New York City’s Airbnb Crackdown

New York City’s Airbnb Crackdown
Starting September 5th, New York City officials are going to begin enforcing rules on short term rental stays more aggressively. Hosts of short-term rentals are going to be required to register with the city and meet certain requirements. Hosts must have a Class B status to provide short-term rental stays.
New rules include restricting a host from renting out an entire apartment or home. They also must be present during guests’ short term stay. Airbnb is blocking future dates for bookings and hosts are removing listings.
There are 38,500 Airbnb listings in New York City. Starting September 5th, the city will know which hosts have not registered, and they will likely impose penalties.
Dallas, Philadelphia, and New Orleans have based restrictions on short-term rentals.
Short-term rentals are generally cheaper than hotels.
Less than half of Airbnb’s New York City listings are in Manhattan. In fact, 37% of them are in Brooklyn, an area that has less hotel options in some areas.
At the end of the day, we are talking about private property. Many hosts rely on the extra income to pay their mortgages and continue to live in their homes. Some hosts rent out their homes when they are traveling for work. Many visitors are families who can’t afford to pay for multiple hotel rooms.
Cities blame Airbnb for the lack of affordable housing. However, I would argue that this is the result of restrictive zoning.
Overly restrictive and complex regulation by local government is burdensome and causes abnormalities in the market. Consider how expensive it is to do construction and develop residential projects in the city.
Both Airbnb and hosts are saying that the NYC rules make is near impossible to register for Class B status required to do short-term rentals. The city is facing a staffing shortage. City bureaucracy is infamously slow, but now it is all but grinding to a fault. As of July 25, the city received 1,632 host registrations, yet only 141 have been approved, according to Airbnb.
Even legal Airbnb’s have little chance of being approved by the city in a timely manner. The city is not actually interested in regulating short term rentals. They want to make it impossible for them to operate all together.
I believe this is a misguided effort by the city to increase affordably housing at the expense of visitors. However, I do not see the city address rent controlled apartments. Instead, they are shifting the blame and targeting short-term rentals. This also could be a play by the city to increase hotel occupancy rates.
At the end of the day, you have to follow the money. The city hotels are furious at Airbnb. The city has lost a lot of hotel tax revenue. In San Francisco you are seeing hotels missing mortgage payments. In addition, you have unions associated with hotels and hospitality that are lobbying the city government to target and crack down on Airbnb.
Also, consider how Mayor Eric Adams has signed contracts for hundreds of millions of dollars to house migrants in hotels. This appears to be another way that New York City is trying to appease the hotel industry and drive business for them.
Rent prices are through the roof in New York City. This law will not make much of a dent in these prices. The affordability crisis is caused by a lack of supply that results from strict zoning and bureaucratic regulations imposed on the construction industry. The city should be doing everything it can do encourage developers to build as many apartments as possible. They are attacking the demand for housing, rather than adding to the supply and letting the market reach equilibrium.
This is really about politicians blaming the private sector for their incompetence. It is virtually impossible for people to own their homes in New York City. To add insult to injury, now the city is telling renters what they can do with their apartments. You could shut Airbnb out of the entirety of New York City, and push all the visitors into hotels, and New York City would still be the most expensive city to rent in the entire world.
You can always count on New York City to put its finger on the scale whenever big, well connected business interests are at risk and threatened by entrepreneurs, innovation, and startups.
Works Cited:
https://www.nyc.gov/site/specialenforcement/registration-law/registration-for-hosts.page
https://www.wsj.com/lifestyle/travel/airbnb-new-york-city-laws-rentals-2950904e?mod=hp_lead_pos10
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