NEW YORK - It's been just over a week since new regulations on short-term rentals were enacted in New York City, effectively ending the free-for-all that allowed people to list their properties on popular sites like Airbnb.
In early January, New York City implemented Local Law 18, a groundbreaking regulation aimed at regulating booking service platforms like Airbnb.
The law mandates that such platforms cannot process transactions without first registering with the Mayor's Office of Special Enforcement. The law intends to ease the housing shortage for New York tenants looking for long-term leases. But is that how it's actually working?
"The details of the law are deeply flawed," said Arun Sundarajan, an author and professor at New York University, who studied Airbnb's presence and profit in 2017 and concluded that the law in effect could have adverse effects and unwritten intentions.
"What this law is really doing is trying to favor the hotel industry over Air BnB and is likely to have a minimal impact on the actual supply of long-term rental housing in New York City," Sundarajan said.
Sundarajan's study concluded that most Airbnb hosts in the city offered spare rooms in their apartments or their entire apartments when they’re away as a means to make extra cash on the side. Sundarajan says it would take 200 days out of the year to actually make a profit, which is a minority of most hosts on the platform.
"1 in 200 Air bnB rentals is being rented out frequently enough to make more money as a short-term rental than a long-term rental," Sundarajan said.
Data suggests that as of August 28, only 257 short-term rental host registrations — out of 3,250 applications — have been approved by the city’s Office of Special Enforcement. That's nearly 8 percent of approved applicants.
"What they should be doing is putting a cap on the number of nights per year that you can rent a place out on Air BnB say 90 nights a year or 120 nights a year," Sundarajan said.
Sara Golan, a broker, says she believes the law comes with some consequences.
"I don’t know necessarily what the percentage is but I do know some professional landlords who heavily rely on renting out there properties on Air BnB and that’s going to dwindle drastically with the new restrictions," Golan said.
Penalties for violating the law include a $5,000 fine for each violation or 3 times the revenue generated by the short-term rental.