From Restriction to Recovery: Correcting the Course of NYC's STR Restrictions
"From Tourist Boom to Housing Gloom: NYC's STR Policy Backlash"
In the city that never sleeps, a quiet implosion is happening. The glittering skyline of New York City, often paralleled with opportunity, is now casting dreary shadows over its own residents. Once heralded as a game-changer for democratizing travel accommodation, short-term rentals (STRs) via platforms like Airbnb have faced a staggering crackdown. The passing of Local Law 18 by the City Council, intended to preserve housing stock, appears to have gone awry, intensifying economic strain and failing to even modestly alleviate the scarcity of affordable housing.
In the wake of what’s colloquially termed the "Airbnb ban," hotel prices have surged by as much as 20%. The average cost of a hotel room in NYC has rocketed to $529 per night — a stark contrast to the thousands of now-defunct Airbnb listings once provided by small homeowners who offered short-term rentals, many for less than $99 per night. These affordable accommodations were not only a lifeline for budget-conscious travelers but a boon for historically marginalized and less-traveled neighborhoods in the outer boroughs, where tourism had begun to blossom and support local businesses.
However, since Local Law 18's passage, which sought to curb STRs in an effort to preserve housing stock, there has been a notable increase in foreclosure filings and lis pendens — legal notices that precede foreclosures, signaling distress within the housing market, with the highest concentration in Brooklyn. This uptick has been particularly pronounced in predominantly Black neighborhoods of Brooklyn, areas where private homeownership had been a source of pride and economic stability. These small homeowners who once opened their doors to visitors for modest earnings now find those very doors closed by legislation.
The impact of the STR clampdown is not merely reflected in statistics and percentages. It carries a human element, a narrative best captured through the voices of those directly affected. Tene Clark, a homeowner from East Flatbush, Brooklyn, recounted her dismay at the city’s stance, “I saw Mayor Adams do a press conference last year standing next to the Hotel Trades Union where he told potential visitors to NYC, "If you wanna visit New York City, stay in a hotel." The only problem with that is that the bulk of hotels are concentrated in Manhattan, which tells all the folks in the outer boroughs, 'you don't matter.'" Her sentiment echoes the frustration of many who feel the city's policy is dismissive of the economic realities faced by non-Manhattanites.
Echoing this sentiment, Phoebe Douglas, from the Bronx, highlighted the financial precarity the ban has thrust upon residents like her, "We aren't getting rich from STRs. We're just trying to survive." She recounted a distressing episode during the COVID-19 eviction moratorium when she fell victim to a 'professional tenant' who resided in her two-family home, withheld rent, and inflicted extensive property damage, all while she had no legal recourse. Resorting to Airbnb became a necessary step for Douglas to offset the heavy financial losses that resulted from pro-tenant laws that offered little protection for her as a small homeowner.
Yet, as these small-time homeowners grapple with the law's restrictions, a distinct group of property owners has emerged unscathed and even benefited from the legislation: those with large apartment complexes and Class B buildings. They now monopolize a market that once offered diversity and choice with exclusive accommodations, commanding exorbitant fees—sometimes thousands of dollars per night—exacerbating the divide between the city's economic classes. Where families once found economical stays, now only the well-heeled can take advantage of short stay accommodations. According to Airbnb CEO Brian Chesky in a third-quarter earnings call, hotel prices are “already” rising in New York because of the recent crackdown on STRs.
In addition to the regulatory challenges and homeowner concerns, the recent short-term rental restrictions appear to have a chilling effect on tourism in New York City. According to a poll by Penta, the tightened regulations are turning visitors away from NYC in significant numbers. The poll revealed that 65% of potential visitors are less inclined to travel to the city due to the spike in hotel prices. Moreover, nearly one in five travelers indicated they are less likely to consider the Big Apple as a destination after learning about the new restrictive rules. Furthermore, 30% of would-be tourists stated a preference for staying with friends and family rather than shelling out for expensive hotel stays, a choice that could lead to substantial tax revenue losses for the city. An industry expert commented on the situation, stating, "New York City is going to lose billions in tourism spending, and I suspect it already has and it’s still declining." This trend could spell trouble for the city's economy if visitors continue to choose alternative destinations or lodging options that bypass the formal tourism sector.
So, what are the "restrictions" that make Local Law 18 so bad? The devil, as they say, is in the details, and for many New Yorkers, the details of Local Law 18 feel more like chains. The restrictions in question begin with a severe limitation on occupancy. As per the Mayor's Office of Special Enforcement, hosts are not allowed to have more than two adult guests in their homes at any given time—regardless of how many bedrooms are available. For example, if you're the owner of a 5-bedroom apartment, you're still limited to hosting no more than two visitors simultaneously.
