NYC Says Renting Out Your Place Via Airbnb Is Running An Illegal Hotel
from the stifling-innovation dept
We’ve seen this over and over again: new and innovative startups enter a market in a creative and compelling way, and a combination of incumbents and regulators get in the way of something cool happening. Perhaps the most well known recent example of this is with Uber, but probably a close second is Airbnb. Airbnb is the immensely popular system for letting people rent out their homes/apartments/spare rooms to willing guests for (usually) short stays. Completely coincidentally, just this morning, I tried Airbnb for the very first time, trying to book a stay in Manhattan for an upcoming trip. And… soon after I submitted my request, I saw this report that officials in New York City have deemed Airbnb to violate the city’s “illegal hotel law.” Basically, they’re arguing that people renting out their homes are running illegal hotels. They originally asked the guy who rented his condo out to pay $7,000 for both violating that law and for zoning and building code violations, but then dropped the latter part, and lowered the fine to $2,400 for just the hotel part.
Of course, laws like the illegal hotel law are supposed to be about public safety, and to maintain certain health and safety standards. But, the reality is that, like so much regulation these days, it’s turned into a way to keep competition out. Laws to protect hotel visitors certainly made some amount of sense in the past, but most of the reasons why they’re in place don’t necessarily apply to the way Airbnb functions. Because we can now share information pretty easily, Airbnb’s detailed review system and communication process take away most of the “risk” that necessitated a health and safety law.
Just as an example, in my own search for a place to stay, I went through about half a dozen different apartments that were available, and looked over the pictures and carefully read the reviews. I immediately discounted the cheapest one, because multiple reviews mentioned that the apartment had not been cleaned prior to them showing up. Information and the sharing of information made that place undesirable just like that. No laws needed. I also emailed back and forth with a few other apartment/condo owners to find out some details about their places, before finally selecting one that worked for me. Honestly, the experience has been awesome so far, giving me much greater choice, and the likelihood of a much nicer stay than in a hotel.
The new ruling doesn’t suddenly make Airbnb itself “illegal,” but does suggest that if the city finds out that you’re using the service, you could face stiff fines. At the heart of the issue is a really stupid law that was basically designed to make Airbnb impossible: it says you can’t rent out your place for less than 29 days. The only purpose of this law is to protect hotels from competition. The backer of the law claims that it was really about landlords illegally converting residential buildings into hotels, but if that was the case, they should have made the bill a lot clearer, because it’s being used to punish this Airbnb user. Airbnb, which tried to intervene in the case, is (quite reasonably) disappointed:
This decision runs contrary to the stated intention and the plain text of New York law, so obviously we are disappointed. But more importantly, this decision makes it even more critical that New York law be clarified to make sure regular New Yorkers can occasionally rent out their own homes. There is universal agreement that occasional hosts like Nigel Warren were not the target of the 2010 law, but that agreement provides little comfort to the handful of people, like Nigel, who find themselves targeted by overzealous enforcement officials. It is time to fix this law and protect hosts who occasionally rent out their own homes. Eighty-seven percent of Airbnb hosts in New York list just a home they live in — they are average New Yorkers trying to make ends meet, not illegal hotels that should be subject to the 2010 law.
As the reports note, this doesn’t mean that the city will now be going after the tens of thousands of residents who rent their places out on Airbnb, but if complaints are filed, it can go after them. Hopefully, this doesn’t scare off the person whose house I just requested… But, more importantly, this shows, yet again, why bad regulations can do serious harm to innovation, often while serving to protect less innovative incumbents.
Filed Under: hotels, illegal hotels, new york city, nyc, regulations, rental
Companies: airbnb
Comments on “NYC Says Renting Out Your Place Via Airbnb Is Running An Illegal Hotel”
I saw this earlier today. It’s a bit shite because it is common practice to rent your property out like a B&B here in the UK.
My cousin had a property which he used to rent to holiday makers at times of festivals. It is a good way for people to make a few extra quid.
Also, if people are determined or not this would be next to impossible to enforce.
