New York City is the nation’s largest short-term rental market, facilitated by hosting websites such as Airbnb. This is understandable given the high cost of hotel rooms in the city. Unfortunately, most Airbnb-type rentals are illegal in New York City. A recent study found that over 50% of all units used as private short-term rentals on Airbnb appeared to violate both state and local laws. Stiff new fines have been enacted into law in an attempt to halt such illegal rentals. In at attempt to prevent hosts from running illegal hotels, Airbnb has announced that it will no longer permit hosts to have more than one listing at any single address in New York City (but hosts can have listings at different addresses).
Airbnb-type rentals can be unhosted or hosted. With an unhosted rental, the entire dwelling unit is left vacant for the short-term guests to occupy. The New York State Multiple Dwelling Law (MDL) establishes the standards for all buildings containing three or more dwelling units. The MDL flatly prohibits unhosted rentals of less than 30 days in “Class A” multiple dwellings—building occupied by three or more families living independently. In 2010, the MDL was amended to provide that Class A multiple dwellings can only be used for “permanent resident purposes”—this means that the units in such dwellings must be occupied for at least 30 or more consecutive days by the same person or family. (MDL, Article 1, Sections 4-7, 4-8.) Thus, one cannot rent out an apartment in a “Class A” multiple dwelling for less than 30 days, unless a “permanent resident” is present during the rental period. Such a permanent resident must be a “natural person”—that is, a human being; this eliminates corporate hosts.
The MDL is enforced in New York City by the Mayor’s Office of Special Enforcement. The OSE responds to complaints and can impose penalties for violations of the MDL of up to $2,500 per day. The city has also obtained court orders barring building owners from engaging in prohibited short-term rentals.
In addition, New York City enacted a new law in October of 2016 that makes it illegal to advertise a short-term rental that is prohibited by the MDL. This includes listing such rentals on Airbnb and other online short-term rental platforms. Fines for violations range from $1,000 for the first violation, to $5,000 for the second, to $7,500 for three or more violations. (N.Y.C. Admin. Code Sec. 27.287.1) It appears that such fines can be levied both on individuals hosts and on Airbnb or other rental platform. Airbnb filed suit in court to stop implementation of this law, claiming it violates the free speech guarantee of the First Amendment. New York announced it would not attempt to enforce the law until the suit was resolved.
The MDL does not prohibit:
However, all such rentals could violate various other laws.
All residential buildings in New York City must have a certificate of occupancy that declares the legal use and occupancy of the building. A change of occupancy from long-term residential to transient rental use requires amendment of the certificate. (New York City Admin. Code Section 28-118.3.3) An application must be filed and the unit undergo inspection by the city to make sure it meets the occupancy standards for such use. This would include compliance with the New York City fire and building codes which impose more stringent safety requirements on buildings that are used for transient residential occupancy. Violations could subject a building owner to fines.
Any prospective host who lives in rent controlled or stabilized housing should contact their local rent board to determine if the short-term rental of the dwelling unit is permitted. Violations of rent control/stabilization rules could lead to fines or even eviction. Visit the New York City Rent Guidelines Board website for information on rent control and rent stabilization issues.
The New York City Zoning Code establishes the areas in which transient rental buildings can be located. Violations of zoning laws can lead to substantial fines.
Residential leases typically prohibit tenant’s from subleasing their units without the landlords permission. Tenants who violate their leases by engaging in unauthorized rentals—short-term or otherwise—could face eviction. Tenants should check their leases and talk to their landlords before engaging in any short-term rentals.
Owners of units in coops and condominiums could also be barred from short-term renting. Coops and condominiums typically have rules prohibiting or limiting such rentals (however, older buildings may have no such restrictions). Violations could lead to fines or other penalties imposed by the cooperative or condominium association.
Hosts who engage in legal rentals in New York City may be required to obtain a special license or permit to operate a business in the City. For more information, visit New York City’s new business portal, business regulation finder, and New York Administrative Code (available under “ADC” on New York State’s website).
In addition, New York State and New York City each impose various taxes on hotels. These include a New York City hotel room occupancy tax, New York State sales tax, New York City sales tax, and the New York State hotel unit fee daily tax. Short-term rentals through Airbnb or other rental platforms may be subject to some or all of these taxes. Airbnb does not collect or remit such taxes for hosts in New York City, thus they must do so themselves. Information about hotel sales taxes is available on the New York State Department of Taxation’s website. Information about NYC hotel occupancy taxes is available on the City’s website.