Airbnb Listings Mostly Illegal, State Contends ,2014

Airbnb Listings Mostly Illegal, State Contends
The new york time

Eric T. Schneiderman, the New York attorney general, found nearly three-quarters of all Airbnb rentals in the city were illegal.
Airbnb, the pioneering home rental service, presents itself as useful and virtuous, but the reality is far less benign, according to a report that Eric T. Schneiderman, the New York attorney general, is releasing on Thursday.

The report will say nearly three-quarters of all Airbnb rentals in the city are illegal, violating zoning or other laws. Commercial operators, not hard-luck residents, supply more than a third of the units and generate more than a third of the revenue. At least a handful of landlords are running what amount to illegal hostels.

Property owners on Airbnb are indeed making money, but it is not being spread around. Most rentals are in three high-profile Manhattan neighborhoods. Queens, the Bronx and Staten Island barely figure.

Airbnb declined to aggressively dispute the numbers in the report, which draws on four years of data it provided to the attorney general after a court fight.

“We need to move forward,” an Airbnb spokesman, Nick Papas, said. “We need to work together on some sensible rules that stop bad actors and protect regular people who simply want to share the home in which they live.”

Airbnb, which is most likely contemplating a public offering in the next few years, seemed eager to avoid another fight. Its latest round of fund-raising put its valuation at $10 billion.

The housing broker and its imitators, like the taxi service Uber and its clones, have been prompting upheaval just about everywhere they go.

Admirers say these stars of the so-called sharing economy are breaking up monopolies that have grown greedy and lazy. They are empowering individuals. Critics say that the start-ups are unsavory efforts to avoid regulation and taxes, and that the very term “sharing economy” is ridiculous.

In some contentious spots, like San Francisco, where the local government endorsed a plan last week to essentially legalize Airbnb, a resolution may be in sight. But in New York, where real estate is often viewed as a blood sport, the battle is only deepening.

Mr. Schneiderman and city regulators will also announce Thursday a joint enforcement initiative to shut down illegal hotels. Various regulators will investigate violations of building and safety codes and tax regulations.

“Anyone operating an illegal hotel should be on notice that the state and city will take aggressive enforcement actions in this area,” said Mr. Schneiderman. “A slick advertising campaign doesn’t change the fact that this is illegal activity.”

He was careful, however, to speak of “illegal hotels” rather than “illegal rentals.” Airbnb is already too popular to dislodge completely, no matter what the housing laws say. It also delights travelers, who get a cheaper and usually more interesting place to stay.

“Most of our hosts are regular New Yorkers, and the overwhelming majority live outside of Manhattan,” Mr. Papas said.

As for the 72 percent of listings that Mr. Schneiderman said were illegal, Mr. Papas said it was hard to tell what was going on.
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“Every single home, apartment, co-op and living space in New York is subject to a myriad of rules, so it’s impossible to make this kind of blanket statement,” the spokesman said. “That kind of uncertainty and lack of clarity is exactly why we’re advocating for clear, fair rules for home sharing.”

The report, Airbnb in the City, draws on anonymized data on 497,322 private stays in 35,354 unique places that were for less than 30 days and did not involve a shared room.

The report said the service was dominated by large-scale operators, finding that 6 percent of the hosts made 37 percent of the revenue — or $168 million. The number of units they administered ranged from three to 272. The individual with those 272 units charged an average of $358.19 a night, yielding $6.8 million, the report says.

Some of these operators may be gone already. In April, in the midst of Airbnb’s negotiations with Mr. Schneiderman over turning over its data, the company said it was expelling hosts with 2,000 listings in New York because they “weren’t providing a quality, local experience to guests.”

Some of the large-scale operators that remain are as upset with Airbnb as they are with Mr. Schneiderman. Over a hundred hosts were told by Airbnb over the summer that Mr. Schneiderman had requested information about them, and that the company would turn over the data unless a court prevented it.

A group of the hosts has now filed a lawsuit against Airbnb under the name New Yorkers Trying to Make Ends Meet in the Sharing Economy.

“It is not O.K. for a website that has gathered sensitive personal and financial data in order to market and profit from short-term rentals to turn around and hand this private data over to a politically motivated attorney general, simply to save its own hide,” said the president of the group.

He declined to be identified because he said it would make his properties a target for the regulators. All his units are legal, he said.

A Quinnipiac poll last month revealed sharp divisions among New Yorkers about companies like Airbnb. Asked whether city residents should be able to rent rooms to strangers like a hotel, 56 percent of the respondents said yes and 36 percent said no.

“Airbnb allows longtime residents to stay in their homes by earning just a little extra money to help make ends meet,” the company states in its promotions. It stresses that only 18 percent of its New York rentals are “where the hotels are,” which it defines as Midtown. The other 82 percent are “outside of traditional tourist zones.”

But the attorney general’s report says rentals in three areas in Manhattan — Lower East Side/Chinatown, Chelsea/Hell’s Kitchen and Greenwich Village/SoHo — accounted for 40 percent of private stay revenue, or $187 million.

Reservations in Queens, Staten Island and the Bronx accounted for only 3 percent, or $12 million.

The report also indicates that an increasing number of units were being rented out on a more or less permanent basis. While still small in absolute numbers — about 2,000 units are rented for six months of the year or more — affordable-housing advocates have warned that this trend could push up prices for long-term residents as units disappear from the housing stock.

A dozen buildings had 60 percent or more of their units used as rentals for at least half the year, “suggesting that the buildings were operating as de facto hotels,” the report says.

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