Airbnb allows people to rent out their homes or apartments for short periods. The site currently has 300,000 listings in over 190 countries, including 30,000 in New York. But many Airbnb listings are illegal in the Empire State—and first-time offenders can face fines of anywhere from $1,000 to $5,000.
Thanks to a 2011 state law, a residential multiple dwelling must be occupied by the same person or family for 30 or more consecutive days. So renting out one’s own property for less than a month is actually illegal.
Plus, penalties can escalate quickly. Nigel Warren advertised his apartment on Airbnb and rented it out for three nights for $300. But Nigel was slapped with $30,000 in fines for “operating an illegal hotel.” Earlier this week, a judge upheld $2,400 in fines for Nigel’s Airbnb rental. Even worse, this isn’t an isolated incident: officials in New York City issued almost 2,000 violations for short term rentals in 2011.
Unfortunately, by banning Airbnb, lawmakers are needlessly hurting both New Yorkers and tourists. Property owners can rent out their rooms to earn some much-needed cash and since a room on Airbnb is usually cheaper than a hotel, this clearly benefits consumers. Plus, by providing more rooms to stay at, Airbnb drives down the price of visiting a city, helping to boost tourism. Crain’s estimates these short term rentals in the Empire State could generate $1 billion in economic activity. In fact, Airbnb even helped host stranded visitors during Hurricane Sandy.
Many tech start-ups are also looking to legalize Airbnb. Andrew Rasiej, chairman of NY Tech Meetup notes, “If it costs $350 a night for a hotel room for a developer to come here for interviews, that's a barrier that may force us to lose some potential talent.”
To legitimize this grey market, two ideas have been proposed. Airbnb prefers a “simple tweak” to the state’s rental law, although that tweak has yet to be specified. In a similar vein, state senator Martin Golden has proposed creating a registration system for short term rentals. Property owners would pay $200 per rental unit and would have to pay hotel taxes as well. No one on this registration system could have more than 30 registered units. As Golden notes in his bill, the current law is “ridding New York state of a legitimate business model: short-term rental units used by tourists, hospital patients and business guests.”
However, both changes face an uphill battle. Quite a few New York legislators and the Hotel Association of New York have issued opposition to changing the state’s rental law.
While registering rentals would be better than an outright ban, it would still be a heavy-handed and invasive burden. The best option would be for New York lawmakers to stop interfering and micromanaging with what people do with their property. No wonder the state ranks dead last in overall freedom, according to the Mercatus Center.
-- Nick Sibilla
Nick Sibilla is a writer at the Institute for Justice