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New York Illegal Sublet Law Affects Vacation Rentals

A clarification in New York's housing laws targets illegal hotel operators -- and apartment owners.



Planning a trip to New York City? Save up. The average rate for a hotel room is about $240 a night or more. To save hundreds, travelers can also go online and rent an apartment. While this may be a cheaper option, it's also an illegal one. A bill that Gov. David Paterson signed into law this summer aims to reduce the number of tourists staying in residential apartment buildings.

Current housing law states that it is illegal to sublet a unit in a residential building in New York City for less than 30 days. But for years now, travelers on a budget have taken advantage of online sites where residents offer couches, rooms or entire apartments for a short stay at prices that undercut hotel rates. Some of these units are operated by companies that treat them as illegal hotel rooms, avoiding safety and building codes by which actual hotels must abide. When apartments are rented out nightly or weekly instead of monthly, it takes affordable permanent housing away from residents. "This is a growing model of illegal business practice that is pushing people out of their own residences," says state Sen. Liz Krueger, co-sponsor of the bill.

The new law, which goes into effect May 2011, seeks to clarify current housing law by defining what a permanent residence is: a dwelling occupied by a household for 30 days or longer. Only the people living in the dwelling can allow someone else to stay in the unit for less than 30 days, so long as no money is exchanged.

The no-money-exchanged provision, however, may threaten apartment owners who rent out their places for additional income. Brian Chesky, CEO of Airbnb, an online network of people who want to rent out their spaces, says he received hundreds of e-mails from members claiming that they use the money they earn from renting to subsidize mortgages and living expenses. Krueger says that the bill's enforcement will be driven by complaints only. Chesky isn't so sure. "They said they're not going to knock on doors, we're not entirely sure whose doors they're knocking on," he says.

New York isn't the only city where vacation sublets are being called into question. Paris officials also are warning apartment owners, reminding them that anyone who rents out their flat for less than a year is violating French law. Like New York, Paris officials are doing this in the hopes of maintaining enough affordable permanent housing for its residents.


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Tina Trenkner

Tina Trenkner is the Deputy Editor for GOVERNING.com. She edits the Technology and Health newsletters.

E-mail: ttrenkner@governing.com
Twitter: @tinatrenkner

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