Streams

Airbnb and the Law

Thursday, April 24, 2014

Airbnb is a way for travelers to rent a room in most cities around the world. Airbnb is a way for travelers to rent a room in most cities around the world. (Natalie Fertig/WNYC)

Airbnb, the short-term apartment renting web-based service, is trying to navigate its way through a legal gray zone, past subpoenas and taxes. Matt Flamm, senior reporter at Crain's New York, updates the latest developments.

Guests:

Matt Flamm

Comments [25]

jason

Rent stabilized rents are artificially low because that is the entire reason for rent stabilization in the first place. Every year, the Rent Guidelines Board sets the allowable increase on a lease renewal. Those increases have never reflected market rate increases because that would defeat the entire purpose of stabilizing rents in the first place --giving tenants a discount on housing costs so that they can reinvest that discount in the form of labor or money into the local market place. Those who rent market rate apartments are also investing their labor and money into the local economy as well but at a higher overall cost due to increased housing cost. This is precisely why rent stabilized tenants should not be allowed to make a profit on what is effectively a subsidy. Should people be allowed to sell food stamps for a profit? We should also be clear, what drives up the cost of rent is not solely landlords but tenants as well. In a city where there is more demand than supply, the next tenant willing to pay more will always be there. Sure, landlords can choose to accept a lower rent, but will insurance companies, heating oil companies, ConEd, housing authorities, property tax appraisers also be so nice when it comes to adjusting their fees and levies? Not likely. The cost of managing housing goes up, so the price offered to rent that housing goes up as well. But rent stabilization is meant to hold back the tide of supply and demand for at least a handful of hardworking New Yorkers so that they can keep a little extra cash in their pockets to do something with that will help benefit our economy as a whole. That's a moral obligation and not a right to profit on it. If you're renting out your housing, then you don't need your housing. And if you don't need your housing, than others shouldn't have to finance it. Give your housing up to someone who will better respect what their community has provided them.

Apr. 24 2014 01:43 PM

I don't disagree with Jason's comments about regulations needed for airbnb tenants as well landlords. But he misses the point. Airbnb, both for renters and rentees, stems out of an economy that's destroying the middle class. Such views on rent stabilization being artificially low beg the question. On the contrary, the argument can readily be made that market rents and current co-op and condo costs are so artificially high that they're turning this city into an oligarchy. If I understand Jason correctly, if rent stabilization allows tenants to "invest in a career, go to school, commute to a job, start a business" (and I thank him for all his thoughtful suggestions of how we should spend our time), then what is it that market-rate tenants and co-op and condo owners are supposed to do with their time? In some cases, we just don't know--because they're absentees for much of the year, with no need to bring airbnb tourists or roommates into their empty apartments. Rent-stabilized tenants aren't bleeding this city. They make it work. If they're priced out, New York will soon become a Disney version of itself. Sections of this city already are.

Apr. 24 2014 11:30 AM
jason

The Attorney General has to go after tenants that rent their apartments on AirBNB just as much as landlords. There are just as many tenants living in rent stabilized apartments renting out their rooms and units than there are landlords, maybe even more. Rent stabilization is effectively taxpayer subsidized housing and the people renting out their r/s apartments and making a profit are violating their leases, law and subjecting properties to violations and increased liability. There is a primary residence requirement for r/s apartments and if you are renting out your apartment, than you are no longer the primary occupant. Other hardworking families could use this important source of affordable housing. Your rent stabilized rent is artificially low so that you can invest in a career, go to school, commute to a job, start a business. Your articifically low rent is not a free ride on the backs of taxpayers who effectively pay to regulate, oversee and protect your stabilized rent. Sadly, what will happen is that the Attorney General's office will only go after the landlords and AirBNB, but will not have the guts to crack down on the tenants who are responsible for a large portion of the wrongdoing here. Because doing that would mean evicting a tenant, even though it is justice for wrongdoing.

Apr. 24 2014 11:07 AM
Geoff from Brooklyn

We rent of apt when we go on vacation. Our building neighbors do the same ( 3 apts in total). It's always been a very pleasant experience. And in our neighborhood there's a ongoing flow of grandparents visiting daughters, sons and grandchildren , AirBnB provides an option of staying closer to family for longer periods for a more affordable cost. I believe this is a side to the AirBnB experience that was ignored by the segment . Airbnb helps fund a vacation and allows family from outside NY visit by not having to rely on expensive hotels or cheaper ones miles from us!
And , we pay our taxes on the income .