Do you mean to tell me that a law designed and intended for one thing is being misused for something entirely different? In America? You must jest, sir. Politicians, lawmakers, lobbying groups and corporations have only our best interest at mind and nothing else. They would never try to use laws in unintended ways.
What a stupid blogger this is nothing new zoning laws for or against house/room rental have been around for ages. If you want to rent you property you must check the local laws not doing so is just plain STUPID, like the Blogger who wrote this…article..lol
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Overuse of ellipses, “lol”, random capitalization of “Blogger”…
Yep, I’m afraid you’re a fucking moron.
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So I’m not the only one who thought that comment was from a teenager who missed too many English classes.
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C’mon man don’t dump on someone just because they assume them laws on a particular are sensable, even if the laws have been on the books for decades or whatever.
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I know right. I mean seriously who wouldn’t look that up. Except that they a abusing a law intended for something else entirely but I am sure you just skipped that part.
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Yeah, free to do as you’re told.
‘overzealous enforcement officials’
that needs changing so it reads what it really means
‘over-bribed enforcement officials’ would probably be nearer the mark!
so, a little bit of clarification, please. if you ‘can’t rent out your place for less than 29 days’ how do other places (hotels, guest houses etc) get on when someone wants a 2 week break only? are they forced to stay 2 more weeks against their will? are they forced not to come at all, because staying a shorter period would turn the break/holiday into a crime? do the accommodating establishments have to lie about the length of stay for all guests and lose payments for half the year? like a lot of laws, there is no rhyme or reason for them in today’s society, but they hang around on purpose for just such situations!
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There’s a LOT of stupid laws in the US. Just google “stupid state laws” and have a laugh…
I suppose you want to own your cell phone too? Hippies.
Seriously?
I’ve been reading Techdirt for a long time now, and I really enjoy most of the articles, but you have a *massive* problem with not being able to admit when you’re wrong. (See also: the Facebook IPO.) Uber has been thoroughly discredited ever since it came out that the company is 1) run by an Objectivist who 2) engaged in massive, illegal price gouging in the Sandy flooding and then 3) tried to use ridiculous Objectivist rhetoric to paint a smiley face over the whole thing and make it look like what he was doing was good for everyone involved, when five seconds of critical thinking tears the entire argument to shreds.
Can we *please* stop talking about poor, persecuted Uber on here already? It just makes you look bad.
Not at all. It just takes the exact same system (protect incumbents from competition at the expense of newcomers that may actually be better) and moves the enforcement from a formal, accountable, legal process to an informal, unaccountable extralegal process. For example:
So the people who have been around for long enough to garner several good reviews end up rising to the top.
If you’re new, you don’t have any reviews, meaning that no one is going to want to choose to stay at your place when there are more attractive places with lots of good reviews competing with you.
And once people start understanding how important reviews are to getting business, managing reviews starts becoming an important part of the business model. Then you get people writing fake reviews of their own place, (or fake *bad* reviews of the competition,) and people starting to take steps to coerce the sorts of reviews they want out of their customers. (See: the case of that one dentist suing people who wrote bad reviews.)
The more things change, the more they stay the same.
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I’ve been reading Techdirt for a long time now, and I really enjoy most of the articles, but you have a massive problem with not being able to admit when you’re wrong.
Just because you have a different opinion does not mean I was “wrong.” In this case, I stand by my opinion. When I am shown to be factually incorrect, I have no problem at all admitting to the mistakes.
Uber has been thoroughly discredited ever since it came out that the company is 1) run by an Objectivist who 2) engaged in massive, illegal price gouging in the Sandy flooding and then 3) tried to use ridiculous Objectivist rhetoric to paint a smiley face over the whole thing and make it look like what he was doing was good for everyone involved, when five seconds of critical thinking tears the entire argument to shreds.
None of that has anything to do with what I stated. It appears you hate Travis because of his views. So be it. But that’s got nothing to do with the key point, which is that his service — which is innovative and useful — is getting hammered due to ridiculous regulations designed to protect cabs.
So the people who have been around for long enough to garner several good reviews end up rising to the top.
