NYC Enforcement Boss on Short-Term Rental Law: 'It's Working' - Exclusive

The head of the New York City Office of Special Enforcement recalls how the agency was inundated with short-term rental registration applications in August 2023.

A judge had just dismissed Airbnb’s lawsuit against what it claimed was a “de facto ban” and short-term rental hosts would need to register their listings. Local Law 18 went into effect nearly a month later, on September 5, 2023.

The OSE went into all-hands-on-deck mode to deal with a massive backlog, said Christian Klossner, the agency's executive director.

Fearful of seeing their listings getting taken down by Airbnb, Vrbo or Booking.com, some hosts seemingly fired off applications without clearly understanding prohibitions such as basement or rent-regulated apartments, or being on the Prohibited Buildings List.

To clear the backlog, the OSE added 10 staff members and for two months used 10 members of the New York City Police Department's cadet program. They supplemented what was already in place: two complaint intake lines, three investigators, two staff analysts, a director and a paralegal. Klossner and a deputy director also devoted much of their time to the effort.

The agency also reached out for help to the New York State Division of Housing and Community Renewal, as well as the city's Department of Buildings.

According to the following chart from OSE's fiscal 2024 annual report, the applications that came in during the surge around the time the law went into effect numbered more than half the applications received during the 16-month period ending in June 2024. The average processing time fell from 88 days to seven. This does not include days that applications were returned to the applicant to obtain additional information, such as proof of identity or to remedy correctable problems.

The OSE said that as of February 2024, initial determinations on an application — including approving it, rejecting it, or returning it to applicants for more information or to correct deficiencies — were largely made within three business days.

Today, the OSE has two customer service staff, three investigators and two staff analysts handling the registration applications. Klossner devotes around 10-20% of his time to the issue.

lnspections Alone Wouldn't Have Solved the Problem

The OSE believes that the registration law has turned the short-term rental compliance issue into one it can handle although it acknowledges there still is some illegal activity going on. Prior to the law, inspections alone wouldn't have been enough.

"I think we've brought this down to a manageable scale," Klossner said. "It's working."

Certain restrictions on NYC short-term rentals have been on the books for many years, including requiring that the host be present during the stay, prohibiting locks on bedroom doors, ensuring a two-guest maximum, and barring rentals of one- and two-family dwellings for less than 30 days.

Airbnb, other platforms and hosts widely flouted these provisions in their listings before Local Law 18 went into effect. In 2013, Skift reported that half of Airbnb's New York City rentals were illegal.

The main changes that Local Law 18 brought about were requiring hosts to be registered, barring hosts from listing rent-regulated apartments, and enabling landlords to sign up for the Prohibited Buildings List.

In the process, Klossner said, the booking platforms — including Airbnb, Vrbo and Booking.com — have "gone from adversaries to allies."

He was referring to their responsibilities to comply with Local Law 18 – Airbnb, for example, hopes to see the law overturned.

Short-term rental booking sites are required to verify that listings are registered and if they aren't they would face penalties of triple that listing's revenue up to a maximum of $1,500 per listing.

Not Much of a Black Market

The OSE does not believe there is much of a black market in short-term rentals in New York City.

What about all of those Facebook Groups and Craigslist listings where hosts are offering whole homes for short-term stays? Since the platforms do not offer booking services, they are not subject to Local Law 18, according to the OSE.

Still, it is against the law for an individual to rent out a whole home even if they don't have a listing on a booking platform.

The OSE said it has contacted smaller, lesser-known booking services when the agency has seen them offering illegal rentals and instructed them on how to get into compliance. However, there is some cost to developing the tech to needed to integrate the OSE's listing verification tool so most of these booking sites have dropped out of the short-term rental market.

Is the Registration Application Too Complex?

Application denials, including those where denials are were still pending, outpaced approvals through June 30, 2024, as can be seen in the following chart. However, the OSE gives applicants 30 days if additional information is required. And it allows another 90 days if the application is correctible such as when an owner needs to remedy building violations.

One year after the registration law went into effect, the number of approvals was up to around 2,500.

Some hosts have complained that the registration application is too complex, and is designed to encourage failure. Applicants, for example, have to certify that the property meets zoning, multiple dwelling law, and construction codes.

Klossner rejects the view that the application is overly cumbersome.

"The registration application is simple and likely easier than setting up an actual online listing," Klossner said. "An applicant must answer basic questions, such as their name, email, physical address, phone number, whether they rent or own, and the number of unrelated people they live with. They must include the listings they use and upload two documents proving occupancy, one proving identity, and if they rent, portions of their lease."

He added that the remainder of the application involves clicking boxes to certify that the individual understands the rules.

Is the OSE Slow-Walking the Process to Tamp Down the Market?

As of June 30, 2024, the average processing time was a whopping 392 days for applications that were submitted in the March to June 2023 period. During that initial 3-month period, the OSE had not yet staffed up to handle the surge in registration applications.

That processing time was down to 44 total days — and this includes the time when applications were bounced back to the applicant for more information or to correct deficiencies — for applications handed in from April to June, 2024. The time those applications were pending in the OSE was seven days on average.

Some argued that the OSE was doing the bidding of the hotel industry, which lobbied hard for Local Law 18, by taking an inordinate amount of time to decide on registration applications.

The OSE pointed out that in the instances where the processing times ran to an average of 392 days, for the majority of that time, the applications were back in the hands of the applicants — and not in the OSE — to provide additional information or to correct deficiencies.

"OSE’s goals in implementing Local Law 18 are reviewing the applications and making determinations as required by this law, ensuring industry-wide compliance while supporting hosts who seek to operate within the framework of the law," Klossner said. "The implementation of Local Law 18 required the careful design of a robust and transparent process that provides applicants with ample resources, guidance, and time to complete their registration."

The three most common reasons applications get denied are:

• The applicant didn't correct deficiencies such as a building code violation in a timely manner.

• The dwelling is rent-regulated.

• Applicants submitted duplicate or multiple applications (one application is required regardless of the number of listings).

What's Next?

The OSE acknowledged that there is still illegal short-term rental activity taking place, and there may be a point when it will begin revoking some registrations and issuing fines. That hasn't happened yet.

The major booking platforms, however, have been complying with Local Law 18, according to the OSE.

The OSE has been receiving additional requests to add Class B Multiple Dwellings, such as hotels, to its database as these are exempt from Local Law 18's registration requirements.

Meanwhile, short-term rental advocates are pushing for amendments to the law. Those policies are up to the city council and mayor — and not the OSE.