February 12, 2017
A war of words between Airbnb and New York, its largest market, has escalated with the first fine issued by the city in what is expected to be a crackdown on “hosts”.
Tatiana Cames, a host who advertised “shabby chic” apartments in Brooklyn to tourists and business travelers, was fined $5,000. Penalties will escalate if she continues renting. The fine was seen by one state assembly member as “just the beginning” of the crackdown.
New Yorkers who make money on the side by offering their apartments for short-term rental through Airbnb have declared themselves confused, unhappy and nervous.
“I’m not sure if it’s legal or not,” said Sierra Kraft, 30, who works for a nonprofit accreditation service and, via Airbnb, rents out her tiny one-bedroom apartment in an old tenement building on the Lower East Side in Manhattan. “I rent out my apartment when I go away on trips and my lease says I can have guests for under 30 days.”
Unfortunately, city and state laws say the opposite: Kraft is prohibited from renting out her place for less than 30 days and it’s illegal to advertise it on Airbnb or other home-sharing platforms.
Kraft has been an Airbnb “host” for four years, previously renting out an apartment further uptown, near Columbia University.
“It also was probably not legal,” she said. But, she says, “rent is so expensive in New York.” And visitors love it.
“I’ve had parents visiting their children, friends, I have a couple in there now and the next ones are coming into town to sit their bar exam. It’s cheaper than a hotel and it’s a great way of connecting people from all around the globe.”
Kraft was staying at her boyfriend’s place in Brooklyn and preparing for a trip to Thailand and Malaysia, where she planned to rent accommodations on Airbnb. She has also been an Airbnb guest in Portland, Oregon and in Colombia and Turkey. She estimates she makes about $2,000 a year from renting out her apartment.
Airbnb offers 46,000 units in New York City. Authorities say it threatens hotels and takes affordable housing out of a market desperate for more.
“I understand the city’s perspective,” Kraft said, “but it’s such an easy way for tourists to come in and out, and it’s good for people like me to make a bit extra.”
The good news for Kraft and thousands like her is that it appears the city does not have the resources – or necessarily the drive – to hunt down individuals who have one home and rent it out for a few weeks a year. The targets, at least initially, are commercial players advertising multiple units.
Cames was described by the city council as a broker who bought a Brooklyn brownstone for $2m in 2015, and then rented five apartments inside it via Airbnb. She was fined $1,000 for each apartment. If found in violation a second time, the penalty rises to $5,000 per unit, then $7,500. The listing has been removed from Airbnb.
The other individual fined last week was not advertising on Airbnb, but broke a state law that prohibits listing short-term rentals on similar home-sharing sites or travel sites such as Expedia or Orbitz. According to the city council, he was a landlord offering illegal rentals inside a hotel in Manhattan.
“These two fines are just the beginning,” said Linda Rosenthal, a New York state assembly member. “There are very strong laws on the books.”
‘We are not going after the little guy’
Airbnb exploded on to the travel scene in 2008 and is now in 200 countries, having catered to 140m guest bookings around the world. Battles with other cities have resulted in agreement, as in London, Sydney, Paris, Chicago and Portland. Other cities, including San Francisco and Barcelona, are still uncertain ground.
New York has seen a particularly stubborn stand-off. Since 2010, it has been illegal under city laws to rent out a home in a building with more than two dwellings, in most cases, and where the resident is not present while the guests are staying.
Rosenthal drove state legislation last year that banned the advertising of such homes on platforms like Airbnb. The San Francisco-based company sued, then settled. But talks to reach an agreed system of operation broke down and there are currently no negotiations between the company and the authorities.
Rosenthal said too many Airbnb guests in one building can be a nuisance to other residents.
“When they clog up the elevator, and they use the washing machines and crowd the lobby with all their suitcases, it infringes on residents’ rights,” she said, adding that the safety of guests, hosts and neighbors is more at risk than when tourists stay in regulated hotels, she said.
She accused Airbnb of “marauding” across New York and not doing enough to negotiate with authorities or vet hosts advertising on its site illegally.
“Their whole attitude is ‘We are too big to fail now’ and it’s disrupting the housing market,” she said. “But cities are fighting back.”
She added: “Airbnb defends the right of middle class New Yorkers to use the service to make ends meet but in their lawsuit they wanted to make sure the hosts were fined, not the company.”
Rosenthal said individuals renting out only their own home were not the primary target of the crackdown.
“We are not going after the little guy,” she said. “There are limited resources for enforcement. The target is serial violators who rent out one or two or more units beyond their own personal unit.”
An Airbnb spokesman, Peter Schottenfels, said the company calculated that 96% of New Yorkers renting out an entire unit were offering their own home.
“We support a one-host-one-home policy,” he said. “If they only crack down on ‘bad actors’ we are OK with that. But the law doesn’t offer any protection to individuals who are just doing this for a bit of extra money.”
Schottenfels said larger, commercial “bad actors” disrupted the city’s housing market. The company had removed 4,000 such listings from its site in the city since November 2015, he said.
Steve, who preferred not to give his last name, makes up to $35,000 extra a year renting the extra apartment upstairs from his home in Queens.
“I’m retired and we are supporting a son at a very expensive college in Boston, so that’s what that helps pay for,” he said.
“Some people like staying in a hotel but some don’t. I personally get tired of it – it’s not just the price, it’s the crappy carpets, the smell of chlorine from the swimming pool. And I stayed in a neighborhood in Detroit with Airbnb that had been Polish and is now largely Muslim and I loved it, I would never have explored it otherwise and it was fascinating.”
‘There is an issue of housing justice’
Murray Cox is a Brooklyn dweller who mines publicly-available information from the Airbnb website and regards himself as a watchdog of the company, via his software enterprise Inside Airbnb. He worries the company could contribute to the gentrification of some neighborhoods.
After analyzing Airbnb data, Cox believes that in his neighborhood, Stuyvesant Heights, 80% of Airbnb hosts were white. In the general population, according to the 2014 census, only 8% of the neighborhood was white.
“There is an issue of housing justice, racial justice in parts of this city and people being displaced by gentrification,” he said.
“I fear some long-term residents, who add more to the culture of an area than tourists, are being pushed out and replaced by new residents who have greater capital to set themselves up as Airbnb hosts and change the face of a historic district.”
In a statement, Airbnb said 73% of Americans polled supported the right of people to share their homes and “84% of those who know Airbnb view us favorably”. It also said seniors and residents of lower-income neighborhoods were a fast growing part of its host community.