If you’re new, you don’t have any reviews, meaning that no one is going to want to choose to stay at your place when there are more attractive places with lots of good reviews competing with you.
That doesn’t seem to be a problem on AirBnb that I can see, so, no.
And once people start understanding how important reviews are to getting business, managing reviews starts becoming an important part of the business model. Then you get people writing fake reviews of their own place, (or fake bad reviews of the competition,) and people starting to take steps to coerce the sorts of reviews they want out of their customers. (See: the case of that one dentist suing people who wrote bad reviews.)
And there are easy ways to deal with that as well. Besides, for the most part, in exploring airbnb, there’s little issue about “competition.” People have spare space, and they rent it out when people need it. No one seems to be all that concerned about competitors.
But, more to the point, faking reviews is fairly difficult (and expensive) since you’d have to actually book the room first, and AirBnB seems to have a pretty extensive system in place to deal with any problems that arise.
So… okay, you hate these new services. That’s your opinion. I disagree. Why the hate?
Re: Re: Geez, Mike, you just confirmed the accusation.
“Just because you have a different opinion does not mean I was “wrong.” In this case, I stand by my opinion. When I am shown to be factually incorrect, I have no problem at all admitting to the mistakes.”
BALONEY! This one where you’re flatly wrong has been annoying me for some time:
http://www.techdirt.com/articles/20111011/17205216309/course-study-shows-that-getting-rid-drm-reduces-piracy.shtml#c139
It’s not academic whether was computer modeling or empirical evidence, as the claim of real world evidence was central to your piece.
Re: Re: Re: Geez, Mike, you just confirmed the accusation.
Even opinions can be based upon fact and empirical evidence.
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“And there are easy ways to deal with that as well. Besides, for the most part, in exploring airbnb, there’s little issue about ‘competition.’ People have spare space, and they rent it out when people need it. No one seems to be all that concerned about competitors.”
That’s the key thing: people renting out their living space is viewed by hotel services as dipping into their cookie jar, taking away potential business. They’re a bunch of control freaks, abusing the law for selfish gain. Given the reputation of NY hotels, having bed bugs and other issues, who’d want to sleep in one of those?
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I was talking about credibility, not the validity of a business model. Simply because something’s a “philosophical viewpoint” does not necessarily mean it’s just as good as any other philosophical viewpoint, and in the case of this particular philosophy it’s about as close to pure evil as you can get.
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Do we really have to Godwin you here?
I’m no fan of objectivism here, but really, so long as what someone does is generally legal and moral, what do their particular beliefs have to do with their ability to run a business? You may ‘hate’ someone for being ‘a baby-killer’ because they support abortion, but it doesn’t mean they are suddenly unable to run a business – just that it’s a business you may choose to not support (like many here feel about the MAFIAA).
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A person’s views on abortion don’t tend to affect the way they run a business, unless they’re in a related industry. But Objectivism is a full moral code, with particular emphasis on the way business should be run, so it’s very relevant to the discussion.
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Fair enough, as I’m pretty anti-Objectivist, especially when it affects how people at the bottom of the pile are treated. Still, unless any particular element can be shown to be overtly Objectivist, we should give him the benefit of the doubt.
I see where you went wrong, Mike
Quote: Because we can now share information pretty easily, Airbnb’s detailed review system and communication process take away most of the “risk” that necessitated a health and safety law.
See, right there is the problem. You somehow think that you get to decide the level of risk you’re willing to accept. You forgot that Nanny Bloomberg and his minions are the only ones capable of determining acceptable risk, whether it be for BNBs or 32 oz. sodas.
Hey, it’s NYC. What ISN’T illegal? Why anyone would want to live in that hellhole is beyond me.
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Government "regulation" is just an opinion with a gun
To quote Jeffrey Tucker of LFB.org:
“Remember that every act of government ultimately reduces to an act of violence against person and property. When you see the word regulation, think of cops with clubs and tasers. Think of fines, courtrooms, jails. These are the essential means by which government operates to control society.”
