NYC Outlaws Airbnb, Will DC Follow Suit?

• May 22, 2013
• 17 Comments

by Shilpi Paul

An Airbnb rental in New York City.

A recent court ruling made Airbnb illegal in New York City. Is DC next?

The precedent-setting ruling came in the case of Nigel Warren, who had been renting out his bedroom, part of a two-bedroom East Village apartment, to Airbnb users. The city caught wind of it, and charged Warren with breaking the law.

Earlier this month, Warren and Airbnb representatives tried to make a case for themselves at a hearing. They found language in city law that they felt allowed short-term renters to stay in an apartment like Warren’s, The New York Times reported.

The city laws in question are a bit unclear and can be hard to interpret, making it difficult for hosts to know if they are in violation. However, Warren seems to have broken at least one law, cited by The Times here, which states that it is illegal for someone to rent out portions of their home or apartment for a short time unless they are living in the residence during the same time period.

The judge handed down his decision on Monday, and ruled against Warren, who was fined $2,400 and, presumably, cannot rent out his room anymore.

The ruling makes clear that many people using the website are probably breaking city laws, particularly hosts who are renters themselves. The tricky part is that Airbnb itself is not doing anything illegal; it is simply setting up its users to break the law.

The business, valued at $2.5 billion, will now start issuing a more explicit warning to those who sign up to be an Airbnb host, making it clear that many cities may deem the practice illegal, or have certain requirements, like acquiring permits, that must be completed before renting out a room.

Now that one of Airbnb’s largest markets has deemed renting out rooms through the site illegal, does this harken the ultimate demise of Airbnb? Will users simply flout the law or will hosts acquire the pricey permits necessary to participate?

Readers, do you think DC will now crack down on Airbnb? Let us know in the poll below and in the comments section.

This article originally published at http://dc.urbanturf.com/articles/blog/nyc_outlaws_airbnb._will_dc_follow_suit/7101

17 Comments

1. KL said at 4:31 pm on Wednesday May 22, 2013:
   As hotels continue to lose business in DC, it is only a matter of time until the city cracks down on Airbnb. The company must have lobbyists working on their behalf to change the law. Gonna have to start working overtime.

1. Diana said at 6:01 pm on Wednesday May 22, 2013:
   I am sure that DC will eventually crack down on the service and those who use it, the question is how much? Plenty of homeowners in DC already rent out their places without the appropriate permits and licenses and only a fraction face the consequences. I suspect it will be the same with Airbnb.

1. Janice said at 7:12 pm on Wednesday May 22, 2013:
   Fight the power!

1. sapo said at 7:23 pm on Wednesday May 22, 2013:
   I agree with Diana. I could see the city passing a law against AirBnB to appease the hotel industry but hardly enforcing it. It's really not in their interest to crack down on people renting units out illegally. I believe the shadow market for basement and room rentals in this city actually drives up housing prices because people factor the rental income into their purchase. The rental income allows them to afford more house and thus drives up real estates prices and subsequently, real estate taxes.

1. Justin S said at 7:47 pm on Wednesday May 22, 2013:
   As someone familiar with the AirBnB scene, I think it's unlikely that DC would write any new laws until the city starts enforcing the existing laws. Currently DC hosts are supposed to have buisness licences and go through all the normal hoops that a landlord would have to go through in order to be "legal." As far as I know, excactly zero AirBnB hosts I've met have bothered with this step. Related: In 6 years of renting all over the city via craigslist, before buying my own house, I don't think I ever once lived in a legally rentable apartment. As "pro tenant" as DC's whiny landlords claim this city is, it's almost impossible to find a legal english basement on Craigslist. Obviously there's a pretty big gap between the laws on the books and the city's enforcement of those laws.

1. Jake said at 8:05 pm on Wednesday May 22, 2013:
   Just force Airbnb to collect room tax on each transaction in each jurisdiction. Or, drop the room tax on hotels. Then as I citizen I won't care. But parity is required. Without tax parity, I respect the hotel industry's grievance. Amazon faced the same challenge vs. retail, and parity was enforced.