Apr. 24 2014 11:02 AM
Val from Brooklyn

The problem with Airbnb is their business model ... which will only result in more conflicts accross different jurisdictions. Their compensation basis is commission or finder based. For most places there are licensing and tax regulations which can sharply restrict the operations of such business moodels. I am launching a site called PropertyMarkits.com (Free at the moment) which is in the real estate and shareing space but the difference is the compensation is based on the charges for advertising space and not commissions or a finder's fee. The transaction is purely between the buyer and seller. That's the Airbnb problem! Being involved in the transaction.

Apr. 24 2014 11:00 AM
Alice Barrett from Brooklyn, NY

I have been an airbnb host for 2 years now. I own a free-standing home in Brooklyn. I am my own landlord. As I am an actor and my husband is a musician, we have often found ourselves financially strapped and airbnb has been a god-send for us. We are always home when we host and we've provided a service for guests that they appreciate as something they can't get or afford in hotels. I find myself frustrated and angry that because of a few "bad actors" as they've been dubbed, it's possible that I may lose a source of income that has literally allowed me to stay in my home. I should also mention that I pay taxes on my airbnb income. I'm not depleting the affordable housing market in NYC by renting out my spare room. And I'm tired of large corporations, i.e. the hotel industry, extolling the free market but complaining vociferously when there's viable competition. I hope that if the law is revisited, allowances are made for those of us who are following the letter of the law.

Apr. 24 2014 10:58 AM
Ian O'Brien from Jersey City

Air BnB doesn't even regulate itself well. My wife & I were caught in a terrible bind when our host cancelled just days before our arrival in Montreal. The company wouldn't immediately refund our money (held it
for a couple of weeks), we were told we could redirect the payment to another host, but the listings were so out of date so we couldn't find anything. Meanwhile the company posted to the host feedback page merely that the transaction had been cancelled - we couldn't directly update it to warn other customers.

This awful company almost totally destroyed our vacation - imagine getting stuck paying full hotel rates in a big city when you credit card has already been burdened by charges for accommodation you can't use!

Apr. 24 2014 10:54 AM
Asli from Prospect Heights

People have been renting/subletting their apartments for a very long time -through craigslist and many other online websites. Airbnb is not the faulty party here. And, with airbnb you pay taxes on the rent that you receive. Any other ways you did it was so much more illegal...

Apr. 24 2014 10:50 AM
Kristen from Brooklyn

I'm wondering why AirBnB is under such scrutiny, yet not other companies such as VBRO or Trip Advisor, which also have short term rentals available?

Apr. 24 2014 10:50 AM
Inquisigal from Brooklyn, NY

I actually love Air BNB. Every time I've traveled in the past 4 years, I've rented places from Air BNBers in other states and cities. It is so much better than staying in a hotel - you get to stay places that feel more homey and are in real residential neighborhoods. I don't know how hotels can compete with this kind of service - even boutique hotels are usually souless places that aren't designed to make you feel like you are experiencing real life in another place.

On the flip side, it's inevitable this would happen. Any useful, indie, off-the-radar service or website these days seems to jump the shark once they become, or are about to become, public. Too many people get involved and turn it into something else.

Apr. 24 2014 10:49 AM
Jesse from NY NY

You're missing a big point here. If the apartments that are being rented on airbnb are market rate, they won't go to low income new yorkers anyhow. If the landlord wants to rent on a short terms basis instead of offering yearly leases they are competing with the hotel industry. So what we need to do is make sure that landlords can't do that. That is where the law should be aimed, I think. But if a New Yorker holds a market rate lease and wants to do that themselves, they should be permitted to do so. Its tricky. Maybe a limit to one apartment per person? A primary residence only?

Apr. 24 2014 10:49 AM
CC from Brooklyn

We have a brownstone with 2 apartments that we currently rent out to tenants. Yes, we can make more money doing one or both as an Air BnB, and if we do it will be more work for us. So why shouldn't we be able to do this if it will also mean more work for us. It is our building and the city keeps raising taxes, water, etc; they gave us a violation for a tiny crack in the sidewalk which we had to spend thousands fixing. It is financially challenging to keep up with the maintenance of an old building. If we were to rent even one apartment, it will help us pay for all these increases in costs but we will also have more work to do. So why not let us do the extra work for extra money?

