Airbnb Says This Could Stop Short-Term Rentals in a Key Market

Last year, New York City passed legislation that sought to regulate the short-term rental market more tightly, placing limits on how people can list their apartments on Airbnb  (ABNB) – Get Free Report and VRBO.

Under the legislation, owners of apartments that they want to offer up for short-term renting, which is defined as fewer than 30 days, must register with the Mayor’s Office of Special Enforcement (OSE) and pay a $145 non-refundable application fee. 

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The regulation, known as Local Law 18, also limits rentals to no more than two guests hosted in the unit the host and/or owner currently lives in. The law was seen as a way to curb the growing trend of people buying a home or apartment solely for purposes of renting it on Airbnb. Critics of this practice allege it makes it more difficult for families to buy a home, furthers economic inequality and also drives up home prices.

But Airbnb has filed a lawsuit against the city, alleging that this legislation will amount to a “de facto ban” against short-term rentals when it goes into effect in July.

In a letter to hosts, Airbnb said the lawsuit “comes only after exhausting all available paths for a sensible solution with the City.” It criticized “the maze of complex regulations” for zoning, multiple dwelling law and housing maintenance codes as well as construction code. In the lawsuit, the company requested that the court block the enforcement of “Local Law 18.”

Airbnb said that in the first week of July, more than 5,500 short-term rentals are reserved to host more than 10,000 guests in New York City, and that a previous law that came into effect in 2021 caused 29,000 hosts to leave the short-term rental market in New York. According to the suit, the company’s annual net revenue in New York City in 2022 was $85 million.

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