New Airbnb Rules Have NYC Landlords and Hosts Feeling Like Unwelcome Guests

As for the hotel market, nightly occupancy rates have begun returning to pre-pandemic levels in Manhattan and the other boroughs, but short-term rentals pose a danger to that recovery. Several hotels remain closed or in financial distress, with some even entering foreclosure.

And the latest rules for short-term rentals, which began unfolding in 2023 after a contentious 2022 passage, have left landlords in a precarious position.

The latest turn came at the start of the year. Airbnb and a group of hosts sued the city over a rule enacted in January called Local Law 18, which requires short-term rental operators to register their name, contact information and address with the city, and provide proof of occupancy, lease or ownership details and a host’s government-issued ID. In June, the city decided to delay enforcement of the law until Sept. 5, but the court could decide to overturn all or part of the law before then.

Longtime Airbnb hosts argue that the new law is burdensome, and that the city didn’t listen to them while developing regulations for it. Airbnb’s policy director, Theo Yedinsky, felt that the policies would “result in a drastic decrease in the number of listings in New York City and effectively ban short-term rentals in New York City.” 

The city also promulgated new rules related to the law, clarifying policies that have existed for years because of previous short-term laws and the state multiple dwelling law. Hosts are not allowed to have internal locks on the doors of their units, and their apartments have to conform to city housing and fire codes. That means units can’t include obvious code violations, like being located in an illegal basement or not having windows in the bedrooms. A law signed by then-Gov. Andrew Cuomo also allows the city to levy anywhere from $1,000 to $7,500 in fines for advertising short-term rentals in an apartment in a multifamily building on a booking platform.

The litigation over the newest rules has placed enforcement in a bit of a holding pattern, and put landlords in a difficult position when it comes to dealing with illegal short-term rentals. 

During a recent rally against the law, Airbnb host Aimee Thrasher said that she “testified in person in front of the City Council when they were considering this bill. I joined the hearings when the Office of Special Enforcement was designing the rules to implement the law. Throughout this nearly two-year process I have been ignored again and again by city leaders. The city cannot continue to ignore the seniors, teachers, mothers and other hardworking New Yorkers who need this income.” 

In addition, the law enables landlords and co-op boards to place their properties on the Prohibited Buildings List, which forces owners to certify that they have prohibited short-term rentals in their leases with tenants. The list prevents short-term rental hosts in those buildings from registering their units legally with the city. As of July 25, landlords had registered nearly 9,000 buildings on the list, but it doesn’t actually protect them from the violations and potential lawsuits associated with short-term rentals, according to the Mayor’s Office of Special Enforcement (OSE), which handles crackdowns on illegal hotel activity.

“What we’re struggling with is trying to get Local Law 18 enforced,” said Peter Kane, a real estate lawyer at Rosenberg & Estis. “Landlords think they’re protected by registering on the Prohibited Buildings List. As landlord attorneys, we want to make sure there’s some teeth to protect our clients. We have been successful in getting temporary restraining orders to stop Airbnbs, based on the Prohibited Buildings List issue.”

Undergirding all of this is a new system that aims to regulate short-term rentals through bookings rather than listings. The OSE will manage the registration system, issue certificates to hosts, and generate registration numbers that booking platforms can use. When hosts register their apartments with the agency, they agree to post their registration certificate and a layout of the building in their unit, and they must certify that they follow all city housing codes and rules related to short-term rentals. 

Airbnb, Booking.com and Expedia, meanwhile, have agreed to work with the city and process bookings for only legally registered hosts. If a traveler tries to book a short-term rental on Airbnb, for example, Airbnb essentially checks against the city’s database to ensure that the unit is properly registered and all the information on the listing matches the registration for the apartment. 

Kane said he felt that the prohibited list should protect landlords from liability and violations related to illegal vacation rentals.

“Our theory is that if it’s on the list, it’s supposed to protect you from someone Airbnbing,” said Kane. “The courts are confused — the question is who the civil penalties go to, who pays them.”

Christian Klossner, who oversees the OSE and has been litigating the details of Local Law 18 with Airbnb and hosts in state Supreme Court, said that landlords on the Prohibited Building List are still responsible for making sure their buildings are operated according to the housing and building codes.

“Building owners are required to ensure their properties are used lawfully, and where short-term rentals are already prohibited in a building, the Prohibited Buildings List is one tool an owner can use to meet their obligations,” he said in a statement. “Local Law 18 will also help owners by limiting online transactions to those that are conducted legally.”

Airbnb hosts have also lamented that OSE has approved just 121 applications for legal short-term rentals. Klossner, however, lays that blame at the feet of Airbnb, which didn’t publicize the requirements to its hosts until May 31.

In his affidavit filed in state court, he noted that OSE received 138 applications on June 1, which was more than four times the weekly average since the portal opened in early March. “OSE received more applications in the seven days after Airbnb’s announcement than it had received in the 84 days preceding it,” he noted in the filing.

Kara Rakowski, a real estate attorney and partner at Belkin Burden Goldman, noted that landlords often have no idea their units are being illegally rented. 

“Up until now it’s not unheard of for a tenant to be violating the law and the owner of the building doesn’t know anything about it until they get hit with a violation, and it can be tens of thousands of dollars in violations and fines,” Rakowski said. “I recommended to all my clients who own rent-regulated buildings that they should be entering their building on the [Prohibited Buildings List]. It could be used in a dissent to the violations.”  

She added that “I don’t think it’s going to shield [owners from liability], but I think it gives an owner an argument against the violations.” 

Rakowksi and other landlord attorneys point out that there are often safety risks associated with short-term rentals in apartment buildings. Travelers may not know how to escape in the event of a fire, or the unit may not have proper sprinkler systems. 

“We’ve seen situations where there have been multiple guests allowed in one apartment,” she said. “We’ve seen situations where people rent out rooms and put in a number of beds. It runs the gamut, and some of it is very dangerous. The city understands that this is an issue. And it’s an issue for the hotel industry that’s trying to get back on its feet after years of being shut down.” 

Rebecca Baird-Remba can be reached at rbairdremba@commercialosberver.com.