On September 5, a new law went into effect in New York City that specifically targets short-term rentals, i.e., stays of less than 30 days. The main goal? To lure travelers away from popular platforms like Airbnb, Vrbo, and Booking.com and toward traditional hotel accommodations or alternatives in United States.
- New regulations
- Early impacts
- Implications
- Airbnb and hosts' response
- Similar cases
- Black market
- Short-term vs. long-term
- How Flatio can help
According to Airbnb, there are seven million active listings in more than 100,000 cities worldwide. In this vast landscape, New York emerged as a major player with the second-highest number of Airbnb listings in the United States, with more than 39,000 listings as of September 8, 2023. Los Angeles has the most Airbnbs of any U.S. city, with nearly 45,000 listings.
What does this mean for landlords, travelers, and the short-term rental market? Here's what you need to know about the recent restrictions and their far-reaching impact on the short-term rental market as a whole.
New short-term rental regulations
The Short-Term Rental Registration Law, also known as Local Law 18, states that property owners must officially register their property with the Mayor’s Office of Special Enforcement. Booking sites cannot process transactions for unregistered accommodations.
The law limits a rental to two guests at a time, regardless of the size of the property. The host must be present during the rental period, and both host and tenant must have access to the entire property, creating a roommate-style living setup.
Early impacts
The number of NYC Airbnb short-term listings has dropped by more than 80 % since the law went into effect. As of October 9, fewer than 500 properties were officially registered with the city. This indicates that only a limited number of short-term rentals in the city have received permission to continue operating.
Implications for hosts and guests
Travelers to New York may find fewer choices when booking, but they won't face legal consequences for making a reservation. On the other hand, hosts can be fined between $100 and $5,000, depending on the nature of the violation.
Airbnb and hosts' response
Airbnb called New York City's regulation a "de facto ban" and said that short-term rent in New York do not worsen housing availability and affordability and contribute positively to the local economy by promoting tourism. Airbnb and hosts in New York City filed a lawsuit against the city that was ultimately dismissed and the new regulations were eventually upheld.
Similar cases
The crackdown on Airbnb is not limited to New York City in the United States. Although Los Angeles has the highest number of Airbnb listings of any U.S. city, it has implemented a Home-Sharing Ordinance that requires hosts to register and guests to pay a tourist tax. San Francisco also requires short-term rental hosts to be certified by the city and stay at the property for at least 275 days a year.
The crackdown on Airbnb-style short-term rentals is happening in other parts of the world, too. Here are the main places that have introduced bans or restrictions on short-term rentals so far:
Europe
Austria: Vienna
- Regulation: As of July 2024, homeowners in Vienna are limited to renting individual units to tourists for a maximum of 90 days per year.
- Background: Certain parts of Vienna have already implemented such restrictions since 2018, and the regulation is now being extended citywide. The goal is to prevent properties from being exclusively used for short-term rentals.
France: Paris
- Regulation: Residents in Paris renting their primary residence on platforms like Airbnb must register with the local town hall and are limited to renting for a maximum of 120 days a year.
- Enforcement: For second homes or rentals exceeding 120 days, official conversion to a furnished tourist accommodation is required. A dedicated unit hunts down illegal rentals and imposes fines.
Germany: Berlin
- Regulation: Berlin previously banned Airbnb but has lifted the ban. Strict rules remain, including the requirement for hosts to have a permit for short-term rentals of entire properties. Second homes can be rented for up to 90 days a year.
- Additional rules: In Munich, short-term rentals of entire homes are limited to eight weeks per year, and in Stuttgart, hosts renting out more than half their property for short-term stays are limited to 10 weeks per year without a permit.
Italy
- Current regulations: Florence and Rome have imposed restrictions on Airbnb-style rentals. Florence limits new tourist accommodation in its historic center, and Venice and Milan are considering similar measures.
- National law draft: Italy's tourism ministry has drafted a law to curb short-term holiday lets across the country. The law, which isn’t finalized yet, targets rentals of less than 30 days, proposing a two-day minimum stay in cities and tourist hotspots.
Netherlands: Amsterdam
- Regulation: Hosts in Amsterdam can rent out their properties for a maximum of 30 nights per year. Beyond that, a permit for short-term stays is required.
Portugal
- License halt: Portugal has stopped issuing new licenses for Airbnbs and similar holiday lets, except in rural areas. All licenses for holiday lets will be reviewed every five years.
- Rent control: A new system to control rental prices is being introduced, and Airbnb owners are offered a tax break if they convert their properties back into ordinary homes.
Spain
- Barcelona: In 2021, Barcelona banned short-term private room rentals, allowing only room rentals of 31 days or more. Entire homes or apartments can still be rented with the appropriate license.
- Palma: In Palma, tourist rentals in apartment buildings are banned. Only single-family homes like isolated houses or villas can be rented through Airbnb.
- Valencia: Valencia is seeking to ban short-term holiday lets in its historic center, currently facing legal challenges.
United Kingdom: London
- London: Airbnb hosts in London are limited to renting their property for 90 nights or fewer per year without applying for a change of use. The aim is to ensure sustainable and minimally disruptive short-term rentals.
Scotland and Edinburgh
- Scotland: New Airbnb listings in Scotland require hosts to obtain a license for short-term letting before accepting bookings.
