With the cost of housing still rising and little relief from the shortage in sight, New York City began enforcing strict new regulations on short-term rentals last September to address housing concerns and boost the city’s hospitality sector. Less than a year into the city’s policy, known as Local Law 18 (LL18), whether or not the near-ban is achieving one of its most central goals, alleviating the housing shortage, remains unclear.
LL18 was motivated by New York City’s housing affordability crisis, which was greatly impacted by a severe housing shortage within the city. Pro-housing supporters advocated for LL18 as they argued that the city needs to prioritize homes above hotel rooms. Someone can rent out their home for less than 30 days only if their unit is in an approved building, they rent to a maximum of two guests at a time, and they stay in the home with their guests, as well as other restrictions under the new regulations.
“Illegal short-term rental operators hurt our hospitality industry and make it harder for New Yorkers to find affordable housing, and we must ensure we are holding them accountable,” New York City Mayor Eric Adams said in a statement this past March.
For individuals looking to list their homes as short-term rentals, you must apply for approval from the Office of Special Enforcement under the Mayor’s Office of Criminal Justice. Since opening its portal for applications in March of last year, and as of the end of June 2024, the office has received a whopping 6,395 total applications for short-term rentals, according to the OSE. Yet, the city has only approved 2,276 of these, denied 1,746 applications, and asked 2,269 applicants to submit additional information.
Since enforcing LL18, the number of legal short-term rentals listed on Airbnb and other platforms has plummeted. LL18 has led to a dramatic decline in short-term listings since last year, according to AirDNA, a collector of industry data, which reported that from August to September of last year, NYC Airbnb listening for stays less than 30 days dropped from 22,246 to 8,039. While these numbers have increased, they are still not the same as they were before LL18.
City officials argue that LL18 aims to ease the housing-affordability crisis while also boosting the hotel industry. They state that short-term rentals, like Airbnb, may remove housing options that would otherwise be lived in full-time. Former city comptroller Scott Stringer found that short-term rentals are contributing to the housing shortage by inflating home prices and rents, citing a 2018 report that stated: “Between 2009 and 2016, approximately 9.2 percent of the citywide increase in rental rates can be attributed to Airbnb.”
Yet, LL18 critics argue that the near-ban hasn’t substantially eased the city’s housing crisis and will ultimately hurt homeowners who relied on rental income to survive.
While it is unclear how much LL18 may contribute to decreasing housing costs, as summer tourism heats up, the near-ban of short-term rentals is showing clear contributions to the hotel industry, which is rising hotel-room prices.
Recently, the hotel industry has seen a big boost in revenue, with occupancy rates hitting 82% last year, while the national average is around 63%. AirDNA’s chief economist, Jamie Lane, stated, “It’s not surprising to me that you remove 20,000 short-term rentals, and all of a sudden, hotel rates are going up by 10%.”
While NYC has not begun fining hosts who violate LL18, the city plans on cracking down on compliance in effort to address housing and hotels.
