- New York City began enforcing regulations last year that largely ban short-term rentals, including Airbnb.
- As of June 24, there were just 2,276 legal short-term rentals, according to city officials.
- City officials say the law is aimed at easing the housing affordability crisis and boosting the hotel industry.
New York City began enforcing strict new regulations on short-term rentals last September, and since then, the number of legal short-term rentals listed on Airbnb and other platforms has plummeted.
The city’s policy, known as Local Law 18, has been in effect for less than a year, and it’s not clear whether the ban-like measure is achieving one of its primary goals: relieving pressure on the city’s severe housing shortage. But as summer tourism picks up, a lack of rental housing and rising hotel rates could force visitors to the city into a more expensive trip than they expected.
Under LL18, people can rent out their homes for less than 30 days, so long as the unit is located in a permitted building, they rent to a maximum of two guests at a time, and there are other restrictions, such as staying in the home with the guests. Potential hosts must apply for approval from the Mayor’s Office of Criminal Justice’s Office of Special Enforcement.
According to OSE, the city opened its application portal in March 2023 and has received a total of 6,395 applications for short-term rentals as of June 24. The city has approved 2,276 of those, rejected 1,746 and asked 2,269 applicants to submit additional information, the department said.
The low number of permits has led to a dramatic decline in short-term listings since last year, according to AirDNA, which collects industry data. Between August and September of last year, when the city began enforcing LL18, Airbnb listings for stays of less than 30 days plummeted from 22,246 to 8,039. They fell again to a low of 2,646 in October, but have since risen slowly to nearly 4,000 in May, about 82% below the level of August last year.
We want to hear from you: Are you an Airbnb host in New York and have you been affected by the new regulations? Have you been affected by a loss of income? Have you converted a short-term rental to a long-term rental? Are you still looking for ways to rent privately? Use this form to tell us how the new rules affect you.
At the same time, Airbnb listings for stays of 30 days or more have also skyrocketed, and many of these new medium-term rentals are conversions from short-term rentals, Jamie Lane, chief economist at AirDNA, told Business Insider.
“In fact, when we looked at the total number of listings on Airbnb from October when the dust had settled to before the law went into effect, we found that the decline was only about 14 percent,” Lane said.
The majority of short-term rentals in New York City are listed on Airbnb, with a small percentage also listed on Vrbo and Booking.com, Lane said.
The city has not yet begun fining hosts who violate LL18, but is working with Airbnb and other short-term rental companies to make sure they are complying with the rules before it begins enforcing them.
“As a result, we have seen a significant drop in illegal listings across all major platforms,” ​​Christian Klossner, director of the Special Enforcement Office, told Business Insider. “This law is not about imposing new fines. This law is about eradicating illegal listings, and we have done that.”
The city has not said how many short-term rentals it has found in violation of LL 18, saying it will release the number in its annual report in September, but OSE lawyers said the city continues to conduct inspections based on complaints and is issuing fines for long-standing violations of rental regulations.
The city has long prohibited homeowners from renting out their entire home for less than 30 days, but until LL18 was passed it lacked the authority to enforce such regulations.
The impact of near-ban situations
LL18 was launched in response to rising housing prices in New York City, which is largely due to a severe housing shortage. Pro-housing LL18 supporters say the city needs to prioritize housing over hotel rooms.
“Illegal short-term rentals hurt our hospitality industry and make it harder for New Yorkers to find affordable housing, and we must hold them accountable,” New York City Mayor Eric Adams said in a statement in March.
Short-term rentals, including Airbnb, can exacerbate the housing shortage by taking homes off the market that would otherwise be occupied full-time — the city recently reported that its vacancy rate is 1.4 percent, the lowest in 50 years — and can also lead to higher home and rent prices.
In a 2018 report, former City Comptroller Scott Stringer found that for every 1% of homes listed on Airbnb in a New York City neighborhood, rents in that neighborhood increased by 1.58%. “Between 2009 and 2016, Airbnb was responsible for approximately 9.2% of citywide rent increases,” the report noted.
But Airbnb and other critics say the ban-like measure won’t do much to solve the housing crisis, only hurting homeowners who rely on rental income and travelers who can’t afford high hotel prices. There are many factors that affect housing costs and vacancy rates, from new housing construction to migration patterns. But there’s also evidence from cities like Irvine, California, that restricting short-term rentals can lower rents. It’s not clear how much of a role LL18 has played so far in changing those conditions.
Hotel industry revenues have soared recently. Occupancy rates hit 82% last year, while the national average is 63% after dropping to 47% in 2020. The average room rate hit a record high of $301 a night and is set to rise 8.5% from 2022 onwards. The drop in vacancy rates and higher rates can be attributed to factors including a significant decline in short-term rentals and about 20% of the city’s hotel rooms now being used as shelters for migrants.
“When you eliminate 20,000 short-term rentals, it’s not surprising that hotel rates suddenly go up 10 percent,” Lane said.
Airbnb sued the city to stop LL18 from going into effect, but lost the case last August. “New York City’s short-term rental restrictions have significantly reduced lodging options for visitors, driven up hotel prices, and contributed to making it more expensive to visit the Big Apple,” Nathan Rotman, Airbnb’s head of policy in the Northeast, said in a statement to Business Insider. “More importantly, the restrictions have not improved housing affordability in the city, where rents continue to rise and housing inventory is at an all-time low.”
Some Airbnb hosts have criticized the move, saying it goes too far and stifles smaller hosts who rely on additional income, even though the original target was a much larger empire.
One New York City host told Business Insider that he found the ban an “insult” and was continuing to offer illegal rentals despite the threat of new fines.
“The Central Park penthouse building is empty because no one is going to pay millions of dollars for it, but I’m fighting in New York to keep living in my pre-war step apartment,” the owner, who asked not to be identified to protect his privacy, told Business Insider.