Travellers looking for an Airbnb for their next trip to New York City might be left grappling with limited options. With new city regulations on short-term rentals (STRs), finding stay options is set to get a lot tougher.
Effective September 5, 2023, the new New York City directive mandates listings on rental sites like Airbnb cannot be available for stays less than 30 days if the owners have not gone through the city’s application process and received approval and an official registration number.
The new rules require hosts to strictly comply with occupancy and building codes. This aims to improve visitors’ security as well as reduce “public nuisances” such as late-night partying, excessive noise and crime rates.
What does the new rule say and how does Airbnb view it?
According to Bloomberg, NYC had some very restrictive measures in place in terms of STRs. However, these rules were often neglected. Pre-dated rules forbid hosts from renting out apartments for less than 30 days if they are not present in the apartment or staying in the same building. It also mentions that a host cannot rent to more than two guests at a time.
Additionally, the property space must abide by building and fire codes at all times, which includes installing sprinklers and fire alarm systems and prohibiting locks between rooms.
According to the NYC Office of Special Enforcement, The STR Registration Law now makes it compulsory for hosts to register with the Mayor’s Office of Special Enforcement (OSE) and booking platforms (such as Airbnb, VRBO, Booking.com, and others) are prohibited from allowing transactions for those unregistered. Violations of these parameters will invite penalties for both hosts and the booking services.
What does the regulation add to this?
The NYC Office of Special Enforcement states, “Final rules for the program were published on February 3, 2023, and the law took effect on March 6, 2023.”
“Starting September 5, 2023, OSE’s initial phase of Local Law 18 enforcement will focus on collaborating with the booking platforms to ensure they are using the city’s verification system, that all verifications are occurring correctly, and that the platforms stop processing unverified transactions,” it adds.
To put it in simple terms, STRs are permitted only if the host is staying in the same unit or apartment and there are a maximum of two guests staying with the host.
A big blow for Airbnbs and short-rental businesses
Airbnb had labelled these rules a “de facto ban” against the company in a lawsuit in early 2023. CNN says, some independent hosts also filed lawsuits to prevent the city from implementing such stringent measures, however, all cases were dismissed in August.
The city claimed that about 50 per cent of Airbnb’s gross USD 85 million (INR 70,65,693,000) revenue from NYC was collected from illegal rental listings. New York City is ranked among the top five American markets for the company, and while hotels are its direct competitors, they, along with lodging houses and furnished apartments make up about 6,000 active listings on Airbnb, says market analysis firm AirDNA. Hence, they can be exempted from these rules.
Additionally, not just the company but several individual hosts have also raised their voices against this crackdown. Since many of them rely on the extra income from renting out space to pay for their personal housing costs and livelihood, it will be a severe blow to them, too. Those who own one and two-family homes in New York’s suburbs are taken aback as they will now struggle to pay expensive property taxes without the extra money coming in.
Effects on tourism
Airbnb says the steps are a setback for tourism as well. With New York witnessing huge footfall during peak seasons such as the New York City Marathon and the Christmas holiday season, Airbnb accommodations come in handy as the hotel market fails to match the demands.
The city received over 3,200 registration applications after the lawsuits were cancelled in August. Of these, only 260 were cleared.
Penalties and implications for current reservations and Airbnb users
Although guests will not be affected by non-compliance issues, Airbnb hosts can be fined as high as USD 5,000 (INR 415,629) or three times the revenue, whichever is lower. Similarly, booking platforms can be levied a penalty of USD 1,500 (INR 124,688) or multiples of transaction fees.
Airbnb will not cancel any reservations with check-in dates on or before December 1, 2023. However, the platform may not collect the amount or refund to keep the accommodation in line with the rules. Those checking in after 2 December might face cancellations if the host fails to provide their registration number.
Starting September 5, hosts who do not provide the registration numbers or fail to adhere to the rules will have their listings automatically converted to long-term stays if their calendar permits. Else, the listing will be deactivated.
(Hero and feature image credit: Hannah Busing/ Unsplash)