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A Short Guide to Airbnb for New York City Landlords

A common misconception in New York City is that most Airbnb rentals available here are perfectly legal. In reality, the majority of these arrangements are typically illegal under the New York State Multiple Dwelling Law (MDL). According to the MDL, it is illegal to rent apartments nightly, for a period of less than 30 days, in a building of three or more units. Even if one owns the condo or co-op that is being rented out, it’s still not a legal practice. For owners of condos in particular, they are able to rent their units, but the rental period must be at least 30 days and the owner has to obtain condo board approval. When it comes to one- or two-family private homes, the zoning of a residential house would have to be changed to that of a rooming house in order to be legal as an Airbnb. There may also be building codes for this kind of zoning with which one would have to comply.

As you may imagine, it’s fairly easy for the authorities to catch New Yorkers who are running illegal Airbnbs. After all, the list of rulebreakers along with the ability to contact them can be found via a simple internet search. However, the business is so lucrative that even those who have been caught will often return to the site at some point. Due to the fact that hotel rates in New York City are some of the highest in both the United States and the world, Airbnb is quite competitive here. The hotel unions are very strong in New York City and the local government is on their side. Additionally, the taxes involved in operating hotels are sky-high nowadays, and this is all factored into the prices of hotel rooms. For these reasons it’s quite simple, and often irresistible despite the laws, to rent Airbnbs for a fairly high price and to pocket a nice profit.

Often, landlords and property managers don’t catch on to the fact that illegal Airbnbs are being run out of their buildings. Other times, they know but choose to turn a blind eye with the thinking that, as long as the rent is being paid, then there is no reason to make a fuss.

In speaking to the landlords that I work with, however, I take a vastly different position on this issue. I see a multitude of risks inherent in allowing Airbnb rentals in one’s building, including but not limited to, thefts, assaults, and the possible introduction of bed bugs to the building. Hotels are equipped with staff, security, and insurance to deal with what can be the very unpredictable behavior of short-term guests. In an Airbnb rental, there is hotel-style behavior in a residential building, which is a very risky situation, to say the least. Thanks to government crackdowns on Airbnb users, there are significantly less Airbnb rentals available in New York City than there were a few years ago. Those Airbnbs that are still operating are typically the result of property managers that are unaware or are being paid to keep quiet.

While the decrease in Airbnbs is certainly a boon for those who own real estate in New York City, they do still exist, meaning that landlords should take precautions to ensure that their buildings don’t become home bases for illegal rentals. First and foremost, tenants should be screened extremely thoroughly before they even move into the building. Provide riders that clearly specify that Airbnb rentals are illegal and be sure to explain this to incoming tenants in person as well. People from other cities and states may be used to it being legal, so it’s important to emphasize the New York City and New York state laws. Landlords should ask superintendents to keep an eye out for unusual people around the building. Every few months, landlords should also check Airbnb and other vacation rental sites to see if any properties or hosts look familiar. While this may not ensure that no Airbnb rentals are taking place in one’s buildings, it’s certainly a start and absolutely worth it in terms of maintaining high standards for the buildings that one manages, as well as avoiding potential liability.

 

Adam Frisch
Lee & Associates Residential
875 Avenue of the Americas, Suite 1808
New York, NY 10001
afrisch@lee-associates.com

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