Summary:
- It’s been nearly one year since New York City began enforcing its Local Law 18, which drastically reduced the number of short-term rentals that can legally operate within the city. The city defines short-term rentals as those rented out for fewer than 30 days.
- Since the policy’s enforcement began, we’ve seen a drastic decrease in Airbnb bookings, slightly longer stay lengths, a drop in occupancy, and relatively stable ADR.
- Through a survey, Lodgify hosts expressed disappointment with how the new policy has affected their businesses. They feel it’s done little to improve the housing shortage and rent prices.
Last September marked an important milestone in the unfolding of New York City’s Local Law 18, also known as the Short-Term Rental Registration Law.
While the law was first passed in January of 2022, full enforcement officially began on September 5, 2023, with a particular focus on strict compliance for platforms like Airbnb. Starting on this date, these platforms were expected to remove unregistered listings from their sites and prohibited from processing bookings for unregistered listings.
One year later, everyone’s eager to see whether the new policy has fulfilled its goal of alleviating New York City’s affordable housing shortage, as well as what impact it’s had on the city’s short-term rental landscape.
Lodgify’s internal data, along with feedback from our New York City-based hosts, gives us clear insights into this second question. So, to better understand Local Law 18’s impact, we’ve analyzed our New York City bookings for the year leading up to and following the policy’s enforcement (see our full methodology here). Comparing year-over-year changes gives us a sense of how the industry has changed under the new law—and what other cities in similar positions might be able to expect.
About NYC Local Law 18
Local Law 18 has widely been referred to as New York City’s short-term rental “ban” because of the number of short-term rentals it has put out of business. However, what the law actually does is introduce a registration requirement, requiring all short-term rentals to apply for approval from the city’s Office of Special Enforcement (OSE).
Of course, in order to receive approval, short-term rentals must meet strict requirements. According to Local Law 18, short-term rentals—which the city defines as those being rented out for fewer than 30 days—are legal when:
- They are in an approved building.
- The space is shared (hosts cannot rent out their entire unit).
- No more than two guests are present.
- Hosts are present during the duration of the stay.
There are a couple exceptions to the law. For example, Class B multiple dwellings—such as hotels, motels, and specifically approved rooming houses—are already approved for stays of less than 30 days and are thus exempt from the registration requirement. The same goes for rentals for 30-plus days, as they’re not considered short-term.
However, for the vast majority of short-term rentals in the renowned city, this new policy has meant drastic changes. Indeed, when we asked our NYC customers how much Local Law 18 had impacted their business on a scale of 1 to 10, the average response was 8.5.
Impact on short-term rentals
So, how exactly has Local Law 18 impacted New York City hosts’ businesses? Our internal data revealed the following changes.
Airbnb bookings have plummeted
The most obvious consequence of the new registration requirement is also the most drastic: a complete halt to operations.
We’ve seen this in the sheer number of Airbnb listings for stays of less than 30 days within the city, which plummeted from 22,246 in August of 2023 (before enforcement began) to around 4,000 in May, representing a decrease of 82%.
While our NYC-based customers have fared slightly better, we’re still seeing a drop in Airbnb bookings of 52% when comparing the years leading up to and following the law’s enforcement.
This drop in listings and bookings has a couple possible culprits. For some Lodgify customers, the new policy has simply put them out of business. This will be the case for any hosts who rent out entire units, for example, as well as rentals in unapproved buildings.
Other businesses have had to temporarily pause operations while they applied for registration and awaited approval from the city. Several Lodgify customers told us that this process took them over three months, during which time they were unable to accept bookings.
Stays are getting longer—but not by much
For some NYC hosts, including some Lodgify customers, pivoting to longer-term stays has been the answer. As Local Law 18 only applies to rentals booked for fewer than 30 days, which is its definition of short-term rentals, rentals for 30-plus days are exempt from its registration requirement.
As a result, we’d expect the average length of stay (ALOS) to have increased substantially during the last year. However, while we are seeing an increase of 39%, that increase only represents an additional 1.63 days.
This goes to show that the majority of Lodgify hosts haven’t chosen mid-term rentals as a viable alternative to Local Law 18.
