September 5th, 2023, marked a significant turning point for the short-term rental landscape in New York City. It was the day that NYC started to enforce Local Law 18 (LL18), commonly known as the “Airbnb Ban”. While it is not the first time NYC has passed legislation to curb Airbnb rentals, it now seems serious about enforcing LL18. If it succeedsLL18 could have substantial implications for hosts, short-term rental platforms, and the city’s rental market as a whole. In this blog post, we will explore the ramifications of LL18, how it affects short-term rental landlords, and provide a step-by-step guide for transitioning from short-term to year-round rentals in New York City.
Section 1: Understanding the Airbnb Ban (LL18)
Local Law 18, or the “Airbnb Ban,” marks a significant shift in New York City’s short-term rental landscape. Under the legislation mandates that hosts seeking to rent their units for less than 30 days at a time (“short-term”) must register with the Mayor’s Office of Special Enforcement (OSE) and obtain a rental permit. Hosts who violate the law face a $5,000 fine per violation. Platforms like Airbnb, VRBO, and Booking.com face up to a $1,500 fine for each transaction involving an unpermitted short-term rental.
LL18 permits are issued under specific conditions:
- The host must reside in the rental property during the rental period.
- Rentals are limited to a maximum of two guests at a time.
- Bedroom doors must not have locks in place.
Hosts can apply for a short-term rental registration permit here.
In anticipation of LL18’s enforcement, Airbnb’s NYC listings have seen a dramatic reduction, with approximately 70% of their listings (around 15,000) removed since August 2023 source: Wired.
Section 2: Impact on NYC’s Short-Term Rental Market
Over recent years, Airbnb listings have outnumbered those on platforms like StreetEasy. In May 2022, Airbnb had between 10,572-20,397 listings, while StreetEasy had only 7,669 source: NY Magazine. The announced enforcement of LL18 has reversed this trend and led to a sharp decline in Airbnb listings with only a handful listings in the five boroughs as of the last week source:Wired. StreetEas , on the other hand, has over 14,000 in Brooklyn, Manhattan and Queens – the city’s largest short-term rental markets.
While not all former Airbnb listings will transition to year-round rentals, this anticipated surge in rental supply is likely to impact rental prices in the city. The transition from short-term to long-term rentals holds the potential to double apartment availability, which should ultimately lead to a decrease in rental rates. However, owners’ bottom line may not be hurt. The assumption that property owners earn a lot more renting short-term as opposed to year-round isn’t necessarily true. When you analyze the numbers, considering the typical occupancy rate for a legally rentable apartment on Airbnb, its average nightly rent, and deducting platform fees, it becomes less evident that renting short-term is significantly more profitable than year-round.
Moreover, year-round rentals offer a more stable and predictable income stream, devoid of the fluctuations inherent in the short-term rental market. Additionally, they mitigate the risk associated with negative reviews, which can have a detrimental impact on an Airbnb host’s reputation and income potential.
Section 3: Challenges Faced by Property Owners Transitioning from Short-term to Year-round Rentals
Owners making the transition to year-round rentals will face unique challenges in managing their properties. Airbnb and similar platforms streamline essential management tasks, including advertising, guest acquisition, calendar management, tenant communication, and rent collection. Without these platforms, property owners must either learn to handle these responsibilities independently or consider hiring a property management company.
Finding cost-effective property management solutions for small portfolios can be daunting. The optimal approach for owners transitioning from Airbnb to year-round rentals is to seek a user-friendly property management platform that offers the convenience of Airbnb but tailored to the needs of small-scale property owners offering long-term rentals. Avoid overly complex platforms designed for large property managers, which can be overwhelming and costly. Look for a solution that is straightforward and meets your needs without unnecessary complexities or expense. Urbanvie, for instance, offers an inexpensive, simple, yet comprehensive platform, along with Urbanvie Links, which connects owners with contractors and real estate industry-related professionals for all their real estate needs
Section 4: Top 10 Steps for a Seamless Transition
Transitioning from short-term rentals to year-round rentals requires careful planning. Here are the top 10 steps to prepare for this transition:
- Consult with market experts to optimize your rental portfolio for year-round rentals.
- Ensure your properties meet local codes and are in suitable condition for new tenants.
- Establish relationships with maintenance contractors who you can call for maintenance issues when they arise, so you’re not scrambling at the last minute.
- Familiarize yourself with NY rental laws, including security deposit regulations and apartment inspections.
- Figure out Rent Collection. Implement an electronic rent collection system.
- Lease. Find a suitable lease for your tenants.
- Tenant Criteria. Define your ideal tenant criteria that comply with legal requirements and implement a tenant screening process.
- Prepare a rental application for prospective tenants to streamline the screening process, is compliant with NY laws, and ensures that you gather all necessary information.
- Understand NYC Housing Voucher Programs and Rental Rates. Remember, by law landlords cannot legally discriminate against tenants based on income source.
- Decide on a Marketing Strategy: Determine your marketing approach, whether it’s a do-it-yourself (DIY) strategy, working with a real estate broker, or exploring hybrid options like those offered by our sister company, Merileads.
Section 5: Pricing Your Apartment Strategically
The timing of LL18 presents a mixed blessing. While its delay in enforcement allowed hosts and tourists to capitalize on the summer tourist season, it also results in vacant apartments at the end of prime rental season. With the potential influx of new inventory, and the natural seasonal decrease in rents, rents are likely to face downward pressure. To mitigate potential losses, consider pricing your apartments conservatively. Extended vacancies can be costly.
Conclusion and Contact Information
As the NYC short-term rental landscape undergoes significant transformation with the introduction of LL18, property owners are presented with both challenges and opportunities. Transitioning to year-round rentals can be a viable option, provided you plan accordingly, have the right tools, and navigate the process wisely.
For more information, assistance, or questions, please feel free to reach out to us. We’re here to help you adapt to the evolving rental market landscape in New York City.
Joshua Nunberg, Esq, Found & CEO of Urbanvie.com
Email: email@example.com | Phone: 347.309.4821
Joshua is a NYC real estate veteran, independent investor, property manager, and real estate broker. He also has extensive experience as an Airbnb/VRBO host and is an avid platform user.