I prefer consensual relationships and voluntary exchange.
Examples
This article reminds me of a law when I lived in California limiting the number of yard sales one can have at their home per year. I’m sure it wouldn’t be too hard to find someone abusing this website to make money under the table and avoid situations such as cleanliness. Bed bugs anyone?
Fire Code
The accusation “the only purpose of this law is to protect hotels from competition” is flatly incorrect, and it is clear Mike Masnick has little regard for public safety if it inconveniences his vacation. It also, unfortunately, demonstrates how little the public understands about safety regulation.
The reason why a renter or co-op owner can’t rent out their apartment as a hotel is because in New York City hotels have much stricter safety regulations than residential structures.
Primarily, hotels have mandatory smoke detectors fireproof and illuminated stairwells, sprinkler systems, strobes, ventilation systems, fire exits, battery back-up lighting, centralized fire command panels, etc. which only very modern residential buildings have in place. The vast majority of buildings in New York City have archaic fire protection and there is almost no regulation on residential structure. A residential might only get an inspection once every 10 years. There’s a good chance the fire escape is unsafe. Or the stairwell is full of refuse or being used for storage. There may simply be no second point of egress because of fears of burglary, or the roof door is bolted shut. The hose for the standpipe could be rotted (if there is water in the standpipe at all). The fire extinguishers probably aren’t charged (if they even have any). The resident has to maintain smoke detectors, not the building owner, so if a neighbor forgets to change his battery and there’s a fire in his apartment, you could die in your sleep.
Another (lesser) reason is that of simple security. Most residents of a building don’t want a steady stream of strangers coming in and out of their building. The chance of violent forced entry, theft and rape are very real concerns to residents, especially the elderly or those with small children. Those who dismiss that with “everybody who uses ‘Airbnb’ is a nice honest person” are both arrogant and blind. This is New York City after all — no matter how much the tourist industry and Airbnb may try to sugar-coat it — and those things happen all the time.
Re: Fire Code
It’s actually a pretty typical situation here, one I have seen before. There tends to be a very narrow focus on what the technology allows (“reviews and opinions!”), and very little of real world reality.
The rules for short stay hotels are there for many reasons, specifically public safety. This is both in the sense of things like fire and well being, but also at the same time safety away from potential criminals and crooks who may harm their “guests”. Imagine the hidden cameras, or running through your luggage, or perhaps re-renting a property that they don’t own and have in fact just broken into – talk about a way to generate from free cash, right?
We won’t get into the risks of things like liability insurance, fire exits, and for that matter the tax avoidance of this nice under the table cash income – and of course, the avoidance of any room or lodging taxes charged by the city or state.
Zoning laws are also important, as they exist to keep residental neighborhoods from being turned into commercial areas. I would hate to live in a “secure” building in New York, only to have a stream of strangers coming in to spend a single night at the condo on the same floor as me.
Closely focusing only on the technology, and forgetting that the transaction happens in the real world with all the risks and legal implications that come with it is classic. It explains so much of why the patent and copyright hating goes on here with little real world connection.
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“It explains so much of why the patent and copyright hating goes on here with little real world connection.”
Actually most of the patent and copyright “hating” that goes on here stems from very real-world experience with laws that were are either of date and don’t reflect the current situation, or were written with by special interest groups with little care for things outside their own little world.
And you sound like a petty bureaucrat. Nobody likes a petty bureaucrat.
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So, you also disallow your neighbors from having guests?
And no one has ever had the luggage gone through, or been subjected to hidden cameras in one of your “reputable hotels” ?
I take it you have never heard of a sub-lease?
You are nothing but a moron with an axe to grind against this site because it proves that copyright maximalists like you are only interested in ripping off the public.
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What a bunch of crap.
“fire exits”
If the building doesn’t already have sufficient fire exits, why does the fact that people staying from an internet booking instead of just living there change the fact that this is a problem? If it’s an occupancy problem, the same issue is raised from a guy having a few friends round for a party, do you want NYC to shut down all parties and large family gatherings too?
