In 2023, New York City implemented Local Law 18, which near banned Airbnb and other short-term rental platforms. The law required hosts to register, prohibited rentals of fewer than 30 days unless the host was present, and had restrictions on the number of guests allowed. Landlords could also add their apartments to a Prohibited Buildings List, and platforms like Airbnb had to ensure host registrations for listings or face penalties.
One year later, it was found that the number of illegal rentals and quasi hotels posing as short-term rentals had significantly decreased in the city. Some neighborhoods and apartment buildings experienced reduced disruptions from transient guests. New York City hotels also saw a significant increase in revenue per available room, outperforming other major markets in the country. However, Airbnb’s short-term rental listings decreased by 83%, leading many hosts to switch to longer stays rather than convert to long-term rentals.
Despite the decrease in short-term rentals, there was no increase in affordable housing availability as hosts converted listings to longer-term stays. Rents continued to climb, with the median rent for a one-bedroom apartment reaching $4,500 per month. Business and tourism in the outer boroughs suffered, with some areas experiencing a 90% drop in listings. Furthermore, owners of one- and two-family homes were shut out of the market, leading to revenue losses.
A loophole emerged where condo owners in Class B buildings could continue offering short-term rentals without restrictions. This resulted in the emergence of a black market for short-term rentals, leaving guests vulnerable to fraud and poor service. While the impact of the short-term rental restrictions on the city had varied consequences, such as a boost in hotel revenue, there was no direct causation between the restrictions and the outcomes observed.
In November, a new bill was introduced to extend short-term rental hosting options to owners of one- and two-family homes, who were previously restricted from offering their properties for fewer than 30 days. The proposed bill is facing opposition from the New York City hotel industry. Regulators and affordable housing advocates worldwide are likely to study the impact of Local Law 18 and similar restrictions in other cities to refine their own initiatives and address the challenges faced in the short-term rental sector.
