One year later: how Local Law 18 reshaped NYC’s real estate landscape

On Behalf of | Oct 29, 2024 | Real estate law, Real estate litigation |

New York City’s real estate market has always been a dynamic beast, but the introduction of Local Law 18 in September 2023 sent shockwaves through the industry. This controversial legislation aimed to tackle the city’s housing crisis by cracking down on short-term rentals like Airbnb and VRBO, and its impact has been both far-reaching and unexpected.

Did LL18 made housing cheaper?

Local Law 18 was a bold move by New York City to address its housing crisis. By imposing strict regulations on short-term rentals, the law aimed to redirect properties from platforms like Airbnb back into the long-term housing market. The intention was clear: increase housing availability and curb soaring rent prices.

The data presents a mixed picture. In the heart of NYC, the law has achieved some success. The median rent increase slowed significantly to just 0.5% from August 2023 to August 2024, a stark contrast with previous years’ spikes. However, this trend did not extend across the broader metropolitan area, where rent growth remained consistent with national averages. While LL18 showed promise within the city, its wider impact on affordability remains inconclusive.

Evasion and the underground market

Despite its intentions, LL18 has inadvertently sparked an underground rental market. Alternative avenues have emerged with Airbnb listings plummeting from over 22,000 to below 5,000. Adding another layer of complexity, the hotel industry in NYC saw a significant boom.

Private groups on social media platforms like WhatsApp and Facebook offer short-term sublets under the radar. These invite-only groups, with names like “Friendbnb”, have gained traction, circumventing the law through private transactions. This burgeoning underground market highlights both the demand for short-term rentals and the lengths people will go to find loopholes.

By seeking legal help, property owners and hosts can understand their rights and obligations under this law, which requires registration of short-term rental properties and limits rentals to periods of 30 days or more when the host is not present.

Local Law 18’s first year has been a period of adjustment, marked by both intended and unintended consequences. While the law has undoubtedly reshaped the short-term rental landscape, its impact on affordability remains unclear.