Tens of thousands of listings have disappeared.
If you try to rent an apartment for a few days of tourism in Brooklyn or Manhattan, you will be surprised by the limited number of listings on Airbnb or the Vrbo platform. Similar to Paris, where finding accommodation can be a challenge, the city of New York implemented a law that prohibits property owners from renting tens of thousands of tourist accommodations for less than thirty days.
The new legislation, allows a property owner to rent a room in their apartment, provided they are present throughout the stay. Additionally, tourist renters cannot exceed two in number, and their room must remain accessible. Every short-term property owner must register with the city and pay a $145 tax every two years.
$7,500 fine
However, these rental permits have been granted to only about 10% of applicants so far. The fines for illegal rentals are already set between $1,000 and $7,500, but they will only affect property owners. The “Big Apple” has a population of 8.5 million residents – not including the larger suburban areas – and the housing crisis. In Manhattan, an apartment – ranging from studios to four-bedroom units – rented for an average monthly price of $5,588 in July (+9.3% year-on-year), and in the trendy borough of Brooklyn, the average rent reached $4,347 (+11.9% year-on-year), according to the real estate firm Douglas Elliman.
Even though the left-leaning municipal government officially aims to combat all the disturbances caused in neighborhoods by short-term rentals, the goal is to encourage the return of properties to the market for one-year leases or longer and possibly to lower prices a bit.
New York is “unaffordable.”
“Finding housing is completely unaffordable in New York, and removing thousands and thousands of units from the market (for very short-term rentals) is obviously a problem,” said Marianne LeNabat, a 44-year-old New Yorker to AFP. New York landlords and Airbnb had long expressed their dissatisfaction.
For the San Francisco-based platform and its Director of Global Strategy, Theo Yedinski, “the city of New York is sending a very clear message to the millions of potential visitors who will have fewer choices: You are not welcome.” As for small property owners who own one or two units, the ban on short-term rentals “will jeopardize their ability to repay their mortgages, causing an additional crisis in the housing market and putting them in financial and personal danger,” according to their association, Rhoar.
This is the case for Tricia, 63 years old, who rents out the ground floor of her typical Brooklyn house to earn an average of $3,000 per month. “Almost everyone (in the neighborhood) owns their house, and we bought it thinking we could do whatever we wanted with it,” protests this retiree, while assuring that she will comply with the minimum thirty-day rule.
The City That Never Sleeps
New York, known as ‘the city that never sleeps,’ has rebounded from the COVID-19 pandemic after hosting more than 66 million tourists in 2019, generating over $47 billion in revenue and employing 283,000 people. However, the hospitality and restaurant sector is now facing a labor shortage, with many large establishments in Manhattan still closed, and room prices skyrocketing to hundreds of dollars per night.
“Many young people visit New York and cannot afford a hotel,” says Joe McCambley, a 66-year-old regular Airbnb customer who believes that “New York is shooting itself in the foot.” In a report commissioned by Airbnb, Boston University professor Michael Salinger writes that the new municipal legislation is not “economically justified” and, on the contrary, will deal “a big blow” to the local economy without addressing the housing shortage in New York.
