A new future of New York City short-term rentals is on the horizon.
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On September 5, New York City will begin enforcing a 2022 law that restricts short-term rentals.
An estimated 40,000 listings will need to comply with new rules, like hosts being on site.
For some short-term-rental hosts, it’s the end of the road. For others, it’s a major opportunity.
Labor Day marks the end of summer, but this year it will also mark the end of an era for New York City’s short-term rentals.
Starting September 5, the city will begin enforcing a 2022 law requiring hosts on Airbnb, Vrbo, and other short-term-rental platforms to register with the city. Hosts will have to comply with new rules like a ban on entire-unit rentals, a requirement to stay in-unit with guests, and a reservation cap of two people.
Failure to comply could result in up to $5,000 in fines per stay, but exemptions exist for certain buildings that are designated for transient lodging.
The new rules threaten to shutter thousands of short-term rentals and fundamentally redraw what kinds of apartments and homes are used for short-term rentals in New York City. For some hosts, it’s the end of the road, while others see the drawback in competition as their biggest opportunity in a decade.
No one knows just how many short-term rentals will get shut down
It’s unclear exactly how many short-term rentals there are in New York City. Data site Inside Airbnb estimates there are 40,000 Airbnb listings alone, while an economic study prepared for Airbnb by Boston University Professor Michael Salinger estimates that number is closer to 36,000. To be sure, the number is large — and that’s just for Airbnb. The law will impact listings on all short-term-rental platforms.
The Wall Street Journal reported the city itself believes there are up to 10,800 illegal listings across all short-term-rental platforms and faces an uphill climb in attempting to efficiently register lawful hosts. As of August 28, only 257 licenses have been approved by New York City’s Office of Special Enforcement, according to the travel site Skift.
Analytics site AirDNA said they are monitoring 4,000 listings they believe might be removed under the enforcement of the 2022 law. That pool, however, represents over 40% of revenue earned in the five boroughs.
Airbnb declined to comment.
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New York is like dozens of cities and towns around the country that are cracking down on short-term rentals, citing everything from rowdy guests to shrinking housing stock. In Philadelphia, the recent enforcement of a 2021 law threatens 85% of the city’s listings.
One reason for New York City’s crackdown is a concern over how short-term rentals squeeze an already incredibly tight housing market.
“Our administration is determined to preserve affordable housing and cracking down on illegal short term renters are one way we are going to accomplish that aspect,” New York City Mayor Eric Adams said at a press conference in July 2022.
One host feels ‘caught up in this lazy sweep’ and fears for her future
New York City Airbnb host Melissa, whose last name has been withheld for reasons of personal safety, owns a townhome with three units in Ridgewood, Queens.
Melissa and her two school-age children live on the building’s first floor, a long-term tenant lives on the second floor, and Melissa rents the basement unit out as an Airbnb. It sleeps up to four people for around $175 per night.
As a documentary filmmaker, the $3,000 to $5,000 per month she makes from the short-term rental has been critical to her livelihood. In April, she was laid off from a full-time job at a media company, and said she couldn’t survive without the income from Airbnb.
“Since I lost my job, I’ve been relying on that income as a single parent with two young children,” she told Insider. “I’m spiraling a little bit.”
Under the new rules, Melissa isn’t sure she’d be able to rent out her unit as she does currently. She finds the law confusing and overly restrictive, shuttering small-scale hosts like her at the expense of trying to weed out hosts with full-blown businesses.
“I understand what they’re trying to do, trying to get rid of nefarious hosts who take a lot of housing stock off the market,” she said. “But a lot of short-term-rental hosts are getting caught up in this lazy sweep.”
Melissa said she does not plan on attempting to register for a license. Instead she’s exploring moving to mid-term rentals — stays between one month and a year — that are often booked by transient professionals like traveling nurses, medical residents, filmmakers, and interns.
Mid-term rentals aren’t as lucrative, she said, and are more vulnerable to legal complications.
She added, “Everyone just wants a place to live and to make it in what is one of the most expensive cities in the country.”
Other operators see a major opportunity
Meanwhile, short-term-rental operator AKA sees an opportunity in the market. AKA CEO Larry Korman told Insider he’s “hoping for a level playing field” under the new law, as operators previously helming Airbnb empires out of apartments will cease to exist.
AKA operates whole buildings of short-term rentals, and will be allowed to operate under the city’s new rules. AKA offerings target luxury travelers, with Bulgari soaps and state-of-the-art gym facilities.
The starting nightly rate for most AKA properties hovers around $450. Currently, the average daily rate for New York City listings on Airbnb and Vrbo is $251, according to AirDNA.
Crowds relaxing in Central Park.
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Korman sees the potential decrease of the city’s Airbnb housing stock as a right time, right place opportunity for his business, with the generation of young users who first took to Airbnb aging into higher-end stays.
“A lot of these younger kids who started out 10 or 15 years ago with Airbnb, some of their tastes have evolved,” he said. Maybe they once relied on Airbnb for cheap travel as students, he said, but “now they have jobs and a little bit more money.”
With buildings off of Central Park, in Times Square, and in New York’s Nomad neighborhood, Korman said most rooms for September and October are already booked, but all eyes are on winter bookings.
“I think that big uptick will be seen after the enforcement goes into full effect,” he said, adding he’s hopeful the first quarter of 2024 will be a boom-time for the city’s hotels and hotel-like residences like AKAs.