Even more so because it was mostly illegal. For many decades, New York City’s residential laws and building codes have prohibited residents from renting out their entire homes to guests for stays under 30 days. Short-term rentals have only been allowed for part of a home, and only for up to two guests, if the primary resident is also present the whole time.

That means it’s long been illegal to buy a New York apartment building to run a secret bed-and-breakfast empire, or even rent your shoebox out to tourists when you’re gone for a few days. But people did it anyway, because it was lucrative and the city rarely enforced the rules.

Hosts only got in trouble if someone reported them directly to authorities – which is what happened to Lisa Grossman, the owner of a posh Midtown Manhattan townhouse, who was penalized in 2019 for hosting short-term guests, charging them more than $2,000 a night. She suspects someone tipped off officials, who confronted the guests outside her home. “Ten minutes later, I got $10,000 in fines,” she says.

Now far more illegal hosts could get knocks on their door, thanks to the implementation of a new regulation called Local Law 18. It forces hosts to get approved by the city before they can list short-term, partial-home stays on sites like Airbnb, which means they can no longer use the platform to advertise illegal short-term, entire-home stays at all. And if Airbnb processes such a transaction, it could be forced to pay hefty fines.

Local Law 18 went into effect in September. Between August and October, the number of short-term rentals plunged 85%, according to Inside Airbnb, a housing activist group that tracks the platform’s data. Authorities agree: the law is working. But now some hosts are fighting back. As the law went into effect this year, Grossman and a few other New York City homeowners formed a lobbying group seeking to legalize short-term, entire-home rentals for one- and two-family homes (such as duplexes), and they claim Mayor Eric Adams is sympathetic to their cause.

Cities around the world are watching closely to see how the fight plays out in the largest tourism market to take action against Airbnb so far. What does it mean for residents desperate for more housing supply – and the tourists trying to visit?

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And though it could just be a coincidence, new statistics this month show that the city’s rental costs are backing off from record highs, as the vacancy rate increases to a level not seen in three years – good news for folks looking to sign rental leases.

Landlords tired of their tenants running secret hotels in their buildings have also started taking advantage of the new law. At least one Manhattan property manager has reportedly sued a tenant and Airbnb for illegally advertising a short-term rental in the building, and more are expected to follow.1

• 1. Murray Cox, Inside Airbnb’s founder, says the law is already delivering its promised breakthrough: “It’s very satisfying to see thousands of housing units potentially returned to the long-term rental market.” But McKee warns the law is “still not enough to solve the housing crisis. You’re still going to have a huge, gigantic disparity between supply and demand, you’re still going to have a landlord’s market,” he says. “Historically, this has been the case in New York City and in virtually every dense urban environment for centuries. There’s too many more people looking for a place to live than you have places to live.”