City Council Members Helen Rosenthal and Jumaane D. Williams have released a letter to Airbnb’s top 30 investors warning them of increasing government regulations on Airbnb’s illegal activity that might impact the value of their investment.
“Our top concern has always and will continue to be the working families, seniors, and tenants who are being forced out of their homes and harassed because landlords know they can profit more by running illegal hotels,ˮ said Council Members Helen Rosenthal and Jumaane D. Williams in a joint statement.
“If Airbnb truly cared about middle class New Yorkers, they would not continue to allow landlords to take valuable apartments off the market, exacerbating our serious housing crisis,”
New York City recently allocated several million dollars to fund education efforts to make all New Yorkers aware that renting out their entire apartment, condo, or cooperative for fewer than 30 days is illegal.
The money is also financial information technology to scrape the websites of Airbnb and other short-term rental platforms to identify users who post illegal listings.
And the city has hired inspectors from multiple City Agencies to identify and fine apartment owners or tenants who post illegal listings on Airbnb and other short-term rental platforms.
“In addition, we are passing legislation to significantly increase the fines for anyone caught posting their apartment for an illegal rental on any online platform,ˮ wrote the council members.
“Legislation that requires additional reporting will also allow the City to more accurately track and fine repeat offenders.ˮ
The pair said tenants, condo owners, and co-op owners who post an illegal rental are breaking the law and, according to the Real Estate Board of New York (REBNY), eviction proceedings are moving forward at an increasing pace.
New York State Attorney General Eric Schneiderman investigated Airbnb in 2014, and his investigation concluded that nearly 75 percent of Airbnb’s New York City listings were illegal.
Rosenthal and Jumaane D. Williams recently met with Airbnb’s Chris Lehane. They said, “We asked him if Airbnb would voluntarily install simple software to keep illegal rentals off of their website. Remarkably, he refused, saying that he did not agree with the New York State law.
“As you can imagine, we were disappointed to learn that a nearly $30 billion company would knowingly allow illegal activity on its website.ˮ
The warning comes as more professional investors are making money off of the service, generating profits by putting hundreds of apartment units for rent.
According to a new study from Priceonomics and Realty Shares, professional investors, those who own multiple properties that they do not live in, are starting to cautiously dip their toes into short-term rentals.
Most of the activity is coming from individual investors. However, there is also evidence that large companies are starting to show interest in the service.
While professional investors remain a small minority, they have cornered a significant fraction of the city’s Airbnb market.
In fact, they accounted for more than a third of all bookings and revenue in the city, in the process generating $168 million over the four-year period. Also, there were more than 100 hosts that had ten or more properties in their portfolio.
Airbnb’s headcount of multiple unit owners are much lower than in the recent report. According to company records released last December, only 1.4 percent of hosts have three or more apartments on the site.