- Edinburgh: Planning permission is necessary to rent out a second home on Airbnb in Edinburgh. The city's 10-year development plan may grant the council the authority to refuse short-term lets in the future.
Northern Ireland
- Regulation: In Northern Ireland, anyone providing tourist accommodation as a business, including through Airbnb, must obtain a certificate from Tourism NI.
Canada
Montreal, Quebec
- Ban on new short-term lets: Some boroughs of Montreal, Quebec, have banned new short-term lets to prioritize housing for residents.
- Maximum stay: The maximum stay allowed in the state of Quebec is capped at 31 consecutive days.
Vancouver
- Stay duration: Vancouver imposes a 30-night cap on each stay.
- Residency requirement: The property being rented must be the owner's primary residence.
Toronto
Annual hosting limit: In Toronto, Airbnb hosts are restricted to welcoming guests for a maximum of 180 days per year.
Asia and Australia
Penang, Malaysia
- Short-term rental ban: Introduced in May 2023, Penang banned short-term holiday rentals to curb antisocial tourist behavior.
- Exception for commercial properties: Certain commercial properties, like serviced apartments, can still host guests for up to three days.
- Requirements for exception: Commercial properties must register with the local government, pay an annual fee, and gain approval from at least three-quarters of the people living in their building.
Tokyo, Japan
- Legal status: Airbnb is legal in Tokyo, Japan.
- Regulations: Rules introduced in 2018 resulted in a significant drop in listings.
- Rental limits: Short-term rentals are limited to 180 days per year.
- Residency requirement: Properties must either have an owner living onsite or a dedicated person in charge of administration.
- Data collection: Hosts must collect guest data for government reporting.
- Seasonal restrictions: In certain districts, rentals are only permitted at specified times of the year.
Singapore
- Legal status: Airbnb is not technically illegal in Singapore.
- Restrictions: However, restrictions limit its use for most holiday stays.
- Minimum rental period: The country imposes a minimum rental period of three months, or six months for government housing.
Sydney, Australia
- Rental limits: In Sydney, Airbnb hosts are limited to renting out their properties for 180 days per year.
- Exemption: Bookings above 21 consecutive days are exempted from this limit.
Creation of black market in home rentals
According to multiple media reports, the strict regulations on Airbnb-style units in New York City have given rise to a black market for short-term rentals, with property owners facing financial constraints forced to rent out their properties through platforms like Craigslist and Facebook. Some exploit legal loopholes, claiming exemptions or advertising units as long-term rentals to circumvent rules.
Industry experts say this underground market poses financial risks and opens the door to scams, while simultaneously, a quarter of hotel rooms being repurposed for migrants has led to elevated hotel prices, deterring potential travelers and impacting the city's economy, especially in Manhattan's struggling downtown. Overall, they believe that such regulations cannot effectively address housing issues in NYC or other cities around the world, creating a complex set of challenges.
Short-term vs. long-term rentals
In light of recent developments, particularly the ban on Airbnb-style rentals in New York City, landlords are now questioning whether switching to long-term rentals would be a more viable option.
This decision requires a thorough examination of the pros and cons associated with both short-term and long-term rental strategies, taking into account the uncertainty surrounding the future of short-term rentals.
Pros and cons of short-term rentals
Pros:
- Higher income potential: Short-term rentals often bring higher overnight rates, offering the potential for higher revenues, especially at popular tourist destinations.
- Flexibility: Landlords have the flexibility to use their property for personal use or to accommodate family and friends between bookings.
- Tax advantages: Hosts of short-term rentals can benefit from certain tax advantages, including deductions for expenses related to the rental property.
Cons:
- Vacancy risks: Fluctuations in demand can lead to vacancy periods that impact overall rental income.
- Operational challenges: Managing a constant turnover of guests and maintaining the property between short stays can be labor intensive and require more effort.
- Regulatory uncertainty: The recent ban in New York City highlights the regulatory uncertainty and potential legal challenges associated with short-term rentals.
Pros and cons of long-term rentals
Pros:
- Stability: Long-term leases provide a stable, consistent source of income because tenants typically sign leases for longer periods of time.
- Lower turnover: With longer leases, landlords have less turnover and lower vacancy costs.
- Predictable expenses: Long-term rentals often involve fewer variable costs associated with frequent guest turnover.
Cons:
- Limited flexibility: Landlords have less flexibility in using their property for personal reasons or making changes to the property without tenant considerations.
- Potential for bad tenants: Long-term rentals may expose landlords to the risk of undesirable tenants who can be challenging to remove.
How Flatio can help landlords
Landlords need to assess their property's adaptability to the changing regulatory landscape and consider whether a shift to long-term rentals aligns with their investment goals.
If you’re considering a rental business that’s more focused on long-term rentals, Flatio is here to help.
Through our online platform, we match tenants, many of whom are digital nomads, with properties available, especially for monthly stays. Currently, the minimum booking period is 5 days, while the maximum period is not limited. As a landlord, you always have the option to set the length of preferred reservations yourself, so that you only receive bookings that meet your requirements.
Visit the Help for Landlords section to learn more about the benefits Flatio offers landlords and how you can join thousands of landlords on our platform, which has a 4.4/5 rating on Trustpilot.
(Sources: Investopedia, Lonely Planet, Wired, Euronews, and View from the Wing)