“tax avoidance”
That’s a matter for the IRS, not zoning laws. In fact, AirBnB would have records of everything booked, unlike someone who rents his room from an ad on his company’s notice board or under the table via friends or family. Why do you want to make enforcement of taxes more difficult?
“Imagine the hidden cameras, or running through your luggage”
This happened to a friend of mine in a big name Vegas hotel, and there’s plenty of stories around about licensed premises having all these things happen. You’re deluding yourself if you think that renting an apartment suddenly makes this an issue. If you’re talking about the ability to prevent people from renting their apartment out, you can’t actually prevent that in any realistic way (they can still rent via word of mouth) but law enforcement can request AirBnB to block that person/property from advertising.
“perhaps re-renting a property that they don’t own and have in fact just broken into”
Imagine if he’s secretly running a zoo and has a tiger in one of the closets! Cite somewhere this is actually happening, or STFU. Fiction is not a basis for law.
“I would hate to live in a “secure” building in New York, only to have a stream of strangers coming in to spend a single night at the condo on the same floor as me”
Then isn’t that down to the building’s management? What if the guy who owns that apartment just lets his friends crash there after a night out on the town or has a large family who often visit? Should the law attack them as well?
“Closely focusing only on the technology, and forgetting that the transaction happens in the real world with all the risks and legal implications that come with it is classic.”
So, you just ignore all the articles where those aspects are discussed, especially given that most of the “hating” is down to real, demonstrable experiences people have with the bullshit being opposed. Typical. I think we’ve found our new troll, and he’s not very good.
I went to New York for the first time a couple of years ago, and found a great, cheap apartment to stay at in Williamsburg, Brooklyn via AirBnB – and had a great time. Had I been forced to stay in a standard hotel, I may never have been to that particular area (and in fact had never heard of it before my search) and in fact the different costs may have put me off making the trip at all (2 rooms may have been necessary and cost double what we paid). So, at best, removing AirBnB properties from my search would have removed tourist dollars from Williamsburg, at worst removed them from NYC entirely.
At their core, these services are merely allowing people to do things they always do with friends and acquaintances (giving lifts, letting them stay in your apartment) with strangers. Unless there’s any actual proven damage, I can’t see the problem.
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At their core, these services are merely allowing people to do things they always do with friends and acquaintances (giving lifts, letting them stay in your apartment) with strangers. Unless there’s any actual proven damage, I can’t see the problem.
Fundamentally, it’s the same reason why few people (if any) would be prosecuted for banging out a copy of a CD for a friend, but like Tenenbaum and Thomas have shown, you can get in trouble for doing it for your “internet friends you don’t know”. Scale is a really big issue here.
Lending your sofa to a friend is pretty normal. Lending your sofa to a stranger is pretty odd, but not off the scale. Charging for it, and actively recruiting strangers to pay for the sofa takes it to a different level.
There is a pretty hard and fixed line in the legal sand regarding hotels versus rental units. There is the very basic question of fitness for use, zoning, and all that. A really key issue is liability insurance, a home owners policy might not extend to cover paid guests. Many people living in flats don’t even have any of that type of insurance at all. So if someone got injured during a short term rental, who would cover the costs?
The split is key here. When you rent a flat long term, you accept to cover your own liability and legally, the landlord is not liable for hazards that you create yourself, and only needs coverage for the building itself.
It’s pretty much a black letter law issue. It would only take a couple of people getting seriously hurt and suing or for that matter a couple of renters getting attacked by their “internet friends” to turn this business model sour, leaving the city and state perhaps having to pay the resolve the issue.
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“Fundamentally, it’s the same reason why few people (if any) would be prosecuted for banging out a copy of a CD for a friend, but like Tenenbaum and Thomas have shown, you can get in trouble for doing it for your “internet friends you don’t know”.”
It’s actually a wildly different set of circumstances that bears almost no relevance here. “It’s on the internet” is about the only similarity.
“Scale is a really big issue here.”
