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Vacation rentals ban in New York City

Monday, July 26th 2010 - comments (1) Comment

Vacation rentals ban in New York City

A controversial bill (S6873) to ban certain vacation rentals in New York City was signed into law on Friday night by Governor David Paterson, despite stiff opposition. The law prohibits all rentals of less than 30 days in Class A buildings and the Governor's reasoning goes as follows...

"This new law fixes problems caused by illegal hotels and improves quality of life in traditional residential apartment buildings, while also meeting the needs of visitors. By removing a legal gray area and replacing it with a clear definition of permanent occupancy, the law will allow enforcement efforts that help New Yorkers who live in SRO (single room occupancy) units and other types of affordable housing preserve their homes."

Carl Shepherd, co-founder of HomeAway, was one vocal opponent of the bill and his firm is faced with removing many of the nearly 900 rental listings on their website.

Speculation is flowing around the blogosphere on the motivations behind the bill - the most obvious being a suspicion that Paterson has been knobbled by the powerful hotel lobby. The disproportionate effect this may have on black and hispanic business owners is also getting airtime. (I don't agree with the sentiment but any exposure to suggestions of racism shows a lack of judgement by the governor.)

As an ardent supporter of the free market, I'm appalled that a US Governor (in New York no less!) reacts to a perceived problem in housing by pulling out a .357 Magnum and shooting the issue plain dead.

Any economist will tell you that markets supply demand, but perfect markets need regulation to keep them honest, vibrant and profitable.

Shutting them down completely seems like the answer of a 2-year old. It's the Kim Jong-Il approach to management. Surely there was scope to compromise.

an adult alternative: regulation?

If illegal hotels are a problem but tourists want short term rentals, one alternative may have been to regulate the vacation rentals sector.

The state would simply provide a license and a quality grading on every property available for short term rental - at a cost.

This approach would have ensured problem property stays out of the market. Meanwhile vacationers get the assurance of a high quality stay and trustworthy people to book from. That stimulates demand rather than hitting it on the head with a sledgehammer.

At a time of fiscal austerity, licensing may also have been tax positive. Not only has this law dissuaded important tourist cash from going to New York, it has also missed a golden chance to swell state coffers.

anything but a ban...

We're sure others have plenty of ideas on ways to tackle the problem. But completely banning something rarely works; the unscrupulous will find ways around the law and legitimate rentals will disappear, taking their tax and tourist dollars with them. Having avoided any other sensible alternatives or attempting to meet both sides halfway, it is fair to question the governor's motives.

It may be small consolation but an amendment supported by the bill's sponsor, New York City Mayor Michael Bloomberg, may delay enforcement of the legislation until May 2011. What a guy.

If you oppose S6873, show your support at protect-vacation-rentals.com

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comments (1)

28th July 2010 18:03 GMT | United States proud B&B owner wrote...
Lucky me to be the first to comment on an excellent post ! Yes, there surely are other ways to meet the demand of the budget tourist and preserve affordable housing at the same time. But that would require taking the time to draft such detailed legislation and caring about these small businesses. YES this outright ban will force legitimate operators out of business and force many others underground. This is far worse for the tourist and the city as a whole. I have owned a small B&B for 12 years and I can tell you that the majority of these B&B's are small, mostly women and minority owned, private residences!! Who, by the way PAY hotel and sales taxes. I thank you again for making me laugh....".Shutting them down completely seems like the answer of a 2-year old. It's the Kim Jong-Il approach to management. Surely there was scope to compromise."-hysterical!!
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