continue with any unregistered short-term rental bookings through 1 December.
The city is working through a mountain of registration applications from hosts seeking to rent part of their homes short-term. As of last week, the agency – which data shows remains understaffed – had received nearly 4,900 applications and reviewed just under 1,900. Of those, it’s granted 543 registrations, denied 290, and sent the rest back to the applicants to ask for more information.
An Airbnb spokesperson said Airbnb began notifying its hosts in March about the registration process, and blamed the city’s registration system for being too complicated. But the agency says some blame belongs to Airbnb, which hit it with a lawsuit over the summer, delaying the registration system’s implementation for months before a state supreme court judge dismissed it in August: “All Airbnb has to do is properly verify potential listings,” the judge wrote.
Some hosts have fled to alternative platforms that don’t currently require registrations. Like Lisa M, 53, of the East Village, a former corporate executive who’s now disabled and unemployed and relies on the income from illegally renting out her rent-stabilized apartment to short-term guests. Now that Airbnb requires a registration, she’s switched to Craigslist, Facebook and a rental site called Houfy to try to find new customers under the table. “I think I’m gonna be able to hopefully navigate this black market,” she says.
But there’s little evidence that many hosts are following in her footsteps. Currently, there are just a few dozen short-term, entire-home listings on sites like Craigslist and Facebook, and a Houfy spokesperson tells the Guardian it is “not aware of any noticeable increase in listings” in New York City over the last year.
What does this mean for long-term residents?
It’s too early to determine if the new rules have brought a flood of housing back to New Yorkers, but the numbers seem to suggest it’s working.
Data from Inside Airbnb shows a huge decrease in short-term rentals on Airbnb between the months before and after Local Law 18 took effect: from 21,785 short-term rentals in August to just 3,227 in October.
And though it could just be a coincidence, new statistics this month show that the city’s rental costs are backing off from record highs, as the vacancy rate increases to a level not seen in three years – good news for folks looking to sign rental leases.
Landlords tired of their tenants running secret hotels in their buildings have also started taking advantage of the new law. At least one Manhattan property manager has reportedly sued a tenant and Airbnb for illegally advertising a short-term rental in the building, and more are expected to follow.
Murray Cox, Inside Airbnb’s founder, says the law is already delivering its promised breakthrough: “It’s very satisfying to see thousands of housing units potentially returned to the long-term rental market.”
But McKee warns the law is “still not enough to solve the housing crisis”.
“You’re still going to have a huge, gigantic disparity between supply and demand, you’re still going to have a landlord’s market,” he says. “Historically, this has been the case in New York City and in virtually every dense urban environment for centuries. There’s too many more people looking for a place to live than you have places to live.”
