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Airbnb Sues Over New Law Regulating New York Rentals

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Apartment buildings in East Harlem, New York. Gov. Andrew M. Cuomo has signed a bill that will impose steep fines on Airbnb hosts who break local housing regulations. Credit Danny R. Peralta for The New York Times

Gov. Andrew M. Cuomo of New York has signed a bill that will impose steep fines on Airbnb hosts who break local housing regulations, creating a new law that could drive people from the short-term rental service.

Since 2010, it has been illegal in New York to rent out a whole apartment for fewer than 30 days. But some tenants and landlords have ignored those rules and have been using Airbnb to rent out their apartments for much shorter periods.

The new law allows the local government to fine hosts up to $ 7,500 if they are caught listing a property on a rental platform such as Airbnb.

“This is an issue that was given careful, deliberate consideration, but ultimately these activities are already expressly prohibited by law,” Rich Azzopardi, a spokesman for Mr. Cuomo, said in a statement.

Mr. Azzopardi added that illegal rentals “compromise efforts to maintain and promote affordable housing by allowing those units to be used as unregulated hotels.”

Earlier this week, Airbnb offered an alternative to the legislation, offering to provide a registry of hosts to local regulators. But supporters of the state regulations, which were drafted in January and passed in June by a nearly unanimous vote in the State Assembly and Senate, criticized the company’s offer as a last-minute public relations stunt.

“Airbnb put a lot of pressure on Governor Cuomo and spent millions, so I’m gratified that he stood up for the cause of affordable housing and protecting tenants,” said Assemblywoman Linda B. Rosenthal, a Manhattan Democrat who sponsored the bill. “This will help stop the bleeding and the loss of units that should be occupied by New Yorkers and not tourists who are here for a few nights.”

The legislation, which was sent to Mr. Cuomo on Tuesday, spells trouble for Airbnb. New York City is the company’s largest market in the United States. The city’s hosts generated about $ 1 billion in revenue last year, and the company took a cut of that amount in fees.

On Friday, Airbnb reacted with anger to Mr. Cuomo’s decision.

“In typical fashion, Albany back-room dealing rewarded a special interest — the price-gouging hotel industry — and ignored the voices of tens of thousands of New Yorkers,” said Josh Meltzer, head of the company’s New York public policy.

The legislation followed years of haggling between Airbnb and New York officials. In 2013, Airbnb irked the state attorney general, Eric T. Schneiderman, by initially fighting a subpoena for data on who used the platform and what they used it for.

The relationship between Airbnb and local politicians has continued to deteriorate since Mr. Schneiderman sent his initial request.

By the time New York lawmakers moved to fine Airbnb hosts, an odd coalition had aligned against the company, including Democrats and Republicans, affordable housing advocates and real estate developers, and hotel unions and landlords.

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