What scale? I still have one apartment to rent out, whether I’m using it myself, letting friends stay there or letting people I don’t know stay there. The actual activity is identical. That’s why there’s a fundamental difference between copying digital files and physical items, and why the idiotic “it’s stealing” argument is idiotic.
“So if someone got injured during a short term rental, who would cover the costs?”
The homeowner, or another party agreed to before the rental. If insurance is a problem, make it a law that any website allowing people to rent in such ways has to have either insurance or an explicit opt-out between the two parties before a rental takes place. It still won’t stop the same problems with the thousands or millions of the same circumstances happening without the internet involved, but since that’s what seems to send people into paranoid delusions, do what’s necessary.
The other stuff you’re blathering on about is related to occupancy. If you’re scared of people renting out an apartment to 6 people instead of 2, make sure the sites have a listed occupancy maximum and an agreement not to violate that (although again, this CANNOT be enforced normally as it is).
“When you rent a flat long term, you accept to cover your own liability and legally, the landlord is not liable for hazards that you create yourself, and only needs coverage for the building itself.”
Which is covered in contracts. So change the law to make sure contracts include this.
Do you see what I’m getting at here? Fining people for not following laws they didn’t know they had to follow and trying to stop people using interesting and useful services is idiotic. Everything you’re complaining about can be taken away as an issue.
“It would only take a couple of people ..”
So, where are the concrete examples of this happening? AirBnB has been running since 2008. Couchsurfing since 2003. Stop depending on bullshit “what if” scenarios and show where these things are actually a problem. People have been renting short term and subletting to strangers via newspapers since the classified ad was first invented. Where has this been happening enough to make it an issue that needs to be addressed?
Evidence first, then laws if required. Get it? Stop projecting fantasies, show me the reality.
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I won’t bite. Your mind is clearly already made up, nothing I can say will change it.
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“nothing I can say will change it.”
Sure it can. Just provide me with logical reasoning, factual evidence and be open to reasonably discuss any issues I have with those things provided. I can’t guarantee that I’ll agree with you, but at least I’ll see your point of view.
The problem with a lot of discussions here is that the people who oppose the articles rarely bring any of those things (although the times they do are often very enlightening).
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That’s what they like you to believe, but how well is any of that enforced? Search “hotel fire calgary”. That was a supposedly professionally managed and bylaw compliant hotel which had padlocked chains disabling the fire exits. That’s in Canada, not some “third world hellhole” country.
This entire discussion is BS. Just as cops don’t really protect anyone (they just get to clean up the resultant mess), protectionist bylaws don’t make commercial establishments act safer or better for their customers. They just keep out competition and allow the chosen few to keep their rates high. Protectionism is a very popular tactic for politicians and their friends, but its value to us is specious (based on pretense; deceptively pleasing) at best.
What about neighbors?
This law was not enacted eons ago. It was written into law about 2 years ago, passed not only by the state of New York and then again by the city of new york. People don’t bother doing the research to find out who was asking for this law. HINT: IT WASN’T THE HOTEL LOBBY. It was the neighbors who have to live next to the anticts of people who don’t give a damn because they won’t be there next week. At least in a Hotel you can complain to the front desk. The NYPD doesn’t exactly prioritize loud noise complaints. There was the incident in Brooklyn where a short term (1 night) rental was used as a Porno set. The drunken turists returning to the unit and banging on the wrong door cause the key won’t work. The late night parties and drinking done by turists. Then there is the fact that if all the empty apartments are being converted into short term hotels, it worsens an already impossibly expensive rental market for the people who want to live in NYC. Hotel charges $300 per night, airbnb user $150 per night. Can average renter afford $150 per night for years?
Laws are laws
I mean cmon, hotels should have licenses and be properly fit to standard. There are so many things that could go wrong with AirBNB rented rooms, and who is left to pay the bills if trouble happens? Not the person who rented the room, not AirBNB, not the one-night tenant, but the landlord. It’s really not fair, and I don’t think that this type of private-hotel-rental for profit should be allowed.
vegas hotels deals
I’m not sure if this is spam. It appears to be on topic.
The link doesn’t appear to work for me, but I’m at a public terminal ATM.