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One year after the implementation of New York City’s groundbreaking short-term rental regulations, the expected relief for the housing crisis has not materialized. Instead, the stringent measures have led to record-high hotel prices for visitors and surging rents for residents. There’s plenty of housing in brand new luxury developments in New York but they are too expensive for the average New Yorker. Lack of housing is not the problem. The problem is the tens of thousands of available apartments are too damn expensive and just a few units in each development are earmarked as “affordable”. New York City is missing the entire point as they bend to the will of the hotel lobbyists.
New data highlights the unintended consequences of Local Law 18 (LL18), a law that stands out for its rigorous approach to regulating short-term rentals.
A More Expensive Destination for Travelers
Since these regulations came into effect, a significant and predictable outcome has been the rise in hotel prices, which threatens to make New York City unaffordable for many potential visitors.
According to CoStar data, the average hotel price in New York City increased by 7.4 percent over the past year, compared to a modest 2.1 percent rise nationally.
Despite Promises, Rents Continue to Climb and Vacancy Rates Remain Static
Legislators assured that LL18 would help protect affordable housing, but evidence from the past year shows that the law has not lived up to its promise. Alicia Glenn, former NYC Deputy Mayor for Housing under Mayor Bill de Blasio, admitted that she had never seen data indicating that short-term rentals were significantly contributing to the housing crisis.
Insights from the past year confirm this:
- Rising Rent: Contrary to expectations, the ban on Airbnb has not led to more affordable housing. Instead, rent in New York City rose by 3.4 percent in the first 11 months of LL18, as reported by StreetEasy. Other factors appear to be driving these rent increases. For the first time in history, the median asking rent in downtown Manhattan hit $5,000.
- Unchanged Vacancy Rates: The vacancy rate for apartments in New York City has remained virtually unchanged at 3.4 percent since the law’s enactment, according to Apartment List.
- Out of Step with Other Major Cities: While rents have stabilized in many other cities, New York’s rent increases have outpaced those in nearby cities like Boston, Chicago, and Washington, D.C. Additionally, New York’s vacancy rates remain significantly lower than those of these other major cities.
Impact on Outer Boroughs and Local Businesses
LL18 has disproportionately impacted outer borough communities by reducing available accommodations and limiting where travelers can stay. Before the law, Airbnb listings were spread across all five boroughs, with Brooklyn and Queens accounting for 37 percent and 13 percent of listings, respectively.
In 2023, the average Airbnb guest spent about $260 per day in New York City, with over a third of that spending occurring near their accommodation. The reduction in short-term rental options has hit outer boroughs hard, resulting in fewer stays and less spending outside Manhattan.
Organizations like the Brooklyn Chamber of Commerce have raised concerns about the law’s adverse effects. In a city where living costs continue to rise, the loss of income from short-term rentals has devastated many residents and small businesses that depend on tourism.
“The reality has been a significant setback for Brooklyn’s tourism and local economy, without the promised increase in rental housing availability. We urge the City Council to revisit the law to support local homeowners and the economic development of outer borough communities,” said Randy Peers, President and CEO of the Brooklyn Chamber of Commerce, in an op-ed for the Brooklyn Paper.
Similar concerns have been voiced by the Dominican American Chamber of Commerce.
“Local Law 18 has benefited large corporations at the expense of middle-class residents and small businesses. With rising rent prices and many families relying on short-term rentals for supplemental income, the law has created financial strain for hosts and led to a decline in revenue for local businesses that thrive on tourism,” said Manuel Lebron, CEO and Founder of the Dominican American Chamber of Commerce.
A Call for Re-evaluating LL18
Even the bill’s sponsor, former council member Ben Kallos, acknowledged that single families renting one space should not have to worry about the law. Yet, one year later, the reality is quite different. To address the shortcomings of LL18, a more balanced approach is needed—one that recognizes the value of short-term rentals while tackling the root causes of housing affordability by building more homes.
“It’s time for New York City to re-evaluate LL18 and consider amendments that would, at a minimum, allow homeowners to host guests again. By rolling back parts of the law, the city can increase accommodation options, support resident hosts, and revitalize local businesses dependent on tourism. A more sustainable, sensible, and equitable model would benefit residents, visitors, and the broader community, ensuring that regulations foster, rather than hinder, community and economic growth.”
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