Major blow for Airbnb users: New law to restrict New York City apartment rentals

New York City has just made it almost impossible for visitors to rent a short-stay apartment direct from an owner.

The issue has been simmering for some time. Since 2010 the city has had a statute on the books prohibiting short-term apartment lettings of less than 30 days in Class A buildings, those with three units or more.

However, the regulation was widely flaunted and the homeshare industry boomed.

In October last year, New York governor Andrew Cuomo signed a bill into law that added teeth to the legislation. An apartment owner or lessee who allowed an apartment to be rented out for less than 30 days would be fined $US1000 for a first violation, $US5000 for a second and $US7500 for a third.

The law has dealt a major blow to homeshare facilitators such as HomeAway, FlipKey and Airbnb. Early last year, before the new law was enacted, Airbnb had around 20,000 properties listed for rental in NYC, more than any other US city.

Today Airbnb lists just over 300 in the city. Most are rooms rather than entire apartments, and renting out a shared or spare room is no problem.

Anyone renting an apartment in a Class A building would not incur the fine – it's the landlord who pays. However, the guest might be turfed out, with no possibility of any refund. Also, if the guest were to suffer third-degree burns from an upturned kettle or if the apartment is burgled, a travel insurer might refuse to pay up since the guest is occupying the premises illegally.