UPDATE: Why Airbnb is Bad for Affordable Housing

Tuesday, the New York City Council’s Committee on Housing and Buildings hosted an eight hour oversight hearing, Short Term Rentals – Stimulating the Economy or Destabilizing Neighborhoods? ANHD and Affordable Housing advocates across the City came together to say the answer is clear: illegal short-term hotels are destabilizing neighborhoods and endangering our affordable housing! Today’s article from New York Observer highlights the hearings key points and the concerns expressed by ANHD groups, tenants, city officials and state officials.

ANHD submitted testimony expressing that residents’ homes, community character, neighborhood stability, and our housing laws must be protected and respected over any individual business practice.

ANHD’s October Blog on Airbnb (copied below) highlights the key challenges of illegal short-term hotels for New York City:

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In an effort to finally legalize its business model in New York City, Airbnb has launched an impressive lobbying campaign, spreading its message through street advertisements and donating handsomely to politicians across the state.  The company’s pitch centers around depicting “Real New Yorkers” who benefit from earning extra income by renting out their homes. But who is really making money with Airbnb?

Last week Attorney General Schneiderman’s office released a report on the impact of Airbnb’s private rentals in New York City, based on subpoenaed information that Airbnb fought against releasing. According to the Attorney General’s analysis, there are 1,406 Airbnb hosts referred to as “Commercial Users” because they rent out anywhere between 3 and 272 units – 124 of them operate ten or more units. These Commercial Users collected $168 million in rent during 2013, controlled 1 in 5 Airbnb units, 1 in 3 bookings, and more than 1/3rd of the total Airbnb revenue for private bookings in NYC. As it turns out, a large segment of the Airbnb host population is controlled by commercial interests renting out multiple apartments as short term hotels.

The report also makes it clear that a full 70% of the Airbnb rentals are illegal because they are for fewer than 30 days in residential buildings.  Airbnb’s lobbying campaign is designed to make this seem like an unimportant technical violation. It is not.

The New York City Multiple Dwelling Law states that it is illegal to rent out an apartment in a residential building for short-term stays under 30 days. There is no ambiguity here, and the law is there for good reason.

We have a housing crisis in New York. Tourists have hotels.  Our residents need apartments. When thousands of apartments are dedicated to short-term bookings for tourists, that means they aren’t available for actual New Yorkers – the people who make our neighborhoods what they are, and make New York City such a desirable place to visit in the first place.  In addition, there are safety issues: the degree of fire safety and other security that hotels require are very different from what is required for actual residents who are truly familiar with the building.

The problem isn’t individuals who occasionally rent out their homes; the problem is landlords, and even some tenants, who exploit the opportunity full-time. The profit made on short-term rentals to visitors is so much greater than the profit made on long-term rentals to residents that a growing number of landlords are pushing out tenants and using Airbnb to rent out those apartments at an extraordinary markup. The de Blasio administration recently brought an enforcement action against a Manhattan landlord who had emptied out tenants in two rent-stabilized buildings to instead rent to tourists on a full-time basis through Airbnb. This removes housing from the marketplace, further reducing affordable units available for lower-income New Yorkers who need them most.

Airbnb also impacts our neighborhoods. Earlier this week, an article in the New York Times noted a recent demonstration by residents of a popular Barcelona neighborhood rallying against the overwhelming influx of short-term visitors staying in their residential neighborhood. ANHD’s member groups on Manhattan’s West Side are already reporting this same phenomenon here in New York.

Keep in mind that this is happening while the Airbnb model is still in most cases illegal in our City. If Airbnb is legalized, the phenomenon could explode. We love tourists in New York – much of what makes this city great is due to its welcoming attitude to people from all over the world.  But there needs to be a balance. Letting our vibrant and diverse residential neighborhoods – which are a big part of what attracts tourists in the first place – turn into hotel districts like Times Square isn’t good for anyone.

Given the current housing crisis in New York City, ending this illegal conversion of apartments to hotels should be a priority. This means resisting Airbnb’s well-funded lobbying campaign to change the current law to suit their purposes, and it means increasing enforcement of the current laws on the 70% of apartments that are rented illegally. Airbnb recently claimed it had removed certain landlords violating the law from its hosting database, but only after the Attorney General took action. This must be verified and all other illegal hosts removed.

The impressive commitment of the Mayor’s 200,000 unit affordable housing plan could be easily overwhelmed by the number of affordable units lost to Airbnb’s business model. That wouldn’t be due to the inevitable expansion of the modern sharing economy – just due to bad policy for New York.