Law360: NYC Prepares To Require Short-Term Rentals To Register



December 5, 2022 4:39 PM


New York City officials got an earful on Monday from supporters and critics of a new requirement for short-term rental hosts to register their units and share information about their activities.


While tenant advocates said the city’s registration system will cut down on the conversion of apartment buildings to illegal hotels, some small building owners said the rule is an unfair burden as they try to garner extra income from renting out rooms to visitors for periods of less than 30 days.


The city’s Office of Special Enforcement, charged with administering Local Law 18, held a virtual public hearing on Monday to hear feedback from the public. The New York City Council approved the law last winter; it will go into effect in January 2023 once administrative rules are in place.


The regulations require people who advertise their units on booking services such as Airbnb or Vrbo to apply to register their rentals and pay a $145 fee. Their application must include a diagram of their homes showing which part of the living space will be available for rent. The booking services will have to submit information to the city about each of the hosts they work with, and confirmation of each rental transaction.


People who fail to register their short-term rentals will be liable for fines of up to $1,000 for the first violation and $5,000 for third and subsequent violations, according to the draft rules.


The city has had strict limits on short-term rentals for some time, including that people who rent out rooms be physically present during the rental period and a limit of two guests per rental. It has not had a way to track rentals to address illegal activity, however.


Zohran Mamdani, who represents the Astoria section of Queens in the New York State General Assembly, blamed Airbnb and other services in part for a 34% rise in the average rent in the neighborhood from August 2021 to last summer.


“Their business model has led to tens of thousands of housing units being used as full-time hotel rooms rather than homes,” he said during the virtual public hearing. “This is almost an entirely unregulated market, and the consequences have been disastrous for New Yorkers.”


Leah James, an organizer for Housing Conservation Coordinators, which provides free legal services for tenants, said at the hearing she knows of several apartment buildings on Manhattan’s Upper West Side where short-term rentals are prevalent. In one case, 16 of the 19 units have been converted for this purpose.


“There are homeless people living in our hallways because access codes are being given away randomly, there’s garbage in the halls because the short-term renters think it’s a hotel and someone else will remove it, and during COVID we had one unit rented out for 30 people to come in for rave parties,” complained tenant Alfred Roach during the hearing, speaking about several short-term rental units in his Hell’s Kitchen apartment building.


Boston; Santa Monica, California; and a number of other cities saw a decline in illegal hotel activity after passing similar laws, according to hearing testimony by Michael McKee, treasurer of the Tenants Political Action Committee.


In a statement, Airbnb focused on what it said was the law’s “draconian and unworkable registration system,” and said it shared city leaders’ concerns about illegal hotel operators.


“We will continue to engage in conversations with the current administration to support an effective and transparent regulatory framework that helps responsible hosts,” said Nathan Rotman, Airbnb’s senior public policy manager.


Mike Harp, whose family owns a small building in Brooklyn’s Bedford-Stuyvesant district, challenged a provision in the regulations that prevents owners from giving their guests a key to lock the room where they are staying. The city was penalizing “law-abiding homeowners,” he said during the hearing.


City Councilor Gale Brewer, who represents parts of the Upper West Side, said in the hearing she supports a “balanced approach” to regulation that won’t hurt small owners like Harp.


The Hotel Association of New York City testified in favor of the regulations, criticizing illegal hotel operators and other short-term rental owners for evading city taxes.


Adam Lindenbaum, an attorney with Rosenberg & Estis PC, said during the hearing the building owners he represents are pleased with the regulations. But he said he is concerned about who will be liable if a host fails to register and the city wants to impose a fine.


The regulations ban short-term rentals in rent-stabilized or public housing apartments. The city is also creating a list of other buildings where these rentals are prohibited, based on input from building owners.