Vacation Rentals in NYC in Jeopardy- who’s next?

 Vacation rentals have become very popular in the last 5 years. I think there are several reasons that spawned the trend- the economic boom created opportunities for many people to buy second homes, potential vacationers became more comfortable with researching and booking online, and the trend to be more like a local instead of a camera toting tourist has grown. The days of twelve countries in twelve days has turned into a week at a rental on the beach, in the woods or a studio in downtown Manhattan.

It has been a wonderful business opportunity for many since that extra income stream can come in handy. There are books, websites and seminars devoted to learning more about managing vacation properties. Advances in the internet have made sites like VRBO, HomeAway and Airbnb easy to use whether you are an owner or prospective renter. Communities benefit as well. In rural areas like the Finger Lakes where there are not enough hotel or B&B’s to accommodate all the summer visitors, vacation rentals are a perfect solution. Visitors spend money at attractions, dine out and shop. They are an important part of the visitor marketing mix.

There are always stories of rowdy rental customers and damage done to properties, but that tends to be the exception rather than the rule. All in all it is a great but small economic boost for many families and businesses. But now New York City seems to be taking strong measures to make any rentals under 30 days illegal. This blunt and shortsighted measure was supported by the Hotel Association of New York City and the Hotel and Motel Trades Council, obviously a much better organized and funded group than an assortment of individuals scattered throughout the five boroughs.

In this online article  Governor Paterson stated: “This new law fixes problems caused by illegal hotels and improves quality of life in traditional residential apartment buildings, while also meeting the needs of visitors. By removing a legal gray area and replacing it with a clear definition of permanent occupancy, the law will allow enforcement efforts that help New Yorkers who live in SRO (single room occupancy) units and other types of affordable housing preserve their homes.

“My office, the bill sponsors and the City have agreed to support a chapter amendment that makes the effective date of this law May 1 of next year. By making the effective date of this law May 1, 2011, property holders, business owners and not-for-profit corporations will be able to adjust the uses of their properties to the provisions of this law, or to dispose of the properties at issue so that they may find alternate sites for their current uses.” The restrictions apply to “Class A multiple dwelling buildings” and the bill was backed by New York City Mayor Bloomberg, who saw the measure as a means of cracking down against illegal hotels.

These new restrictions do not “meet the needs of the visitors” who cannot afford the expensive hotels, or are looking to stay in a hostel (yes, they are affected as well) or to live like a New Yorker for a few days. The delay in enacting the bill might provide organizations like Trip Advisor the time to strategize with the Vacation rental booking companies to develop a strong strategy to encourage  voters to make sure the bill is overturned.

In a bulletin to rental property owners in NY State, VRBO states: “But the bill effectively takes what has always been a legal activity—renting one’s home on a short-term basis—and makes it illegal. This law would prohibit any vacation rental in the five boroughs even if it is rented with permission of the co-op board, the condo association, or the building owner. The law makes it illegal for the owner to decide how to best use his property.

The most troubling aspect of this bill is that it will not end the practice of short-term rentals, but it will drive them underground. The City of New York will lose the tax revenue generated by these formerly legitimate businesses and travelers who stay in them will be put at risk.”  Bill S6873 is a bad piece of legislation that will prevent property owners from being able to make choices. I am concerned that if this bill is not overturned, then other areas of the state will start looking at how to legislate and control this important piece of free enterprise.


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