• SMM Law

Airbnb in New York City

A wide variety of academic research has demonstrated the far-reaching impacts of home-sharing services upon urban real estate markets with New York City being no exception. One recent report indicated that at the time of its publication in 2018 the city had lost between 7000 and 13500 units as a result of Airbnb alone. The anxiety which has accompanied dwindling vacancies and the exacerbation of rent growth has motivated the State and City to regulate the ever-expanding short-term lease market.

New York’s recent attempts to access to Airbnb’s data, the legal battles associated with the City Council’s efforts in that direction, and an expanding array of passed and pending state legislation to regulate the use of home-sharing platforms are indicative of a hotly contested legal space both in terms of substantive law and enforcement powers. This post seeks to summarize the key regulations on short term leasing and associated activities by both owners and tenants, and a variety of recent regulatory efforts pursued by the state and city including pending legislation at the city and state level.

Existing Regulations

The core of the existing regulatory regime came into being nearly a decade ago with the amendments to both Art. 1, § 4.8(a) of the Multiple Dwelling Law and the New York City Administrative Code § 27-2004(a)(8)(a). Under these provisions residential multiple dwellings can only be utilized for 'permanent resident purposes.’ For an occupancy to satisfy permanent residence purposes standards the lease must encompass a period of at least 30 days. These provisions also apply to tenants attempting to engage in short term subleasing ventures. Tenants who engage in such rental schemes face stringent penalties for illegal profiteering and commercialization. Notably, such conduct has been held to be “not curable.”

Other regulatory schemes have imposed substantial restrictions on the scale of home sharing operations. Significantly, in 2015 New York adopted of the "one host, one home" policy. Under one host one home each home share host or owner was capped at one property. Subsequent efforts have addressed associated activities, specifically the use of advertisements. In 2016, the State imposed restrictions on the placement of advertisements on home share platforms. Violators initially face civil penalties of up to $1,000 which increase to $7,500 for third or subsequent offenses.

Data Access

As important as the as the explicit regulations on short term leases are investigatory and enforcement powers. Recently, substantial attempts at expanded access have been made by the City. During the summer of 2018 Intro No. 981 was passed with the intention of forcing home sharing services to hand over vast amounts of data pertaining to their listings as well as the identities and addresses of hosts. This law was challenged by Airbnb on constitutional grounds and a preliminary injunction against its enforcement was granted by the Southern District in January.

In May the tide turned in the city's favor when an agreement was reached whereby Airbnb would provide the City with anonymized data on over 17,000 listings to allow for the detection of possible violations of rental law.

Recent Regulatory Efforts

At the State level, a series of new rules was proposed this April. If put into effect, they would require home-sharing platforms to register usernames and to collect occupancy taxes. Additionally, some have interpreted the City's recent attempts to liberalize regulations on operating conventional hostels as a circuitous attempt to undercut home share platforms. While more nebulous, such claims should not be taken lightly given the loathing of the hotel industry for home sharing services.

While its form has and will continue shift the effort to assert control over home sharing continues unabated.

This publication is issued by Simon Meyrowitz & Meyrowitz, P.C. for informational purposes only and does not constitute legal advice or establish an attorney-client relationship. To ensure compliance with requirements imposed by the IRS, we inform you that unless specifically indicated otherwise, any tax advice contained in this publication was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matter addressed herein. In some jurisdictions, this publication may be considered attorney advertising.

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