Apr. 24 2014 10:48 AM
Kevin from Brooklyn

What about people renting in an apt and "sub-leasing" rooms to subsidize their own rent?
Is this legal? It happens a lot!

Apr. 24 2014 10:45 AM
DB from UWS

The landlord of my building has many apartments being rented out to foreign travelers for short term stays. It is a nightmare. The "guests" don't know the rules of the building. They don't know where the garbage goes, recycling goes, let strangers into the building, and generally are not invested in keeping the building safe and clean. Besides, the rents go up enormously because of it. An apartment that normally rents for $3,000 a month -- could get much more renting by the day.

I also have friends who have rented apartments from folks who have a rent stabilized lease -- these tenants pay the landlord $1,200 -- but rent it to guests for $3,500! The tenant MAKES money off the landlord's property.

I want the AG and the mayor to crack down on this. It has made the city more difficult to live in -- not easier.

Apr. 24 2014 10:44 AM
MikeInBk from Clinton Hill

This is an example of the American Capitalist political system run a mock.
If I am traveling through Germany, I can roll into most cities, goes to the tourist info office and have them help in renting a room in a private home. The apartment/home owner gains income and because it is room is registered, the German government get's its taxes. Somehow in Germany, the coexistence of hotels, B&B, and hotels can harmoniously be. But not here.

As is often the case, Europe get it right and the US, largely because of its capitalist driven system of picking winners (bigger money), gets it wrong.

Oddly enough, AirBnB enabling a system that competes against the big hotels is an ideal example of capitalism -- competition.

Register and regulate AirBnB participants, collect the taxes, and move on.

Apr. 24 2014 10:44 AM
Judi from New York

Our daughter lives in Tel Aviv and we rent apartments there all the time. Having our own apartment in a residential neighborhood is so much more comfortable and certainly cheaper than a hotel. Many people in Tel Aviv own several apartments and rent them out on a full-time basis.

Apr. 24 2014 10:42 AM
Moira from NYC

It's not just Air B & B. It's Flipkey, VRBO, and other sites as well. There are many rentals in Manhattan, but also in other boroughs.

Apr. 24 2014 10:40 AM
Sara from Bedford NY

Wouldn't the overall environmental impact of going in the direction of the Airbnb be better than that of a hotel?

Apr. 24 2014 10:38 AM
David from NYC

Firecode ??
What fire code...about 60% of the units in my buildings have illegal walls

This is NYC in 2014, so by any means possible..make that over priced rent.

Apr. 24 2014 10:38 AM
Sheldon from Brooklyn

If you want to rent out your own condo/coop, if they allow it, or your private <4 family home, by all means - you should be able to.

It's already against in most leases to illegally sublet apts, and there a reason for that. Strange people in and out of buildings and hipsters hoarding rent-stablized 3 bedroom apts, thus keeping them off the market.

Apr. 24 2014 10:37 AM
Martin

A lot of people have to travel to New York for reasons other than fun & tourism--for medical treatments, for business, for family obligations, etc. Hotels in NY are almost unregulated and priced according to a sort of manipulated internet auction. The same basic motel-type room can cost $200 one night and $500 the next, or $200 if you book is today and $500 if you book it tomorrow. The need for air BNB is also created by the deregulation of hotels & pricing schemes.

Apr. 24 2014 10:37 AM
Don Harjes from NJ

You will most likely void any tenant insurance you have for contents and liability

Apr. 24 2014 10:36 AM
Don Harjes from NJ

You will most likely void any tenant insurance you have for contents and liability

Apr. 24 2014 10:36 AM
Ben from NYC

Does anyone else notice the similarity between this and the earlier FCC/Netflix issue?

In both cases, parties are trying to extract additional revenue from an existing situation. Homeowners are seeking to pull extra cashflow from property they already own, just as cable companies are trying to do the same from the "pipes" they already have...

I suspect, however, that the side with the better paid lobbyists will win here...

Apr. 24 2014 10:33 AM
pliny from soho

isn't this just a response to the real problem
of rent gauging by landlords? a way to make ends meet.

Apr. 24 2014 10:29 AM

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