A new wave of crackdowns on New York City vacation rentals has left some property managers anxious for the future.
The measures include a reduction in short-term rental permits granted, plus restrictions on how short-term rental businesses can operate.
What do these restrictions mean for the industry, and should you be worried?
While restrictions might seem bothersome, abiding by them is beneficial in the long term. Regulations can be good for the industry and ensure hosts, guests, and local communities all benefit from vacation rentals.
In this article, we’ll summarise the latest changes in New York and explain how to educate yourself about regulations in your local area to stay compliant.
What’s happening in New York?
New York is one of Airbnb’s top markets, with the city accounting for approximately $85 million of the channel’s annual revenue. However, the city council has claimed that much of that revenue came from illegal listings.
As of 5th September 2023, stricter measures will be enforced for property managers in New York, meaning that many of the city’s 40,000 short-term rental properties will no longer be eligible to list.
According to Local Law 18 (Short-term Rental Registration Law), originally passed in January 2022:
- For stays of less than 30 days, the host must also be staying in the property, which essentially means that private short-term property rentals are banned.
- Locks on bedroom doors are prohibited.
- Hosts must obtain a registration from the city.
- Booking platforms must verify that their listings have approved host registrations and document and file transactions with the city.
Hosts who fail to comply can face fines up to $5,000 or three times their revenue and can have their registrations revoked.
Booking platforms are also subject to fines of $1,500 per booking for violations.
The regulations have been put in place to reduce the impact of short-term rentals on rent prices and local communities, and curb illegal listings.
Why vacation rental regulations are needed
Whilst New York City’s restrictions are especially stringent, regulations are essential for the vacation rental industry to thrive.
Here are some ways regulations can have a positive impact on the industry:
Stabilise the market
When a local area only grants a limited number of vacation rental licences, this can prevent sudden influxes of new listings that can create a lot of competition and drive down rates.
Property managers who obtain a licence will benefit from a more stable market that won’t change suddenly or be flooded with new competitors overnight.
Keep long-term rentals affordable
When large residential units are converted to short-term rentals, this can result in less affordable housing available for local people and higher rent costs.
Restricting the amount of short-term rental properties can protect the local community and ensure enough housing is available for long-term renting.
This benefits property managers as well by reducing animosity towards short-term rental hosts that can lead to complaints.
Many travellers prefer short-term rentals because it gives them a chance to feel at home and experience the destination like a local.
However, when an area becomes overrun with tourist properties it can begin to lose its initial charm. Regulations can help balance authentic tourism with protecting the identity of the destination.
This helps make sure that travellers will continue to visit for years to come.
Promote guest safety
Many regulations are put in place to protect guests’ safety.
Without proper regulations and licences, it would be too easy for unscrupulous short-term landlords to offer cheap, unregulated properties for unsuspecting guests.
Safety regulations ensure that genuine property managers won’t be undercut by those who don’t care about the rules.
Improve guest behaviour
With regulations in place that punish littering, noise or other nuisances, property managers are more likely to explain and enforce house rules that prohibit anti-social behaviour.
This means guests behave better and you have less chance of suffering property damage. It also improves relationships with neighbours, meaning fewer complaints and less chance of further regulations being called for.
Benefit local economy
Vacation rentals can bring an influx of money into local economies as tourists come to the area and spend money in local shops, cafes and bars.
However, towns can lose revenue if vacation rental hosts and property managers aren’t required to pay the same taxes as hotels and bed and breakfasts.
With regulations in place, local economies benefit and this can also reduce hostility between traditional hospitality businesses and vacation rentals.
How to keep up with restrictions in your local area
Your business may not be directly affected by the New York regulations, but they should serve as a reminder to ensure your vacation rental is compliant with local laws and regulations.
If you don’t comply with regulations, you could be faced with hefty fines or even lose your licence.
Here are some things you can do to learn about regulations that apply and ensure you comply:
- Review Airbnb’s online repository — The online repository is a helpful resource where you can look up the different regulations that apply in some of the world’s largest markets.
- Investigate your local area — Research the history of your local area and what regulations have been brought in recently – this might give an indication of potential future changes.
- Contact Vrbo — You can read the information on Vrbo’s regulatory resources page, and enquire about regulations in different markets by reaching out to GovernmentAffairs@Vrbo.com.
- Read your local government policies — Visit your local government website and search for information about vacation rental regulations.
- Join social media groups — Facebook and LinkedIn groups are a great place to learn about regulations from hosts and industry experts. You can ask questions and stay up to date with upcoming changes. The Vacation Rental Professionals, Vacation Rental News and Information, and the The Business of Short Term Rental Management are some groups we recommend!
You should also remember to plan ahead and carefully research regulations in any areas where you are thinking of investing in property.
Different types of regulations
In relaxed markets, vacation rental regulations might be limited to issuing fines or penalties for excessive trash, noise complaints, or parking violations.
However stricter markets often also place restrictions on what short term rental owners can do with their properties.
They could, for example:
- Limit the number of vacation rental properties an operator can own
- Allocate a limited number of vacation rental licences
- Only allow shared rentals (renting out a room in your own home)
- Apply minimum stays of 30 days
- Require owners to collect and pay certain taxes
Situations can quickly change, and a seemingly relaxed market may apply more restrictions if vacation rentals are negatively affecting the local community or economy. This is why it’s vital to comply with regulations – when property managers break the rules, it’s more likely that local governments will apply stricter laws.
Following laws and guidelines can help the industry thrive and benefit the local community.
Protect your business by complying with regulations
Vacation rental regulations are a part of the industry that property managers can’t and shouldn’t avoid.
Educating yourself on the regulations that apply to you and ensuring your property complies is the best way to ensure your vacation rentals thrive.
Ultimately, short-term rentals must coexist with local communities with mutual respect on both sides. Regulations can help to achieve this and make the business safer and more stable in the long-term.