For two years now, Airbnb and New York City have been in a legal battle regarding an ordinance that was passed by local officials back in 2018. This week, the Airbnb New York City legal battle ended in a settlement, with the home-sharing company agreeing to hand over host data. This has some positive implications for Airbnb New York City. But it will also result in the loss of tens of thousands of Airbnb listings that operate illegally in the city.
The Airbnb New York City Lawsuit – Background
In July 2018, the City Council passed the Homesharing Surveillance Ordinance with a unanimous vote. Under the law, home-sharing companies like Airbnb and Homeaway would be forced to hand over a monthly report to the Mayor’s Office of Special Enforcement (OSE) which would reveal major Airbnb New York City host data including:
- Transaction records with guests
- Each Airbnb listing’s URL
Under the law, if Airbnb and other companies failed to deliver the data on a rental listing, they would be fined up to $1,500 for a single listing.
The reason the Homesharing Surveillance Ordinance was passed is mainly due to the fact that there are certain Airbnb New York City regulations that hosts must abide by. For instance, whole houses and apartments may not be rented out for 30 days or less. Such laws are in place to protect New York City neighborhoods as well as the affordable housing inventory. Without the necessary data from Airbnb, local officials would have a harder time tracking down illegal listings.
Airbnb and Homeaway filed a lawsuit against New York City two months after the law was passed. The companies claimed that the new law was a violation of privacy laws. Specifically, the lawsuit claimed that the Homesharing Surveillance Ordinance was in violation of the First and Fourth Amendments of the U.S. Constitution, as well as Article I, Section 12 of the New York Constitution (security against unreasonable searches, seizures, and interceptions) and the federal Stored Communications Act.
After the file was claimed, Judge Paul Engelmayer issued a preliminary injunction, preventing the ordinance from being carried out until the case was settled.
Airbnb vs New York City Settlement
Through private settlement talks, Airbnb has agreed to hand over the necessary host data. Initially, it was requested that the Airbnb host data be delivered to the OSE on a monthly basis, but the final agreement calls for a quarterly report instead. The Airbnb host data will be reported for hosts who rent out an entire home for 5 or more nights a quarter and will include:
- Phone numbers and emails
- If the Airbnb listing is for a whole unit or part of a unit
- Total number of days booked and the amount of money the host received
Both sides commented on the settlement:
Christian Klossner, the executive director of the OSE, said:
With this agreement, the city will have a powerful tool to detect those who hide behind fake accounts and address those who take housing away from New Yorkers. We will be able to better protect our communities and visitors, and more fully understand the impacts of the illegal short-term rental market.
Airbnb co-founder Nathan Blecharczyk commented:
We hope that our willingness to be transparent enables the State and the City to feel reassured that short-term rentals can be effectively regulated without blunt prohibitions. Now, more than ever, regular New Yorkers should have the ability to occasionally share their home, activity that we believe should not be confused with illegal hotels.
Although Airbnb fought hard to protect host data, this settlement is no doubt an important move for the company. The Airbnb New York City market is one of the largest domestic markets for the company and the settlement will help to solidify its legal standing in the city.
What This Means for Real Estate Investors
As a real estate investor, you should always understand and work to uphold local laws and regulations. If you had any plans to buy Airbnb property in the New York City real estate market, be aware that it has been illegal to rent out full units, long before the ordinance and the lawsuit.
If you wish to take advantage of the kind of returns Airbnb hosts in New York City enjoy, try house hacking an Airbnb rental property. To learn more, read: House Hacking with Airbnb: How to Live for Free. And be sure to check out Mashvisor’s Airbnb data to learn where to invest in short-term rental properties in New York City and what properties to buy.
Finally, there are other cities that allow real estate investors to buy and rent out whole investment properties on Airbnb. If house hacking is not an option for you (perhaps you are an out of state real estate investor), then check out this list of 20 Cities with No Airbnb Legal Issues in 2020.
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