Landlords laud Airbnb crackdown, but two-family owners cry foul

Local Law 18 essentially bans short-term rentals in NYC

Landlords Applaud Airbnb Rules, Homeowners Cry Foul
Small Property Owners of New York's Ann Korhak (LinkedIn, Getty)

Despite Airbnb’s best efforts to quash a law that requires short-term rental hosts to register units — a de facto ban, according to the firm — the regulations took effect Tuesday.

For many landlords, the new rules are a relief. Stricter enforcement means owners no longer need to police tenants who post illegal listings, which can lead to fines against the building.

But for a smaller subset of property owners, those who rent out of two-family homes, the law has stamped out a revenue stream they have relied on for years.

Since 2016, the city has banned rentals for fewer than 30 days unless the owner is present for the stay. But enforcement was nearly impossible. Local Law 18 figures to change that.

Owners must now get short-term rental privileges for a given building approved by the city or they will not be able to list the unit on Airbnb or similar site. They can then rent to no more than two guests at a time and must keep doors in their apartment unlocked.

Landlord groups, including the Real Estate Board of New York, have lauded the law, figuring it will reduce owners’ liability. Airbnb this summer told hosts any listing not registered with the city would be automatically converted to a 30-day stay, which would effectively block tenants from renting illegally.

The law also allows landlords to submit properties to a list of buildings in which the city cannot issue registration numbers necessary for short-term rental listings. Short-term rentals are banned in rent-stabilized buildings and some landlords prohibit them in leases.

Both REBNY and the Small Property Owners of New York, which represents mom-and-pop owners of rent-stabilized properties, said numerous members had put their buildings on the prohibited list.

“The security risks and inconvenience to other residents are often the reasons owners added their buildings,” SPONY’s Ann Korchak said in an email, adding that “profiteering” tenants in rent-stabilized buildings were another catalyst.

The city has received 10,517 applications for the list, a spokesperson for the Office of Special Enforcement said.

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For two-family owners, though, the crackdown is a nightmare.

Restore Homeowner Autonomy and Rights, a group of 350 one- and two-family owners, has condemned the law for snuffing out a revenue stream that made homeownership possible for many.

Though the regulations allow such owners to register for short-term rentals, only 257 have been approved, according to OSE. By comparison, 23,000 Airbnb listings were active in New York City in July, according to AirDNA, which tracks vacation rentals.

The homeowner group, which goes by RHOAR, is comprised primarily of two-family owners, 98 percent of which claim they depend on a short-term rental to pay their mortgage and support their family.

“Now they’re struggling to keep up with their expenses,” said Lisa Grossman, a spokesperson for the group. “That includes the mortgages, continuously increasing property taxes, a roof that needs fixing for $25,000.”

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It’s likely that some owners of three- or four-family homes are in a similar bind.

Arthur Hunt, a broker at Compass, said he’d worked with a four-family owner who relied on Airbnb rentals to pay his mortgage, plus a construction loan he’d taken out to renovate the house.

“Now, he’s feeling the pressure from his lenders,” Hunt said. “He may end up selling if he can’t get the numbers to work.”