1. Wilson said at 8:19 pm on Wednesday May 22, 2013:
   It is unlawful to rent out rooms in a house that is not zoned for that. The issue has nothing to do to Airbnb. The City doesn't ignore anything. they are losing the sales and use tax which is 14.5% , permit fees which are substantial, housing business licenses fees and the list goes on. Illegally renting out rooms is an affront to all other DC residents and businesses who operate their businesses lawfully. I doubt very seriously if people who are engaged in this illegal activity report it as income on their taxes because tax records can be cross referenced with housing and business records. It is a matter of public record as to how a particular piece of property is zoned as and what housing business license are required. Rental income can't be counted as income for purposes of supporting a mortgage application unless it is declared on Schedule E of the 1040. Homeowners insurance doesn't cover damages to or from illegal renters. What is really interesting is that these very people who are profiting from illegal Actively want to hold everybody else to the letter of the law.

1. Tom A. said at 8:43 pm on Wednesday May 22, 2013:
   I find it hysterical that people are worried about a hotel- which regularly sells out 500 rooms at $400 per night, as compared to someone who rents out their one spare bedroom for 50 or 75 bucks. If DC does crack down, I suppose people will just go back to doing the same thing on craigslist like they have for years.

1. zcf said at 9:09 pm on Wednesday May 22, 2013:
   yeah that's a crying shame. I hate staying in hotels in New York, especially with a bigger group. It's so nice to get a kitchen. So does that mean that VRBO is illegal as well? I hope this gets over-turned.

1. cam said at 3:28 pm on Thursday May 23, 2013:
   I discovered that a number of people in my downtown condo are using Airbnb to make much, much more than $50-75 per night. The ads tout the great amenities in my building. I wasn't pleased to learn that I'm sharing my building's amenities, including our front desk staff, with complete strangers. It's definitely a violation of condo rules, and I've reported this to the board, but I also contacted DC about the issue. I received no response, so I'm under the impression that DC doesn't care and/or doesn't have the resources to enforce the law. (I checked, and none of the folks in my building using Airbnb for extra cash have the required licenses). Take a look at who is running an illegal hotel in your neighborhood. You may be shocked. There are plenty of reasons to object to Airbnb -- safety and loss of tax revenue come to mind, but there are others. Count me on the side of supporting legislation to ban the practice, or put much tighter controls on it.

1. Com said at 5:52 pm on Thursday May 23, 2013:
   So, per this, though, a single person (or couple) with a 2-bedroom could legally AirBnB their 2nd bedroom, as long as they were occupying the other bedroom then? In theory?

1. Jason said at 8:17 pm on Thursday May 23, 2013:
   I think subletting and re-renting while you are away should be legal generally but renting out a property that you own but don't live in yourself should require a business license. If DC is going to enforce housing laws more stringently, start with the condo associations that have all kind of illegal rules about renting/renters and those that treat renters unfairly.

1. mona said at 8:42 pm on Thursday May 23, 2013:
   Seriously doubt that DC will outlaw Airbnb. They don't have the resources the control the illegal basement rentals going on in the city much less the Airbnb stuff. If only they could collect the revenue from all this our taxes would drop

1. west side long term stay hotel in NYC said at 4:14 am on Saturday May 25, 2013:
   Truly an amazing post. Loved reading it

1. Airbnb = Awesome said at 6:28 am on Sunday May 26, 2013:
   The ruling doesn't necessarily mean all Airbnb hosts will be cracked down on, as the city only enforces the rule when a complaint is filed. http://www.fastcompany.com/3009953/where-are-they-now/airbnb-stay-illegal-in-new-york-rules-judge

1. smn-dc said at 10:04 pm on Monday June 17, 2013:
   US hosts using AirB&B actually do pay taxes to Uncle Sam as AirB&B reports it. I've used AirB&B while traveling abroad and love the experience. Times have changed and especially w/the Internet at our finger tips, ways of doing things also need to change. Traditional hotels need to move over and make room for innovative ideas--such as AirB&B. Bravo to AirB&B!

1. tmp said at 5:49 pm on Thursday November 14, 2013:
   I am big proponent of AirBnb. Since a rising tide floats all boats, I think hosts should focus on taking care of the neighbors around them and keeping them happy too. I fixed both of my neighbors leaky porch roofs when I was fixing mine and brought my neighbor shopping when she got a new job after being unemployed for a while. Take care of your neighbors with a little extra income AirBnB and keep them happy. Make sure they have your number if guests are loud or disorderly and make sure your neighbors know you are looking out for them too.