Airbnb Sues New York City Over Short-Term Rental Law

Airbnb, the short-term rental platform, is taking legal action against New York City over a new law that it claims amounts to a “de facto ban” on short-term rentals.

As reported Thursday (June 1) by Reuters, the law, known as Local Law 18, is set to go into effect in July and will limit the number of people who can host rentals in the city, which remains one of the company’s most important markets, with about 38,500 active listings as of January.

Airbnb is challenging the new scheme, calling it an “extreme and oppressive” policy that clashes with a federal law that has shielded many tech platforms from liability for content posted by its users.

The U.S. rental giant is also concerned that the new law will make it more difficult for hosts to do business, requiring them to register with the New York City Mayor’s Office of Special Enforcement (OSE) and comply with “the maze of complex regulations” for zoning, multiple dwelling law, housing maintenance code, and construction code in the city. Ultimately, the OSE application reviews will ensure “that only a minuscule number of hosts will ever be granted a registration,” the company said in its filing.

Short-term rentals have become a frequent target for local activists and politicians, who say that many of the listings take affordable homes off the market. Moreover, existing rules on when hosts can offer short-term rentals are regularly flouted, which has prompted complaints from city officials, housing advocates, and the hotel industry.

Against that backdrop, city councils around the United States are increasingly introducing ordinances to regulate short-term rentals, which in some cases will require hosts to obtain licenses and pay registration fees or limit the number of short-term rentals in business districts.

And the effect is already being felt. Data shows a modest to significant decrease in the number of listings after registration schemes went into effect in Santa Monica, Boston, and San Francisco — a further indication that the outcome of this lawsuit could have significant implications for the future of short-term rentals across the U.S.