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Is a permanent Airbnb ban on the horizon? The company is currently embroiled in major fight with the city and the New York City hotel industry over a potential ban on it’s services. NYC is Airbnb’s largest market and Airbnb doesn’t appear to be going down without a fight.

The main players in this battle seem to be the city and the hotel industry against Airbnb. However, ordinary New Yorkers are also taking sides. They either blame Airbnb for driving up rents and destroying neighborhoods or they are in favor of the company due to the additional source of income.

So exactly how would a ban on Airbnb affect NYC? Here is the current status of the Airbnb NYC ban proposal and what it means for hosts.

A Brief History of the NYC Airbnb Ban

In 2010, Krueger and State Assemblyman Richard Gottfried presented a bill that was designed to make it illegal to sublet multiple-unit dwellings for less than 30 days. The bill, which was later signed into law as the Illegal Hotel Law, made a large number of Airbnb listings illegal.

Despite the name, Krueger contends that law bill was not done in discussions with the hotel industry and the majority of the law’s provisions had actually predated Airbnb’s existence.

Hotel Industry Versus Airbnb

However, Airbnb spokesman Peter Schottenfels claims that the hotel industry is actually using private investigators to conduct sting operations in order to bust Airbnb hosts who continue to operate on Airbnb. The responsible organization, known as Share Better, is a partnership between hotel union and industry leaders that was designed to expose illegal Airbnb activity.

Share Better is funded by the Hotel Association of New York City and the New York Hotel and Motel Trades Council. In the past year, group said that it would spend more than $1 million to uncover Airbnb listings faster by conducting monthly stings.

Is Airbnb Bad for NYC?

The dispute doesn’t only involve the hotel industry. Airbnb is also fighting against a number of studies which propose that the company is having a negative impact on rental prices in NYC, and even in the rest of the country.

FastCompany reviewed several studies that were done on Airbnb. In one report published by the New York City’s comptroller’s office, the study reported that Airbnb had contributed 9.2% to New York City rent increases between 2009 and 2016. However, Airbnb and AirDNA, a third-party data firm, are fighting back against this study saying that the comptroller misrepresent data from AirDNA, the firm whose research was used in the study.

Another study commissioned by the Hotel Trades Council and the AFL-CIO found that between the years 2014 and 2017, Airbnb resulted in a 1.4% rise in median long-term rents in the city. However, even studies not funded by the hotel industry have determined that Airbnb is impacting NYC rents.

An MIT study found that that a 1% increase in Airbnb listings results in a 0.018% increase in U.S. rents. As a result, it is clear that the findings of these studies are conflicting.

The Potential Impact of an Airbnb NYC Ban

So if NYC decides to turn against Airbnb, how would it impact hosts? The potential outcomes are numerous and include the following:

  • Airbnb hosts would have to be listed. In lieu of a complete ban, Airbnb hosts would likely be limited to those who have obtain the proper permits.
  • Stiff fines for illegal short-term rentals. Individuals would no longer be permitted to rent out their own homes and would face stiff penalties for doing so. Under the current law, first violations already cost a host $1,000 with fines escalating with each subsequent infraction, up to $7,500.
  • No more entire home or apartment rentals for travelers. For travelers, it means that they would be limited to the types of properties they could rent. It would disallow them from renting an entire house or an apartment in buildings that have three or more units.

Our advice is to you is to always be aware of the current Airbnb laws in your area. Please feel free to reach out to a Tax Pro if you have any questions.