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New York City’s Airbnb Ban Is Sparking a Sketchy Short-Term Rental Black Market

by Eben Diskin Oct 10, 2023

Alcohol. Drugs. Airbnbs. What do these three things have in common? Each has been, to some degree, banned or made illegal, and each time, the result has been an underground, unregulated black market. Prohibition resulted in speakeasies and bathtub gin. The illegalization of certain drugs has resulted in those drugs being trafficked in an unregulated (and unsafe) manner. Now, we have New York City’s Airbnb ban.

Basically, the ban places a number of restrictions on short-term rental services like Airbnb, making it nearly impossible to operate. The Short-Term Rental Registration Law, adopted at the start of 2022 but not enforced until September 5, 2023, requires short-term rental hosts to register with the Mayor’s Office of Special Enforcement, and prohibits booking platforms from working with short-term rentals that aren’t registered. To register, hosts must not rent out their entire apartment or home, limit guests to two, and must be present for the duration of their guests’ stay. As anyone who’s stayed in an Airbnb before knows, these aren’t exactly the most feasible or realistic requirements for either hosts or guests. NYC knows it too. They’re even calling it a “de facto ban.”

The new law was enacted to curb the alleged negative impact of short-term rentals on housing availability and affordability, as well as on local hotels. Those supporting the law, including other cities, like Amsterdam, that have implemented similar bans, argue it will free up apartments for residents desperately in need of housing.

Since NYC’s Airbnb “Prohibition” went into effect, just two percent of the city’s previous 22,000 short-term Airbnb rentals have been officially registered, and the number of Airbnb rentals fell 80 percent from August to October. According to watchdog group Inside Airbnb, just over 400 properties have been registered with the city. But if we’ve learned anything for drugs and alcohol, illegalization of a substance doesn’t result in the elimination of that substance. Where there’s demand, the supply will find a way, and there’s certainly still plenty of demand.

Unsurprisingly, the Airbnb restrictions have created an underground short-term rental market on platforms like Facebook and Craigslist. On these platforms, people can search for either guests or places to stay without the strict regulations now associated with Airbnb and other short-term rental sites. While there are still Airbnb listings for NYC, they are far fewer than before, prices are likely high due to the dearth of options, and the lengths of stay are typically over 30 days (since longer stays don’t need to be registered). Indeed, long-term rentals now make up 94 percent of Airbnb’s listings in NYC.

Of those listings that do remain on Airbnb, many have gone to sketchy lengths to circumvent the city’s rules and attempt to fly under the radar. One listing, according to WIRED, asks guests to avoid interacting with the building’s concierge. On another, the host claims they used to live in the unit but has since moved to New Jersey. Properties can be “exempt” from the law if they’re classified as hotels, clubs, or boarding houses, but only 2,300 short-term rentals have listed themselves as exempt.

Though implemented to boost the city’s economy and the quality of life for residents, it seems likely the effect might be the exact opposite. The ban has already led to a hike in hotel prices, making visiting more expensive (and potentially less desirable) for tourists who might otherwise contribute to the local economy. Many hosts rely on their listings to make ends meet, by renting their apartments while out of town, or renting out half of a duplex to cover a mortgage. Now, they’ll have to explore unregulated options.

While the future of short-term rentals in NYC looks bleak, history tells us one thing: if something’s popular and desirable, it probably isn’t going away because of a government ban. NYC’s Airbnb users don’t necessarily have to mourn the loss of their beloved platform, but they will have to get more creative as they navigate this modern day short-term housing “Prohibition.”

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