NY Attorney General: 72% Of Airbnb Rentals Violate State, City Laws

New York state’s crackdown on the burgeoning short-term home rental industry continues this morning, with a new report from the state’s Attorney General claiming that nearly 3-in-4 of the short-term New York rentals listed over the last few years were in violation of state and/or city law.

The report [PDF] from NY AG Eric Schneiderman is based on data obtained as a result of the May 2014 agreement in which Airbnb agreed to turn over anonymized user information to state investigators.

Of the 35,354 private, short-term listings included in this data, Schneiderman’s office believes that 25,532 violated either New York State’s Multiple Dwelling Law, which prohibits rentals of fewer than 30 days in most apartment buildings, and/or New York City’s Administrative Code, which prohibits the use of non-residential buildings for housing.

These 25,532 properties accounted for nearly 301,000 bookings on Airbnb and brought in $304 million in revenue, from which Schneiderman claims that Airbnb earned almost $40 million.

The report also calculates that New York City is owed nearly $33.5 million by Airbnb landlords who did not collect or remit the city’s hotel room occupancy tax of 5.875%. In the past, Airbnb has stated that it reminds property owners of their obligations under local laws, but maintains that it is not the site’s responsibility to actually collect this occupancy tax.

While so-called “commercial” Airbnb landlords — those who list at least three properties on the service — only make up around 6% of the total number of Airbnb hosts, they account for a disproportionate share of rental revenue.

According to Schneiderman, those 6% of hosts brought in 37% of all revenue ($168.3 million) during the years in question. And the more than 100 commercial hosts with at least 10 properties earned a total of $59.4 million, claims the report.

The most entrepreneurial operation had 272 unique Airbnb listings and earned $6.84 million in revenue.

The AG’s office also contends that the short-term rental business is making it more difficult to find long-term housing options for New Yorkers.

According to the report, more than 4,600 rental units were booked for at least three months of the year, and nearly 2,000 of these were booked for at leasts six months. Since these properties are booked as short-term rentals, Schneiderman argues that they can’t very well be rented out to someone looking for a more permanent home.

“This report raises serious concerns about the proliferation of illegal hotels and the impact of Airbnb and sites like it on the City of New York,” said Schneiderman in a statement. “We must ensure that, as online marketplaces revolutionize the way we live, laws designed to promote safety and quality-of-life are not forsaken under the pretext of innovation.”

We reached out to Airbnb for a comment on the AG’s report, and the company sent the following statement in response:

We’re proud that Airbnb has helped countless families pay their bills and stay in their homes.

Now, we need to move forward. We should not deny thousands of New Yorkers the chance to share their homes, pay their bills and stay in the city they love. We need to work together on some sensible rules that stop bad actors and protect regular people who simply want to share the home in which they live. We look forward to working with everyone in New York in the weeks ahead.

The report’s conclusions rely on incomplete and outdated information. For example, the findings do not account for the more than 2,000 listings we have already removed from our community in New York.

Additionally, every single home, apartment, co-op and living space in New York is subject to a myriad of rules, so it’s impossible to make this kind of blanket statement. That kind of uncertainty and lack of clarity is exactly why we’re advocating for clear, fair rules for home sharing.

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  1. webalias says:

    Airbnb has an absurb argument. They don’t necessarily deny that lots of people renting through their service are breaking the law. But they suggest that doesn’t matter, because Airbnb helps homeowners “pay their bills and stay in their homes.” So what. Selling crack could also help some people stay in their home. Or running a prostitution ring. Or printing $50 bills in their basements. If Airbnb wants to argue that the law should be changed, fine — and I’ll argue that prostitution should also be legal (why deny struggling homeowners the right to work-at-home? Please, let them stay in the city they love!). But in the meantime, these activities are illegal, and the fact that they are profitable makes a ridiculous, pathetic case. Profit is generally one reason why people break the law.

    • furiousd says:

      Declaring something as wrong because it’s illegal is an absurd standpoint. It’ll hold up in court, certainly, but here we can make an argument for what ‘should be done’ and form suggestions for laws to support that, rather than claiming that legal authority constitutes moral authority.

      If I own the property and want to rent it out while I’m out of town, I should have the prerogative to do so regardless of whether I’ve hit on hard times or if I just want a new Playstation. Subject to the concerns of availability of long-term housing given the commercialized use which some people have made of AirBnB, I think it’s reasonable to change the terms of use once laws have been enacted in housing-sparse areas like New York. It goes from a small personal endeavor to make more money on the side to a commercial operation which I would argue does not merit the same leniency.

      I’ve rented from people who had two homes, and stayed in whichever one wasn’t rented on their AirBnB listings. More than two, in areas that don’t like it, perhaps they should be required to prove registration with the local authorities for commercial use of their property. Just like how taxes and interest can be deducted from your income tax burden for a primary home, there should be a distinction. It sounds like based on the AG’s analysis, a commercial business or two are trying to hide within a system set up for a different purpose.

      As someone who has used the service to rent when traveling, I find it much nicer to stay in a home-like environment. It’s cheaper and more comfortable than a hotel, overall a better experience. I hope that reasonable rules are made to enable this service to continue in as many places as possible.

      • webalias says:

        We have a couple of fundamental disagreements here, furiousd.

        I don’t suggest that all laws are right — far from it. Segregation was legal in the U.S. until 1964; slavery until the Civil War. Nor do I suggest that obeying the law is always right, or disobeying it wrong. But unless you believe we should all pick and choose which laws to obey based on whether we agree with the law, it seems reasonable to ask: when is breaking the law justified (even necessary), and when isn’t it? I’d be in favor of breaking the law if there is some kind of moral imperative: like stopping an unjust war, or preventing the pollution of a river that’s a major source of drinking water. But to make some extra cash in the rental market? I don’t find much “moral authority” behind that justification.

        I’m also not on board with your argument that, “If I own the property and want to rent it out while I’m out of town, I should have the prerogative to do so…” Maybe, maybe not. Your rental activity may have no serious negative consequences, and perhaps the law should be changed to allow it. But in the meantime: I own a house, and my city like most others has lots of laws about what I can and can’t do with my property — about how many unrelated people I can have living there, whether I can rent out rooms, whether I can operate a home business and what kind, how many dogs or cats I can have, when I have to shovel my sidewalk, how tall my grass can be, how I must install smoke detectors, whether I can have a wood fire in my back yard, etc., etc.. I don’t approve of all of these laws, but I do approve of most of them. I’ll put up with the ones I don’t, because I don’t want my neighbor to have six Rottweilers barking in his back yard, and I don’t want his house to burn down, since it just might burn down mine.

  2. NYCitizen says:

    New York City law is fairly clear on short-term (in this case, less than 30 days) rentals. You can rent space in your apartment only if you or another permanent resident are in residence during the duration of the short-term rental. You cannot rent out your apartment and stay elsewhere for the duration. As long as you are willing to stay and ‘host’ your guests, you are not in violation of NYC law. It’s actually pretty straightforward.