Sergii Starostin, the CEO of Outpost Club, a real estate technology platform, has been deeply involved in the New York real estate market for over eight years. In 2022, New York City authorities introduced Local Law 18, which began enforcement in 2023. This law significantly impacted the short-term rental market by implementing strict regulations, such as hosts having to be present during guest stays and limiting the number of guests to two people, regardless of the space’s size. The law also prohibits booking platforms like Airbnb from processing transactions for unregistered short-term rentals.
In response to these regulations, some property owners have turned to risky alternatives, such as the rental black market. This underground method involves renting out properties without proper documentation or government oversight, leading to potential risks such as property destruction, theft, or legal issues. Despite the high demand for housing in New York, landlords should consider legal options to protect their properties and income.
Short-term rentals can offer landlords the advantage of maximizing profits during peak tourist seasons and provide flexibility in adjusting rental rates and avoiding long-term lease commitments. However, drawbacks include the risk of apartment damage, inconsistent income generation, and vulnerability to external disruptions like the Covid-19 pandemic. Landlords must familiarize themselves with Local Law 18 regulations, such as registering with the city of New York and adhering to guest limits and other restrictions to avoid fines.
On the other hand, long-term rentals provide landlords with a stable income stream in a market where 69% of residents are renters. Landlords can also explore co-living options, where residents share common areas while having their private bedroom, catering to millennials and Gen Zs. Leveraging modern technologies for remote management, like digital intercoms, locks, and online platforms for rental processes, can streamline operations and enhance tenant experiences.
Ultimately, landlords must weigh the advantages and disadvantages of both short-term and long-term rental options in light of Local Law 18. While short-term rentals may attract vacationers and offer flexibility, long-term rentals can deliver stability, tenant reliability, and potentially higher profits per square foot. Adapting swiftly to market changes and staying compliant with regulations are key factors for success in navigating New York City’s evolving rental landscape.
