Story and photos by Jason Riggs
Laura Ravegnani, a Ph.D. student in physiology at Italy’s Università degli Studi di Modena e Reggio Emilia, was out touring the financial district in Lower Manhattan on a recent Sunday.
But at the end of the day, instead of heading to an expensive hotel in midtown, she and her parents, who were traveling with her, returned to a 700-square-foot, one-bedroom apartment in Long Island City, Queens. They had booked the place for a nine-day stay on Homeaway.com, which helps people find apartments in cities around the world
“The cost of $950 for the apartment was cheap relative to a hotel room that would accommodate three people,” says Ravegnani.
But this convenient and cost-effective alternative to the traditional hotel stay has just gotten more difficult to arrange in New York City.
On May 1, the so-called “Thirty Day Law,” which restricts many short-term apartment rentals to no less than 30 days, took effect. The law applies to property owners in buildings of five units or more and tenants who are permitted by their leases to sublet bed-and-breakfast establishments are exempted, as are people who share their apartments – living in the apartment while a short-term renter is present.
The bill, which had been strongly supported by the hotel industry, was signed into law last July by Gov. David Paterson.
In fact, the law takes aim at the short-term apartment rental business, which gained popularity in the last decade as Web-based facilitators, such as Homeaway.com, Roomorama.com, Localbigwig.com, Vrbo.com and Sublet.com made it easier for their clients to advertise their apartments, and for renters and subletters to find them. The clients subscribing to these websites are homeowners who advertise their furnished apartments for a short-term period, which typically ranges from just a few days to a month. Lease-holders also use these sites to advertise their furnished apartments to subletters for short-term.
“I make five times the income renting my furnished apartment on a daily basis than renting it on a monthly basis,” says Michael Hoffer, who owns an apartment on West 24th Street in Chelsea.
New Yorkers may now have to think twice before offering their apartments for short-term rentals. “The penalty for using a unit contrary to the Certificate of Occupancy is a maximum of $800 levied against the building owner,” says Amanda Konstam, deputy director of public affairs at the Office of the Mayor. While the law sets no penalties for web-site hosts, some short-term apartment rental sites are changing how they do business to comply with the law, while others are educating their clients about the law.
A representative for Roomorama.com says that, as of May 1, it is accepting reservations only on a monthly basis. Localbigwig.com informs its clients about “The Thirty Day Law” on its site.
“We don’t see the law affecting our business model, because our website targets executives who stay for periods of over a month,” says Ray Madroinio, the chief executive of Localbigwig.
The law’s many exemptions make it harder for websites to distinguish between apartment owners who are complying with the law and those who are not. Marie Jezequel, the chief executive of Nyhabitat.com, says she is struggling with the law. “I have to go through 1,000 apartment listings to make sure they are in compliance with the new law,” says Jezequel. “My clients have been asking questions since the law was signed. ‘Can I go to the Department of Buildings and get an exemption to get a different C of O?’ ‘How can I keep my listing posted on your website?’ It’s a saga for every apartment that I have listed on my website now.”
Supporters of the law assert that it is needed to curtail the proliferation of illegal hotels and to increase public safety. The bill itself states, “Not only does this practice offer unfair competition to legitimate hotels that have made substantial investments to comply with the law, but it is unfair to the legitimate permanent occupants of such dwellings who must endure the inconvenience of hotel occupancy in their buildings and it decreases the supply of affordable permanent housing.”
Fire- and safety-code violations are another reason for the law. Some landlords have divided apartments into a labyrinth of rooms, causing a major fire hazard.
But the principal beneficiary of the restrictions on short-term rentals is the hotel industry, which saw vacancy rates soar and revenues decline during the recession. In 2009, occupancy rates fell only 5 percent, but hotel revenues fell 35 to 40 percent from the previous year, according to the Partnership for New York City.
Young people and artists who rely on short-term rentals, both as an inexpensive way to travel and as a source of income, are likely to be hit hardest if the market for these apartments tightens.
Ron Hilley, a baritone with the New York City Opera, has been subletting his apartment during the off-season for 20 years and is concerned about the law. “I rent my apartment because when I’m not working I can’t afford my apartment,” says Hilley, who moves in with his relatives during the off-season.
Berhnard Rotzetter, 38, of Switzerland, who was visiting Times Square recently, says he is concerned about his ability to afford a comfortable hotel on his visits to New York City. “I usually find an apartment on Homeaway.com because I take long vacations and can’t afford to stay in a New York City hotel for three weeks,” he said.
Opponents of the law are beginning to organize. The Short Term Renters and Hospitality Association has been raising money to mount a public relations campaign and has hired a hospitality-sector lobbyist, John Cordo of Cordo & Company.
“We are not slumlords or scam artists, but offer safe and secure properties that enable families with children, loved ones of sick friends and other individuals who would never be able to afford an extended hotel stay in New York to come and to bring their dollars with them,” a statement on the group’s website says.
According to Protect-Vacation-Rentals.com, a website that helps protect the rights of homeowners who rent their properties on a short-term basis: “Enforcement will be complaint-based, including complaints that originate via calls to 311.” The Mayor’s Office of Special Enforcement will then be assigned to investigate the complaints.
Ms. Ravegnani, who says she loves New York and plans to move here in the future, says the law won’t deter her from taking another short-term rental. She thinks there will be many short-term apartment hosts who are willing to break the rules and continue to keep their apartments on the market because the penalty is much less than the losses they would incur from not renting out their apartments. And, of course, there will always be demand for an inexpensive rental in the Big Apple.