But the regulations don't stop there. You're also required to reside on the premises and share your space with the guests, which means you must be present within the home throughout their stay. Does that sound intrusive? Well, it continues. The rules also prohibit any keyed locks on your doors, stripping both you and your guests of the option to secure any personal or private space, effectively meaning that "all areas of the home," including your own bedroom, must be accessible to the guests. And if a host wishes to accommodate more than two guests? They could be required to install expensive sprinkler systems and fire escapes, investments that can climb to tens of thousands of dollars—hardly a viable option for most.
Aside from the apparent constitutional concerns these STR regulations pose for private residences, they are fundamentally irrational and defy common sense and practicality—particularly when considering that many of these same rules do not extend to long-term rentals.
Tony Lindsay, the Executive Director of New York Homeowners Alliance Corp., has been vocal about the flaws in the system: "The bulk of the guidelines set by the OSE for approved registrations are tied to the NYC Building Code and Housing Maintenance Code (HMC), which are woefully outdated." He suggests that while the intention behind the council's action might have been to protect the city's dwindling housing stock, the issue was misdiagnosed, and the actual outcome has been a financial bludgeoning of small homeowners across the city. "The goal was to 'stop the bleeding' of our housing stock," Lindsay explains, "But the real issues causing the housing shortage were overlooked in favor of legislation that unfairly targets small homeowners."
One poignant illustration Lindsay provided addressed a critical oversight in the identification of the root causes of the housing shortage in New York City. "In a detailed memorandum we issued to the city council in September," Lindsay recounts, “NYHOA pointed out that more than 40,000 rent-stabilized apartments (RSA) were being intentionally held off the market by landlords throughout the city, which creates increased demand and causes a rapid inflation in rent prices." These findings were corroborated in December when a state report revealed a figure of 46,000 unregistered RSA, leading to legislative action. Governor Hochul's recent approval of Senate Bill S2980C imposes financial penalties on landlords who fail to register their rent-stabilized properties, enforcing a $500 fine for each lapsed month of registration.
Yet, the core issues contributing to the city's dwindling affordable housing are not solely linked to rent-stabilized apartments. Lindsay points to the rampant construction of luxury developments, which displace middle-class and economically vulnerable New Yorkers, effectively pushing them out of their neighborhoods. The proliferation of such upscale projects signals a trend away from homeownership for all but the wealthiest New Yorkers, as institutional investors continue to snap up residential properties across the city's outer boroughs. This sentiment is echoed in recent reports, forecasting that by 2030, institutional investors could own as much as 40% of all U.S. single-family rental homes—a staggering projection that underscores Lindsay's concerns.
Lindsay also calls attention to the role of lobbyist groups in shaping the law. According to him, officials have been swayed by representations from organizations such as The Coalition Against Illegal Hotels (CAIH) and the Hotel Trades Council—groups with vested interests in the hotel industry and a history of opposing platforms like Airbnb. In fact, the CAIH has publicly taken credit for drafting much of the bill that led to Local Law 18. "Many of the talking points presented by city officials when the law first passed echoed the narratives pushed by lobbyist groups who've been in opposition to Airbnb for years. But the data from CAIH that influenced the legislation? A lot of it was false, and deliberately manipulated." When probed further, Lindsay noted, “The Airbnb corporation has become the face of this fight instead of the thousands of homeowners who use platforms like Airbnb, VRBO and Booking.com as a means to survive in a city where the cost of living continues to rise. I don’t think that is a coincidence.”
Lindsay is not merely a critic but a proactive force seeking change. "I don't really blame the council members as much as I wish they had looked through the fine print and double-checked the data," he says, recognizing the challenge now facing the council members who have witnessed the negative impact on their constituents. "We all want to find a sensible solution that doesn't hurt homeowners struggling to survive while holding the bad actors accountable." He's keen on finding a middle ground—a sensible solution that mitigates the legislation's harm without compromising on safety. Lindsay is prepared to meet with city council members and Mayor Adams to push for what he believes to be a viable solution: amendments to the HMC that protect homeowners and their ability to supplement their income without affecting reasonable safety concerns.
"NYHOA supports Local Law 18 and its premise," Lindsay affirms. "However, the solution lies not in attacking Local Law 18, which requires registration, but in clarifying and, where appropriate, amending the HMC. Some of the standards we’re currently being held to were written more than fifty years ago and no longer apply to today’s circumstances.”
According to Lindsay, NYHOA is working tirelessly to develop a strategy to rescue the countless homeowners reeling under the impact of Local Law 18. The question that now presents itself is whether the City Council and Mayor Adams will heed Lindsay's call and whether a middle ground can be found—one that upholds the safety and housing stock concerns of the city while also preserving the rights and livelihoods of its homeowners. As we enter the new year, the consequences of Local Law 18 and the search for a fair resolution will undoubtedly continue to stir dialogue among New Yorkers, from kitchen tables to the chambers of City Hall.