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Sunday, July 14, 2024

Airbnb Regulatory Dispute in NYC Rages On, Thousands of Delistings Possible

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By:  Hal C Clarke

New York City faces a potential mass delisting of thousands of Airbnb rentals due to a backlog in verifying new regulations set to take effect after Labor Day. The city had mandated that owners using home-sharing platforms like Airbnb and Vrbo must apply for a license by September 5th to ensure compliance with strict occupancy rules and building codes.

However, the city’s Office of Special Enforcement, responsible for issuing licenses and regulating the home-sharing industry, has thus far approved only 257 rental host registrations out of a total of 3,250 applications.

This backlog has left Airbnb hosts like Ilan Rabinovitch in a predicament, as they attempt to pacify anxious guests who have booked stays through the end of the year. He spoke to Bloomberg on this predicament.

Rabinovitch shared his experience, saying, “I’m like, I don’t know, I’ll let you know if I ever get approved.” Hosts who fail to obtain a license could face fines of up to $5,000.

Airbnb has been embroiled in regulatory disputes with New York City and other municipalities across the country for several years. In New York, hosts are prohibited from renting their homes on the platform for less than 30 days unless the permanent tenant is also present.

City officials argue that Airbnb and similar home-sharing platforms, such as VRBO, exploit the system by renting out entire buildings or significant portions of units to tourists without adhering to the 30-day rule. Despite the reported backlog, the city’s Office of Special Enforcement did not respond to Bloomberg’s request for comment.

According to data from market analytics firm AirDNA, there are currently 7,500 rental units that do not meet the licensing requirement and are at risk of being removed from Airbnb. More than half of these units represent some of the most popular Airbnb listings in New York, accounting for 40% of Airbnb income in the city.

AirDNA estimates that only 9,500 out of Airbnb’s 23,000 listings in New York are in compliance with the new regulations. Airbnb has taken legal action against the city over these regulations, challenging their enforcement.

Despite Airbnb’s opposition, New York City is set to begin enforcing the new rules on short-term rentals, requiring all hosts to be registered with the city. Critics of the law argue that it effectively serves as a “de facto ban” on short-term rentals within the city. However, city officials contend that the rule is crucial to address a housing shortage.

In 2021, the city implemented a law aimed at returning apartments used as short-term rentals to the permanent housing market. Last year, New York City initiated legal action against a property owner accused of running an illegal short-term rental operation through multiple controlled LLCs.

Mayor Eric Adams emphasized the importance of housing in the city, stating, “Safe, stable, and affordable housing is fundamental to a prosperous city, so we will not allow bad actors to deplete our housing stock and undermine our hospitality sector.” The new rules mandate that hosts cannot rent out an entire unit for fewer than 30 days, even if the host owns or resides in the building.

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