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By: Jared Evan
A year after New York City’s clampdown on short-term rentals, the market for underground apartment rentals is booming, creating opportunities for nimble startups. Local Law 18, passed by the City Council last fall, was intended to limit Airbnb’s reach, but critics say the ban has had unintended consequences, as reported by the NY Post.
Rather than diminishing short-term rentals, the law has simply pushed them into the shadows, sparking a wave of private online groups and new platforms designed to work around the restrictions.
The law’s strict rules have effectively forced Airbnb to delist thousands of rentals across New York City. Hosts must now navigate a cumbersome registration process and adhere to requirements like staying on the premises when renting out their space—unless the rental lasts over 30 days. But instead of solving the problem, the regulations have shifted it elsewhere.
Groups like “Friendbnb” and “Gypsy Housing NYC” have sprung up across social media platforms such as Facebook, Instagram, WhatsApp, and Craigslist. These groups operate as invite-only networks where renters and hosts can connect directly, often bypassing the city’s stringent rules. According to the NY Post, these groups charge fees through payment apps like Venmo or PayPal, keeping the market alive outside traditional platforms.
One of these groups, “NYC Short Term Sublets,” markets itself as a middle ground for those seeking stays of a few weeks or months, appealing to professionals and artists coming to New York for work or cultural events. The group has grown rapidly, boasting 17,300 Facebook members since April 2023, with 630 listings added in the past month alone.
New York-based startup Ohana is also capitalizing on the fallout from the Airbnb ban. In June, Ohana set up shop in a renovated loft at the Domino Sugar Factory in Brooklyn. A small team of 20-somethings spends their days combing through roughly 40 different social media groups, which they estimate have about 60,000 rental listings in total. Ohana, focusing on rentals longer than 30 days, has been actively recruiting hosts, even drawing criticism for its aggressive tactics.
One critic, Ricky Berrin, founder of a WhatsApp group called “NYC Home Sharing,” accused Ohana of infiltrating his group to poach listings. “This group has been infiltrated by some lame startup,” Berrin wrote in a post, urging members to report any activity related to Ohana. Craigslist also sent a cease-and-desist letter to Ohana for attempting to lure hosts away from its platform. Yet, Ohana’s investors, including several former Airbnb executives, see this as a sign of the company’s potential. “It’s common for companies like mine to poach leads in this way,” Ohana CEO Ezra Gershanok told the NY Post. “Investors love to see that because it’s a proven strategy.”
Ohana has already raised $3 million from high-profile backers, including Spencer Rascoff, co-founder of Zillow. The startup has recruited over 1,200 former Airbnb hosts and is adding around 500 more each month from social media and online forums. Since its launch 18 months ago, Ohana has processed over $2 million in rental payments, a clear indicator of demand despite the new regulations.
The Airbnb ban has also provided opportunities for other startups. HostU, founded by Northwestern University student Bella Le Sage, aims to connect students with short-term housing in New York. With backing from Edwin Marcial, former CTO of Intercontinental Exchange (ICE), HostU is expanding into New York’s market. “We view Local Law 18 and other regulations as positives for our business,” Le Sage told the NY Post.
