New York City reacts to a new rental law
Laura Ravegnani, a Ph.D. student of physiology at Italy’s Università degli Studi di Modena e Reggio Emilia, was out touring the financial district in Lower Manhattan on a recent Sunday.
But at the end of the day, instead of heading to an expensive hotel in midtown, she and her parents, who were traveling with her, returned to a 700-square-foot, one-bedroom apartment in Long Island City, Queens. They had booked the place for a nine-day stay on the website Homeaway.com, which helps people find apartments in cities around the world.
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“The cost of $950 for the apartment was cheap relative to a hotel room that would accommodate three people,” says Ravegnani.
But this convenient and cost-effective alternative to the traditional hotel stay has just gotten more difficult to arrange in New York City.
On May 1, the so-called “Thirty Day Law,” which restricts short-term apartment rentals to no less than 30 days in the city, took effect. The bill, which had been strongly supported by the hotel industry, was signed into law last July by then-Gov. David Paterson.
In fact, the law takes aim at the short-term apartment rental industry, which gained popularity over the past decade as web-based facilitators such as homeaway.com, roomorama.com, localbigwig.com, vrbo.com and sublet.com made it easier for private owners to advertise, their homes.
“I make five times the income renting my furnished apartment in Chelsea on a daily basis,” than renting it on a monthly basis, says Michael Hoffer.
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The new law establishes a distinction between permanent and transient occupancy, “permanent” being defined as over 30 days.
“The penalty for using a unit contrary to the Certificate of Occupancy (“C of O”) is a maximum of $800 levied against the building owner,” says Amanda Konstam, deputy director of public affairs at the Office of the Mayor. Konstam adds that while there are no penalties against website hostsSome short-term apartment rental websites are changing the way they do business to be to comply with the new law, while others are educating apartment owners about the law.
Roomorama.com frequently asked questions page on the new rental law. ABOUT WHAT? RENTALS? ALSO, AS WORDED IT SOUNDS LIKE THE PUROPOSE OF THE BLOG IS TO ANSWER QUESTIONS? PLS CLARIFY A representaive for the website states that, as of May 1, they were only accepting reservations on a monthly basis. Localbigwig.com informs its clients about “The Thirty Day Law” via its website.
“We don’t see the law affecting our business model, because our website targets executives who stay for periods of over a month,” says Ray Madroinio, the CEO of Localbigwig.
Marie Jezequel, the CEO of Nyhabitat.com, says she is concerned that the law’s ambiguous language might lead to penalties levied against her business if apartment hosts lease for less than 30 days. “I have to go through 1,000 apartment listings to make sure they are in compliance with the new law,” says Jezequel. “My clients have been asking questions since the law was signed. ‘Can I go to the Department of Buildings and get an exemption to get a different C of O?’ ‘How can I keep my listing posted on your website?’ It’s a saga for every apartment that I have listed on my website now.”
Questions have been mounting throughout the industry since the law took effect..
The law does not prohibit all short-term apartment rentals, making it harder for websites to distinguish between apartment owners who are in compliance with the law and those who are not. For property owners in buildings with five units or less, or those who bill their homes as a bed & breakfast, short-term rentals are still legal. Individuals who share their apartments—living in the apartment while a short-term renter is present– are also be in compliance.
The justification for the law is to curtail the proliferation of illegal hotels and increase public safety. The bill itself states, “Not only does this practice offer unfair competition to legitimate hotels that have made substantial investments to comply with the law, but it is unfair to the legitimate permanent occupants of such dwellings who must endure the inconvenience of hotel occupancy in their buildings and it decreases the supply of affordable permanent housing.”
Fire- and safety-code violations are another reason for the law. Some landlords have divided apartments into a labyrinth of rooms, causing a major fire hazard.
But the principle beneficiary of the new restrictions on short-term rentals is the hotel industry, which saw vacancy rates soar and revenues decline during the recession. In 2009, occupancy rates fell only 5 percent, but hotel revenues fell 35 to 40 percent from the previous year, according to the Partnership for New York City. http://www.pfnyc.org/pressReleases/2009/pr_2009_0806_harlem%20chamber.html )
Young people and artists who rely on short-term rentals both as an inexpensive way to travel, and as a source of income, are likely to be hit hardest if the market for these apartments tightens. Ron Hilley, a baritone for the New York City Opera, has been subletting his apartment during the off-season for the past 20 years and is concerned about the new law. “I rent my apartment because when I’m not working I can’t afford my apartment,” says Hilley who moves in with his relatives during the off-season.
Berhnard Rotzetter, 38, of Switzerland, who was visiting Times Square recently said he is concerned about his ability to afford a comfortable hotel on his visits to New York City. “I usually find an apartment on Homeaway.com because I take long vacations and can’t afford to stay in a New York City hotel for three weeks,” he said.
Opponents to the law are beginning to organize. The Short Term Renters and Hospitality Association have been raising money and intend to mount a high-profile public relations campaign. STRAHA believes the balance of power has shifted in its favor since the midterm elections and has hired one of the most influential lobbyists in the hospitality(OK?) sector, John Cordo of Cordo & Co., to overturn the law.
“We are not slumlords or scam artists, but offer safe and secure properties that enable families with children, loved ones of sick friends and other individuals who would never be able to afford an extended hotel stay in New York to come and to bring their dollars with them,” according to a statement on the STRAHA website.
According to Protect-Vacation-Rentals.com, a website that helps protect the rights of homeowners who rent their properties on a short-term basis: “Enforcement will be complaint-based, including complaints that originate via calls to 311.” The Mayor’s Office of Special Enforcement will then be assigned to investigate the complaints.
This new law will not prevent Ms. Ravegnani, who says she “loves” New York City and plans to move here in the future, from taking another short-term rental. She thinks there will be many short-term apartment hosts who are willing to break the rules and continue to keep their apartments on the market because the penalty is much less than the losses they will incur from not renting out their apartments. And, of course, there will always be demand for an inexpensive rental in the Big Apple.