Forces aligned against short-term rentals are on the cusp of victory in their battle to harm the ability of spacesharing services like Airbnb and HomeAway to conduct business in New York state, under legislation just passed by both the state Assembly and Senate.
The measure would make it illegal to advertise entire homes or apartments for rent for durations of less than 30 days. The bill would charge violators $1,000 for a first offense, and up to $7,500 for repeat offenses.
That the Legislature’s effort has little to do with protecting consumers (despite passionate claims to the contrary) is obvious to most outside observers. For those in doubt, one needn’t look further than the statement released by the Hotel Association of New York City, a group that has not only actively lobbied against spacesharing, but that uncoincidentally stands to benefit the most if services like Airbnb lose their ability to fully operate within the state. According to their representative:
Airbnb facilitates the creation of a black market for illegal and unsafe commercial rental properties…This smart and innovative legislation will allow law enforcement agencies to better target, track and penalize lawbreakers, while also protecting one of New York’s most vital economic contributors — the hotel and hospitality industry.
That the hotel industry is opposed to innovative new services that threaten to compete for hospitality business is unsurprising. But the level of vitriol underpinning the group’s official statement is telling. This is a very personal fight.
Contrary to the hotel lobby’s assertions, the average Airbnb renter is almost assuredly not a Dickensian slumlord “lawbreaker” peddling “illegal and unsafe” rentals through the “black market.” The accusations call to mind the Philadelphia cab industry’s decision to publicly compare Uber – another “sharing economy” company that has shaken up an industry and thus run afoul of established entities – to the terrorist group ISIS.
Instead, as Airbnb has argued, those using the service are most often middle-income property owners looking to supplement their salaries. Most make only modest profits. According to the data, the average unit listed through the site was rented for 42 nights per year and brought in $5,110 annually, on average.
That reality also makes more notable the fact that, despite the law’s already-hefty fines, there is already pending a bill in the New York City Council that would increase the minimum fine for breaking the law by tenfold, to $10,000. This is twice what the average renter is even making through the service, because the statute is primarily about punishing those who have the gall to challenge an entrenched special interest.
The bill’s impact would not be minor, either, but would make illegal the majority of properties listed through Airbnb in New York City. According to the New York Post: “Of the nearly 36,000 listings that were active in mid-November, roughly 55 percent — or 17,942 — were for rentals of entire homes or apartments.”
Though the hospitality lobby’s allies in the Legislature and the City Council have insisted these measures have nothing to do with the wealthy, powerful lobby vocally championing their implementation, their arguments appear to be wildly false based on currently-available data.
According to a study commissioned by Airbnb of the housing market in San Francisco – perhaps one of the only places on Earth with rental prices and housing scarcity that can rival Manhattan – the prominence of short-term rentals has had negligible impact on the region’s greater housing market. The study indicated that “a housing unit would need to be rented more than 211 nights annually on a short-term basis in order to out-compete a long-term rental.” Only 0.09 percent of the company’s San Franciso properties met those criteria. The report further found that “from 2005 to 2013 the number of vacant units in San Francisco has remained essentially unchanged,” a trend that casts doubt on warnings of housing scarcity due to short-term rentals, even in densely populated urban areas.
Despite this reality – and the fact that more consumer choice is a good thing for New Yorkers — the bill would law, barring a veto from Gov. Andrew Cuomo. That’s bad news for the hard-working New Yorkers who rent their properties in order to help to make ends meet and who may soon find themselves unwitting cannon fodder in the hospitality industry’s war to protect its own profits.