October 15, 2013

New York City fights Airbnb rentals

City officials say that the short-term room rentals undercuts hotels, avoids taxes and threatens safety.

By Verena Dobnik
The Associated Press

NEW YORK — Each night, people in apartments all over New York City are cleaning up, putting out fresh towels and clearing out – to rent their private space to strangers from around the world.

click image to enlarge

Mishelle Farer poses for picture in her apartment, where she rents a room on Airbnb, in New York, Thursday, Oct. 10, 2013. Farer is an avid user of Airbnb, a website that allows travelers to rent other people's homes or rooms. (AP Photo/Seth Wenig)

Thousands of city residents are using websites such as Airbnb.com to list apartments or rooms for as little as $35 a night, a phenomenon officials say is illegal in many cases, undercuts the hotel industry, avoids taxes and threatens apartment building safety.

New York’s top prosecutor is demanding that Airbnb turn over data on city dwellers who have listed on the site as part of an investigation into whether residents are breaking a state law barring sublets for fewer than 30 days if occupants are not present.

But many residents in the nation’s most expensive city say they’re providing a service that’s valuable to them and their guests. Subletting for nights at a time is often the only way they can afford to pay rents that average $3,000 a month and can top $6,000 in the most desirable areas.

“I use Airbnb to supplement my income, and it’s allowed me to go back to school,” says Mishelle Farer, a 32-year-old former U.S. Army sergeant who rents her second bedroom in Brooklyn’s artsy Williamsburg neighborhood through Airbnb for $60 to $70 a night, depending on the season.

Farer says she covers about half her rent through such sublets. And besides, “I’ve met so many wonderful people from France, Germany, Spain, South Africa, Brazil, the Philippines.”

Travel guide author Pauline Frommer says Airbnb and smaller sites such as flipkey.com, couchsurfer.com and housetrip.com fill a need in a city where hotel prices average $275.

“New York hotel prices are truly outrageous,” Frommer says. “The city is overwhelmed with visitors, and it’s practically impossible to find an affordable hotel room, so you need some kind of outlet.”

Airbnb started five years ago in San Francisco, after two roommates couldn’t afford their rent and inflated air beds for paying guests. It now operates globally in 35,000 communities, currently offering 500,000 listings, and is the world’s biggest short-term rental company. The site takes 6 to 12 percent of every rental.

In New York, the company says about 15,000 people are offering short-term rentals ranging from $35 for a private space in a Brooklyn studio to a $60 walkup in Times Square to $120 for a garden apartment in Brooklyn’s Red Hook to $921 for an antiques-furnished loft in Tribeca.

New York City has been aggressively challenging Airbnb, contending many sublets on its site are illegal because residents aren’t there. And the city says such rentals are cheating the city of lodging taxes.

Since the mayor’s office began examining short-term rentals in 2006, it has fielded more than 3,000 complaints and issued almost 6,000 notices of violation, including fire, safety and occupancy infractions, which carry fines.

Airbnb says 87 percent of hosts in New York share the space they live in with guests. The company has called the subpoena of customer information by Attorney General Eric Schneiderman an “unfounded fishing expedition” and says hosts are responsible for following varying laws around the world.

NYC & Company, the city’s official tourism agency, issued a statement saying, “This illegal practice takes away much needed hotel tax revenue from city coffers with no consumer protections against fire- and health-code violations.” Neither city officials nor hotel organizations would estimate how much revenue hotels and the city might be losing.

Landlords and tenant organizations have long complained that short-term sublets are a violation of most leases and a security issue.

Having strangers coming in and out of a residential building “is a terrible problem,” says Tom Cayler, chairman of the Illegal Hotel Committee for Manhattan’s West Side Neighborhood Alliance. “If you come home at night and there are people in the lobby or elevator who you don’t know, you should be scared.”

Sam Shaber, a musician who rented space on the Lower East Side for $150 to $225 a night, says she welcomed guests from France, Argentina, Sweden and elsewhere. And she said she always got a good sense of them from online exchanges and profiles before handing over the keys.

“In this day and age of Craigslist, we have a radar for who’s weird,” Shaber said. “We never had one problem.”

Airbnb renters say they can offer an experience hotels can’t – the opportunity to live like a native in funky neighborhoods off the beaten tourist paths.

Sergio Verdasco, 33, a mechanical engineer in San Sebastian, Spain, was hosted by Farer in Williamsburg for three nights.

“It was an amazing experience – a soft landing in a city where I don’t know the people and don’t speak the language well,” he said by phone. “She told me where to go, what she likes.”

“It’s not the same as taking up a guide and doing what a million people do.”

Associated Press writer Jennifer Peltz contributed to this report.

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