Occupancy rate is down
Occupancy is down from 56.8% for the year leading up to the policy’s enforcement to just 48.7% for the past 12 months.
Trying to understand what’s happening with occupancy here reveals just how complicated the current situation is. On the one hand, we might wonder why occupancy rates are down by only 14% when Airbnb bookings have dropped by 52%, but the reduction in available listings is probably behind this.
On the other hand, why are we seeing a drop in occupancy at all if fewer listings are available and demand has remained the same?
A couple factors could be at play here:
- For listings that have switched to mid-term stays, this could be a sign that they aren’t meeting travelers’ actual needs. After all, an increase in supply for mid-term stays doesn’t mean there will be a newfound demand for them.
- Similarly, there may now be a surplus of rentals for two guests available, given the new two-guest maximum. Not finding short-term rentals that meet their needs, groups of two-plus guests may be turning elsewhere for accommodations.
At any rate, occupancy rate has remained fairly consistent pre- and post-Local Law 18 in the rest of the country.
ADR remains relatively stable
Also of note: average daily rates (ADR) are down by about 3.7%, representing a change of only $14.
In some senses this is an anomaly: The drastic drop in supply, paired with consistent demand, should be driving ADR up, if anything. However, the slight decrease is in keeping with a lower occupancy rate.
Of course, as many would be eager to point out, slightly fluctuating ADR is beside the point for hosts whose income has been eliminated altogether by Local Law 18.
Impact on affordable housing
So, has Local Law 18 achieved its goal of increasing affordable housing? Many maintain that it hasn’t.
Preliminary evidence shows that housing supply has not increased significantly and the affordable housing shortage persists. Data published by Apartments.com shows that 2024 rental prices in New York City are even higher than they were before Local Law 18 went into effect. In fact, as Kaitlyn Harger, a senior economist at the Chamber of Progress, points out, rental prices in New York City rose by over 3% last year—more than they rose in comparable large U.S. cities.
When we asked our NYC-based customers via an email survey if they thought Local Law 18 would positively impact housing affordability, their concerns echoed these numbers.
Is there a better solution?
These disappointments are compounded by the fact that, although the law set out to target larger businesses, it’s largely impacting small hosts who rely on the extra income to get by.
As one Lodgify customer told us, “Not everyone is a landlord taking housing out of the city. We are homeowners renting out half of our home. We cannot do that now.” This customer felt that, even though the law is designed to allow shared spaces with live-in hosts, its other requirements are stringent enough to prevent operations. “If someone has a house that they are currently living in full time, we should have the right to rent it out as we please. We do not own multiple properties. This is our home.”
Nevertheless, Local Law 18 has nearly halted operations for this small host: “It has removed a large source of our income and the income of people who worked for us, such as cleaners.”
So, is there a better solution—one that can prevent companies from converting large numbers of residential units to short-term rentals, without negatively impacting small-time hosts?
This is a question that’s currently confounding local governments around the world. But as for our customers, they have some ideas of their own:
Other ideas largely echoed those put forth above—that regulating short-term rentals isn’t bad in itself, but regulations shouldn’t prevent hosts with a few units from operating.
Beyond the Big Apple
This issue is top of mind not only in New York City, but also in highly-traveled destinations around the world that are implementing or considering similar restrictions. From New York to Hawaii and Barcelona to Berlin, governments are scrambling to find solutions to what’s obviously a very multifaceted problem.
On the line are issues as important as the affordable housing crisis, the tourism industry and its economic impact, and the empowerment of small local businesses, to name a few. These are no small concerns, so it’s no wonder that a clear solution has yet to emerge. We only hope that future proposals will use Local Law 18’s results and unintended consequences as an example, so as not to do more harm than good.
Methodology
We analyzed over 5,800 New York City bookings in Lodgify’s internal data, including direct bookings as well as bookings from Airbnb, Vrbo, Booking.com, Expedia, Google Vacation Rentals, and other OTAs. All reservations analyzed were for stays with arrival dates between September 5, 2022 and September 6, 2024, allowing us to compare the year preceding and succeeding the enforcement of Local Law 18.
We also reached out to Lodgify customers in New York City to get their input on Local Law 18.
