Six months have passed since New York City all but banned short-term rentals like those offered via Airbnb. The policy was intended to free up apartments in America’s most congested city to become homes for long-term New Yorkers, instead of housing rotating out-of-town guests that bring noise, trash, and worse. So far, the law’s most noticeable effects seem to be sending droves of tourists to New Jersey and frustrating small-time Airbnb hosts.
New York City’s law immediately wiped out some 15,000 short-term rentals from Airbnb’s site when it was implemented in September, as the site automatically converted them to longer stays to remain compliant with the new rules. As of February, there are fewer than 5,000, according to Inside Airbnb, a housing advocacy group that scrapes Airbnb’s site for data.
Other cities are watching as New York and its anticipated 65 million tourists for 2024 navigate the new regulations. A recent search on Airbnb for places to stay for a weekend pulled up individual rooms in occupied apartments scattered across the city, hotel rooms, or entire apartments and homes in nearby New Jersey. There are some 35,000 New York City apartments listed on Airbnb for stays of 30 nights or more, according to AirDNA, a short-term rental intelligence firm, which are legal and do not require the short-term rental licenses. That suggests many apartments previously listed on Airbnb haven’t been converted into long-term leases for more permanent residents.
Brian Chesky, Airbnb’s CEO, has called New York a “cautionary tale” for cities looking to regulate short-term rentals. New York is one of many cities around the globe experimenting with ways to restrict short-term rentals, in response to the way Airbnb and other sites have changed the makeup of neighborhoods and brought tourists into previously purely residential areas. How New York’s ban fares is a test: If America’s biggest city can fix the problem, more may follow.
New York had long banned short-term rentals of entire apartments, but without last year’s law it lacked the teeth to enforce the measure. The change didn’t fully ban all short-term rentals, but it did usher in strict requirements to operate them. Among the rules: Hosts must live in and be present in the residence they want to rent and can only allow two guests to stay at a time. This effectively did away with sleek, luxury whole-apartment rentals owned by real estate investors, but also shut down people who may have made a little extra income renting out their apartment while out of town, or those who let separate apartments attached to the one where they live.
Many of these small-time hosts had no intent to become full-time landlords. Welcoming short-term renters was a way to avoid the responsibility of a 24/7 tenant or the risk of squatters. When the city touted the law as a way to open more homes and calculated these apartments into its vacancy estimates, it assumed wrong, says Tony Lindsay, president of the New York Homeowners Alliance Corp, a nonprofit that advocates for the rights of homeowners in the city.
More than 95 percent of the group’s members say they have no intention of becoming long-term landlords, says Lindsay. Instead, he argues, they are now faced with rising housing costs and no immediate way to offset them. The law “has yielded some unintentional effects that are harming smaller homeowners,” Lindsay says.
Amid the uncertainties, there may be some winners from the law: hotels in the city and the state of New Jersey. Hotel occupancy rates in New York have been slightly up year-over year, by 4 percent in January and 3.4 percent through February 24, according to CoStar, which tracks commercial real estate. The average daily room rate in January was up from $198 a night to $209, and from $200 to about $207 through February 24.
Across the Hudson River, demand for short-term rentals has risen sharply in Jersey City, Hoboken, and Weehawken since the law passed, all cities that offer quick access into downtown Manhattan. Jersey City has seen demand rise 77 percent year-over-year as of mid-February, according to AirDNA, while in Weehawken and Hoboken demand has increased 45 and 32 percent, respectively.
The high rents in New York so far seem unaffected. Despite hopes from lawmakers that the ban might bring them down, short-term rentals are just one piece of a complex unaffordable housing problem. More than half of New York households are rent-burdened, meaning they spend more than 30 percent of their income on housing, a 2023 report from nonprofit Community Service Society found.
The median rent of properties in the city on Zillow was up $165 in March from the same month last year, coming to $3,465. But a January 2024 report from real estate company Douglass Elliman found that rent prices fell in Manhattan and Brooklyn, areas popular with tourists, after rents stabilized and the number of vacant apartments increased in December. If restricting short-term rentals helps residents, it may take longer than six months to manifest. A recent study looked at Irvine, California, which bans short-term rentals in all residential zones, and found that after two years of the ban, rents dropped by about 3 percent.
Enforcement of the law has been patchy. With Airbnb off limits, people turned to Craigslist, Facebook Marketplace, or other home-sharing sites like Houfy to list their apartments after they were booted from sites like Airbnb or Vrbo. The city has not yet issued any fines to people for renting out their apartments illegally, as it is still working on compliance, according to Christian Klossner, executive director of the Mayor’s Office of Special Enforcement, which oversees the licensing process. But he says the city is responding to complaints related to illegal renting. As of February 26, the city had received 5,783 applications to run short-term rentals. It has approved 1,594, denied 990, and sent back more than 3,000 for more information or corrections.
Airbnb opposed the law, and sued the city before it took effect, but the case was dismissed last August. Now that the law is in effect, the company is maintaining its opposition. “In the six months since New York City’s short-term rental rules went into effect, we’ve seen travelers facing record hotel prices and former hosts struggling with loss of income—but we have seen no improvement in housing costs,” Nathan Rotman, Airbnb’s Northeast policy lead, tells WIRED. “We hope city leaders listen to hosts who are advocating for changes to the existing rules.”
Lindsay, of the homeowners association, says people like him are hurting while their counterparts in New Jersey benefit. Renting out an apartment on Airbnb “was a lifeline for me, especially during the pandemic,” he says. The association is working on ways the New York City Council might amend the law to allow these smaller hosts to operate short-term rentals. Right now, he says, it fails by grouping small homeowners in with big-time investors. “It treats all property owners as if they’re these evil, maniacal villains.”
Source : Wired
