Airbnb Takes Legal Action Against New York City’s Short-Term Rental Regulations

Airbnb Inc. has taken legal action against New York City, filing a lawsuit in the New York State Supreme Court. The lawsuit challenges a new law set to be enforced in July, which Airbnb describes as a “de facto ban” on short-term rentals. The company argues that the legislation, passed in 2022 by the city council, imposes highly burdensome regulations that severely limit the number of hosts allowed to offer short-term rentals in New York.

This move comes as city councils across the United States increasingly implement ordinances to regulate short-term rentals, often introducing licensing requirements, registration fees, or business district limitations. Airbnb’s legal filing contends that New York City’s new regulations represent the most extreme and oppressive regulatory scheme imposed thus far, effectively stifling short-term rentals in the city.

In a letter addressed to its hosts, Airbnb expressed that their decision to file a lawsuit against New York City was a last resort after exhausting all possible avenues for a reasonable resolution with the city. According to the legal filing, the upcoming law will impose significant challenges on hosts, including the requirement to register with the New York City Mayor’s Office of Special Enforcement (OSE) and adhere to a complex set of regulations encompassing zoning, multiple dwelling law, housing maintenance code, and construction code.

Impact of Regulations on New York City’s Short-Term Rental Market

Airbnb is seeking a court injunction to prevent the enforcement of “Local Law 18.” The company argues that the OSE application reviews will result in a limited number of hosts being granted registration, creating a barrier for many individuals wanting to engage in short-term rental activities in the city.

A spokesperson from the New York City administration, under Mayor Eric Adams, responded to Airbnb’s lawsuit by stating their commitment to ensuring the safety and livability of communities, preserving permanent housing stock, and supporting the recovery and growth of the hospitality sector. The Mayor’s office acknowledged the lawsuit and expressed their intention to review it.

Airbnb has reserved over 5,500 short-term rentals to accommodate more than 10,000 guests in New York City during the first week of July. The company also highlighted the impact of a previous law implemented in 2021, which resulted in 29,000 hosts leaving the short-term rental market in New York.

Airbnb Takes Legal Action Against New York City's Short-Term Rental Regulations
Credits: Business Today

In April 2023, there was a 27% increase in the number of available short-term rental listings in New York City compared to the previous year. However, listing counts remain 32% lower than those observed in 2019, as reported by short-term rental analytics company AirDNA. AirDNA’s Chief Economist, Jamie Lane, noted that most listings in New York consist of private or shared rooms, commercial properties, or listings primarily catering to long-term stays.

The Ongoing Debate: The Role of Airbnb in New York City’s Short-Term Rental Market

According to the filing, Airbnb’s annual net revenue in New York City amounted to $85 million in 2022. In addition to the details mentioned above, it’s worth noting that the contentious relationship between Airbnb and New York City regarding short-term rentals has been ongoing for several years. The city has implemented various regulations to address concerns about the impact of short-term rentals on housing availability and affordability, as well as potential safety and quality-of-life issues.

Proponents of stricter regulations argue that the influx of short-term rentals reduces the number of long-term rental units available, exacerbating the housing crisis and driving up rental prices. They believe that regulations are necessary to protect the city’s residents and maintain the integrity of its neighborhoods.

On the other hand, Airbnb and its hosts contend that short-term rentals provide an important source of income for many individuals and contribute to the local economy. They argue that regulations should be balanced, allowing responsible hosts to continue operating while addressing legitimate concerns.

The outcome of the lawsuit filed by Airbnb against New York City will likely have significant implications for the company and the broader short-term rental industry and the city’s approach to regulating it. The court’s decision could set a precedent for other cities grappling with similar issues related to the sharing economy and the impact of short-term rentals on local housing markets.