Fact V. Fiction

 The Truth on New York State Legislation

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In June 2016, the NYS Legislature passed new legislation — A.8704-C/S.6340-A — to strengthen existing prohibitions in the Multiple Dwelling Law against illegal short-term rentals that are significantly contributing to New York City’s affordable housing crisis, and driving up rents in communities across the city. Since its passage in 2010, the Multiple Dwelling Law has explicitly prohibiting the rental of unoccupied residential housing units in multi-unit (3 or more) buildings in New York City. However, the advertising of these illegal rentals – the only way that transaction can occur – was not been specifically prohibited, opening a wide loophole in the law that has resulted in enforcement challenges and allowed commercial operators on platforms like Airbnb to convert tens of thousands of residential housing units into short-term commercial rental properties.

The bill, sponsored by Assemblymember Linda Rosenthal and Senator Andrew Lanza, which was passed with overwhelming bi-artisan support, specifically bans and sets strong penalties for the advertisement of what are already illegal short-term rentals. The legislation was signed into law by Governor Cuomo on October 21, 2016.

Key Provisions of New Legislation

 

• The bill closes a loophole in the current MDL by making the advertising of what is currently an illegal commercial transaction – the only way that transaction can occur – specifically illegal, and gives law enforcement a powerful tool to track and penalize large commercial short-term rental operators that violate the law and take away housing stock.

• Under this bill, a host who advertises a short-term rental that is already illegal under the MDL can receive a fine of up to $1,000 for a first offense, up to $5,000 for a second offense, and up to $7,500 for a third and subsequent violations.

• The new law does not apply to single or two-family homes, shared or private room rentals, or rentals of 30 days or more.

• Under this bill, the fines will specifically be levied against the “person” committing the violation, not the online platform or the owner/operator of the building.

2010 Multiple Dwellings Law

 

  • The proliferation of short-term rentals in SROs on the Upper West and Upper East side of NYC led to a loss of affordable housing stock, increasing rents, public safety concerns, and quality of life issues.
  • In response, the Legislature passed the 2010 MDL law banning the rental of unoccupied Class A multiple dwelling housing units – buildings with 3 or more units – for fewer than 30 days. Short-term rentals in one and two family homes, private or shared rooms, and short-term rentals of 30-days or more (eg. snowbirds, timeshares) were NOT included in the law.
  • Fines for violating the 2010 MDL range from $1,600 for a first offense to $25,000 for repeat offenders, with an additional penalty of at least $1,000 per day for up to 45 days at the discretion of the presiding judge.

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New York State Attorney General Investigation

 

  • NYS Attorney General Schneiderman conducted an investigation into Airbnb’s listings in NYC from January 2010 to June 2014. The report found that:

o   72% of Airbnb listings in NYC were illegal.

o   36% were controlled by commercial operators and generated 37% of all revenue.

o   The top 12 commercial hosts earned more than $1 million each off illegal listings.

What Legal Home-Sharing Looks Like

 

  • Despite what Airbnb says, New Yorkers can LEGALLY make extra money renting their home, without taking away affordable housing stock. They can rent out a spare room or one/two family home anytime they want, or an entire apartment for more than 30 days.
  • Across Airbnb’s top 20 neighborhoods, the average host was able to rent a spare room in his/her apartment for $105/night, earning $10,800/year.
  • Airbnb doesn’t want hosts to know they can supplement their income legally and without taking away affordable housing because 80% of their revenue comes from illegal rentals. 

 Top Manhattan Neighborhoods:

o   Midtown: $138/night, $16,000/year

o   SoHo: $136/night, $15,500/year

o   UES: $112/night, $12,400/year

o   UWS: $116/night, $12,000/year

o   East/West/Greenwich Village: $120/night, $10,800/year

 Top Brooklyn Neighborhoods:

o   Bed-Stuy: $70/night, $7,300/year

o   Greenpoint: $80/night, $7,600/year

o   Williamsburg: $86/night, $8,600/year

o   Clinton Hill: $100/night, $11,500/year

o   Fort Greene: $104/night, $12,600/year

FICTION: Airbnb claims that this new law will virtually ban ALL short-term rental activity and impose staggeringly high fines.

FACT: This new law ONLY applies to short-term rentals that were ALREADY ILLEGAL. This bill merely adds new enforcement tools by specifically prohibiting the advertising of a short-term rental that was already illegal under current New York State law. The same exemptions – one/two family homes, shared/private room rentals, and rentals of over 30 days – are still legal and thus would not fall under the new law.

FACT: The fines under the new law are LESS than the current fine regime for the MDL. The new law sets fines at $1,000 for a first offense, $5,000 for a second offense, and $7,500 for a third and subsequent offenses. The MDL fines START at $1,600 and range up to $25,000 for multiple offenses, with an additional penalty of at least $1,000 per day for up to 45 days at the discretion of the presiding judge.