New York City Council held a vote on a bill that will force Airbnb to turn in names and addresses of Airbnb hosts in New York City. These actions taken by the city council on Airbnb New York are nothing new. In October 2016, New York Governor Andrew Cuomo signed a bill into law to illegalize renting out unoccupied apartments for less than 30 days.
That being said, for Airbnb hosts in NYC, it can create great financial distress. This mainly affects real estate investors who invested in Airbnb New York, as it demolishes the community of Airbnb hosts and investors in NYC. Airbnb New York is not the first to experience such laws; other cities have passed similar laws which resulted in a noticeable decline in Airbnb listings.
This bill comes as a method to implement the already strict rules on Airbnb rentals in New York City. But where is this all going? Is Airbnb going to abandon Airbnb New York?
To clarify, the fight between Airbnb New York and the city council is more about how the company will be perceived in other cities and locations. Yes, it’s true that New York City is among the top 5 largest markets. However, when you look at the overall portrait, you’ll realize that the top 5 markets for Airbnb only make up for 4.3% of total listings. This definitely makes you think!
If Airbnb were to abandon NYC, would it be a financial loss on its own or are they afraid of the repercussions that might follow in other regions? Also, does Airbnb want to run a travel accommodation business without having the big apple among its cities? I think not!
If you want more details about the history of Airbnb regulations in New York City, read this blog: What’s the Deal with Airbnb New York Regulations?
Airbnb’s policy and public affairs head, Chris Lehane, a former Clinton Administration political consultant, spoke openly on the matter. He stressed on the invasion of privacy- something Airbnb always assures its hosts of. Moreover, he explained that the ones to suffer from such a legislation are not big-time investors. They are Airbnb hosts who are using the home-sharing platform to make ends meet.
The war on Airbnb New York remains to be viewed as an effort of the hotel industry in New York City. Why? Well, simply because more and more people are using Airbnb to travel. Whether you’re going to New York City for leisure or business, Airbnb will offer you an affordable space to recharge. On the other hand, hotel companies are unable to raise the already sky-rocketing prices. Why is that? Simply because people have the option of more space for a lower price through Airbnb New York.
If you’re a real estate investor in NYC at the moment, don’t panic! Airbnb doesn’t go down without a fight. Chris Lehane openly commented that the company is not hesitant to take legal action to prevent the legislation.
Is becoming an entrepreneur the issue with Airbnb New York?
The commercial user of Airbnb or vacation home rentals is the one targeted by the new legislation. An average of 6% of Airbnb hosts has more than three listings on the website. That being said, Airbnb is constantly enticing landlords and real estate investors to go for Airbnb rentals as opposed to traditional rentals. Accordingly, these real estate investors get more bang for their buck with real estate investing. So, if you’re an Airbnb investor with one listed, you needn’t worry as the law does not encompass you.
What’s the tax issue with Airbnb New York?
Regulating such new investing ventures is a must. The key issue is the fact that the city council is unable to regulate the vacation home rental industry. In addition to that, keep in mind that New York is not the first to take that step; Santa Monica banned renting out an apartment on Airbnb when the host is not present. Moreover, a 14% tax is a requirement for Airbnb hosts in Santa Monica. On the other hand, Airbnb investors are more willing to pay a hotel tax. Airbnb hosts expect Airbnb to deduct the hotel tax at the time of reservation as they do in other cities. If you wish to get a clear idea about rental income taxes, read this: All You Need to Know About Rental Income Tax.
What should Airbnb New York hosts do in the meantime?
Do not fear Airbnb hosts, Airbnb will surely come up with a solution to this issue. In the meantime, you should conduct your business as always. This goes accordingly for two reasons; the legislation has not taken effect and the company is willing to take legal action. Secondly, if it does go through, make the most out of the time you have with multiple Airbnb rental properties.
On the other hand, with traditional rentals generating a high rental income for landlords in New York, you shouldn’t let it get to you. Chances are you will lose some of the rental income from Airbnb, but you will still be capable of renting out any real estate investments as traditional rentals.
Should I still consider an Airbnb investment property?
It’s definitely still a lucrative option to invest in real estate in New York. The method, however, may be different. For example, if you’re going to buy an apartment in NYC and considering renting out a room, great! The new legislation doesn’t affect you anyway. On the other hand, if you’re going to buy an apartment for the sole purpose of an Airbnb investment property, I’d wait until things settle down. Another option is to capitalize on the growing need for multi-family homes in both New York State and NYC. The New York real estate market still remains a hot investing market regardless of the politics.
Check out this blog post to learn more about multi-family homes in New York State: Where Should You Invest in Multi Family Homes in New York State?
If you are looking to invest in an apartment, whether for Airbnb New York or traditional rentals, a must-have tool is an investment property calculator. It makes perfect sense to measure a property prior to the actual purchase. That’s exactly what an investment property calculator can do! Check out Mashvisor’s investment property calculator to make use of the 14-day free trial by clicking here.
The war on Airbnb New York is merely the beginning of actions taken by multiple city councils and states. Above all, Airbnb has a value of over 25 billion dollars and will manage to find a way to maintain its listed locations.
Whether you’re a New Yorker or not, drop a comment below to let us know what you think of the new New York regulations.