New York City has implemented “Local Law 18,” which took effect September 5, effectively banning short-term rentals. Individuals cannot legally rent an apartment or home for less than 30 days, even if that individual owns or lives in the building. Additionally, rental owners will have to register their properties through the city so that potentially illegal short-term rentals are preemptively caught. New regulations on short-term rentals are being implemented in NYC and other major cities (in different variations), such as Atlanta, San Fransisco, New Orleans, and Dallas.
The rationale behind these regulations is that short-term rentals reduce the amount of available long-term listings within cities. The lower housing supply could, in turn, raise the prices for long-term rents. This relationship between rising rents and the existence of short-term rentals within zipcodes was studied by the Wharton School of Business - the study found that companies offering short-term hospitality (like Airbnb) contributed to a fifth of actual rent growth within a zipcode annually.
Individuals such as Arun Sundararajan (an NYU professor & author in economic studies) have argued that Airbnb users in NYC mainly rent out apartments that they live in. Therefore, the short-term rentals within NYC do not dip into the long-term housing supply, but this argument has yet to be studied and proven.
Local Law 18 prompted Airbnb to file lawsuits against NYC, but they were dismissed. Judge Arlene P. Bluth concluded that having to comply with a registration system does not present an “overly onerous obligation.” It is yet to be seen how these regulations will affect the tourism economy and the businesses in the city that survive off of the tourism revenue. Additionally, this may open up the possibility for a short-term rental “black market” in the area.
Hotels are not directly affected by Local Law 18 as the buildings do not take away from the long-term housing supply, and revenues generated by New York's resort tax on hotel stays are appealing enough to keep the businesses unregulated.
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