Skift Take

New York City's defacto short-term rental ban is harsh. Hopefully, the city will revisit the law to strike a more balanced approach.

More than four months since New York City cracked down and limited short-term rentals, Airbnb claims the city hasn’t delivered on the benefits it promised to Big Apple residents.

“Many have argued that removing the ability to host short-term renters will open up tens of thousands of available rental units in the city, yet, more than four months after New York City’s short-term rental rules went into effect, there has been no detectable increase in available rental inventory and rents have only risen further,” said Taylor Marr, senior housing economist at Airbnb, in a statement. “Policymakers should continue to focus on reforms that encourage new housing construction throughout the region to address the root cause of the affordability challenges.”

Too Soon to Evaluation Local Law 18

A handful of months is certainly too soon to judge the eventual impact of Local Law 18, but a December 2023 market report from real estate firm Douglas Elliman seemed consistent with Airbnb’s findings on trends New York City rentals. That report found that rental rates in Manhattan were flat year over year; Brooklyn saw higher rents, and Northwest Queens saw its highest rental prices in nearly two years.

So there were no big declines in rental rates since September 5, when Local Law 18’s host registration requirements went into effect.

However, the Elliman report found that rental listings in Manhattan in December rose 33% year over year.

The Local Law 18 requires hosts to be present during a guest stay of less than 30 days, effectively banning a big chunk of the city’s short-term rental market. Goals of the law included improving the quality of life in neighborhoods around the city, as well as increasing the housing supply and lowering rents.

The Case for Airbnb

Jay Carney, Airbnb’s global head of Policy and communications, said yesterday at a mayoral conference in Washington, D.C. that Local Law 18 “is “probably the most onerous regulation in the country if not the world.”

Airbnb provided Skift with several data points to back its arguments:

  • Rents in the city in rose 2.3% in December, according to Apartment List’s rental index. “While the first half of 2023 was marked by a downward trend in rental growth rates, the minor increase in December demonstrates the loss of thousands of short-term rental listings has not led to an immediate improvement in rental affordability,” Airbnb stated.
  • There’s been no increase of apartment rental inventory. Apartment List, which maintains a roster of vacant apartments, found that the vacancy rate in December was 3.2% – the same as in September. Airbnb added that almost 12,000 new rental units came on the market over the past year because of new construction, but Local Law 18 didn’t trigger added rental supply.
  • Airbnb said in New York City “hotel prices are at an all-time high,” and hosts have gone off the grid to rent out their apartments illegally.
  • Hotel rates in December in New York City were 8%-20% higher than a year earlier, according to the Trivago Hotel Price Index.

Hotel Rate Increases in New York City

Average daily rates for hotels in New York City jumped 10.85% to $393 in December, according to Costar, but not all of that can be directly tied to the NYC crackdown on short-term rentals.

One major NYC hotel operator, who declined to be identified, said its revenue per available room in December jumped 12%, and that was driven by an 8% increase in average daily rates.

“It’s a murky narrative, one can’t say it’s all because of Airbnb,” the hotelier said, adding that stable interest rates in December, the recovery of international tourism, and restricted hotel supply because of of the influx of migrants have all contributed to the jump in daily rates.

Many major cities, with the exception of San Francisco, have produced significant revenue per available room gains since 2019, lending credence to the argument that NYC’s hammer on Airbnb rentals is not the sole factor behind hotel rate increases, the hotelier said.

A Housing Crisis for NYC Homeowners?

Margenett Moore, a member of the RHOAR (Restore Homeowner Autonomy & Rights) leadership team, said the NYC host registration law has created a new housing crisis for owners of one- and two-family homes in the city.

The law states that they can only host short-term rentals for stays of 30 days or longer, a stipulation that cuts many homeowners off from income that they needed to pay their mortgages.

In many cases, Moore said, mortgage costs exceed 50% of homeowners’ incomes because they lost that essential short-term rental revenue stream.

“Obviously our point of view has been we absolutely believe some regulation of the short-term rental market needs to happen, but as private homeowners, we are not part of the group that can be considered bad actors or illegal hotels,” Moore said.

She argued that there needs to be a “carve out” in the law that would enable owners of single- and two-family homes to be able to continue offering their homes as short-term rentals on Airbnb and other platforms.

Safeguarding Neighborhoods

Another goal of Local Law 18 was to enable buildings to ban short-term rentals to avoid strangers traipsing around hallways, as well as noise complaints and other nuisances.

An Airbnb spokesperson said the company has a global ban on house parties and, among other tools, blocks reservations that screening tools show might lead to such house parties.

Skift reached out to the NYC Office of Special Enforcement, the city body charged with implementing Local Law 18, to get its take on the impact of the law. OSE didn’t provide an immediate answer, but we’ll update if it does.

Have a confidential tip for Skift? Get in touch

Tags: airbnb, average daily rates, hotel rates, local law 18, new york city, nyc, regulation, vacation rentals

Up Next

Loading next stories