Judge Throws Out Airbnb Lawsuit, Strict Regulations to Go Into Effect in September

August 10, 2023 10:35 AM

New York City’s Short-Term Rental Registration Law — also known as Local Law 18 — has survived a legal challenge from Airbnb, and will go into effect in early September. The law requires short-term rental hosts to register their units with the City – and prohibits websites like Airbnb from processing payments for those who don’t. The law is the final step in a decade-long effort to stop the proliferation of illegal hotels across New York City.

Residents, housing advocacy groups, and organized labor have been instrumental in New York City’s fight against the illegal hotel industry brought on by home-sharing websites like Airbnb. In 2010, New York State’s Multiple Dwellings Law established the rule that now governs all short-term rental operations that register with the City: individuals in NYC apartment buildings may not rent out their entire apartments or multi-family homes for less than 30 days. Since then, there has been additional legislation aimed at increasing and improving enforcement.

But enforcing the law has been difficult. In 2022, NYC had tens of thousands of listings on Airbnb, and the company has consistently refused to release data to the City that would aid them in shutting down illegal hotel operations.

Local Law 18, passed by the City Council, was the solution to this problem. This law follows the lead of many other cities across the country, by requiring short-term rental hosts to register their businesses with the city. This registration helps the city to ensure that hosts are operating safe and legitimate rentals that don’t violate the law and that don’t create illegal hotels.

But this past June, just a month before the law was to go into effect, Airbnb made a last minute attempt to escape the new regulations by filing a lawsuit against the City.

On August 8th, a New York State Supreme Court judge threw out Airbnb’s case, writing in her decision that “the Court finds that these rules are entirely rational” and setting September 5, 2023 as the new start date for the short-term rental registry. Airbnb estimates the new regulations will eliminate 95% of its net revenue from NYC units, while city officials estimate that the registry will allow them to remove thousands of illegal units from Airbnb’s website.

The dismissal of Airbnb’s lawsuit is a major victory for New Yorkers. This is especially true at this moment, when NYC is facing a dire housing crisis which is caused in large part by high demand for housing combined with low supply of apartment units. The tens of thousands of illegal short-term rentals advertised by Airbnb are being used as full-time hotel rooms, rather than housing, which makes the problem worse. Getting those units off of Airbnb helps to not only root out illegal hotels, but to protect the city’s housing stock and help stabilize housing costs.